To close a credit card, you need to notify the credit card company and request an account closure. The credit card company will deactivate your account and report it as closed to Experian and the other credit bureaus. You may want to check your credit report 30 to 60 days after the request to make sure the status of the account is reported correctly.
Whether the account is open or closed, the payment history will remain on your credit report. If the account is open and has any history of late payments, the late payments will remain on the report for seven years from the original delinquency date.
If the account is closed and was delinquent when it was closed, the entire account will be removed seven years from that original delinquency date. A closed account that has no late payments will remain on the report for ten years from the date closed. Experian keeps positive accounts longer than negative accounts to help you rebuild your credit history over time.
Remember that closing a credit card can affect your credit scores because it impacts your overall utilization rate, also called your balance-to-limit ratio. Your utilization rate is calculated by taking the total of your credit card balances and dividing that number by the total of your credit card limits. The lower your utilization rate, the better for your credit scores.
When you close a credit card account, you are decreasing the amount of credit available to you. If you decrease your overall credit limit without also reducing your credit card balances, your credit utilization rate will increase, which can hurt credit scores.
Although your credit scores may decrease initially when you close an account, your scores will typically rebound within a few months if you continue to make your payments as agreed and keep your credit card balances low.
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Scoped on: 6/12/2018