How Does Closing a Credit Card Affect Credit Score?
A prediction of
your credit behaviour
& how likely you are to repay a loan on time based on your credit reports.
Ideal Credit Score
An ideal CIBIL score should be
750 or above
to fulfill the eligibility criteria for a credit card or loans.
Affect of Closing Credit Card on CIBIL Score
Closing credit cards can effectively increase your
credit utilisation ratio
, which would decrease your CIBIL score.
Credit Utilization Ratio
It represents the amount of revolving credit you're using divided by the total credit available to you.
Effect of a Negative CIBIL Score
It will remain on your credit report for around
, & based on this information, lenders will analyse your repayment behaviours.
5 C’s to Consider Before Closing
Calculate the impact on your credit score.
Clear all outstanding dues.
Carefully go through the closure policies.
Call off auto-payments.
Check your credit report.
Calculate the Impact
Closing a card
reduces the available credit
, & leads to an increase in credit utilisation ratio. If this ratio does not get affected, you can close safely.
Clear the Dues
impossible to close
the credit card account before clearing all remaining dues.
Read all policy-related documents carefully to close off your credit card account
without paying any charges
Call off Auto-Payments
Cancel the auto-payment instruction for
or other subscriptions. If not done, then the bank will continue to charge on the closed card.
Check Your Credit Report
It is crucial because any mistakes or inconsistencies will remain for the next
in your credit report & repayment history .
Advantages of Closing Credit Card
Prevents over expenditure.
Reduces your overall debt.
Reduces the chances of identity theft.
Retains the payment history.
Disadvantages of Closing Credit Card
Increases credit utilisation ratio.
Shortens your credit history.
Impacts credit score.
Earn 9 - 11%
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