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Will closing a credit card hurt your credit?

Your scores may temporarily drop when you close a credit card.

When you close an account you lose the available credit limit on that account, which makes your utilization rate jump up, and that is a sign of risk. Utilization rate is simply your balance-to-credit limit ratio. To calculate your utilization rate, divide the total of all your balances by the total of all your credit limits to get your percentage.

While your scores may decrease initially, they typically rebound in a few months if you continue to make your payments as agreed because it becomes evident that you just closed an account and didn’t take on new debt.

Check out the scope to hear answers to all the questions asked:

Do you have questions about credit?

Join our live video chat every Tuesday and Thursday at 2:30 p.m. ET on Periscope. Rod Griffin, Director of Public Education at Experian, is available to answer your questions live.

Scoped on: 07/07/2016

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