Oftentimes, people attribute their extravagant spending habits to the easy availability of credit. Naturally, when it comes to curbing expenses, the credit card is the first to go, as they believe that this will help them control their spending habits. Besides, people are often advised to close their credit cards in an attempt to improve their credit scores. However, this is the biggest mistake one can commit.
If you have been diligent with your credit card payments, then, naturally, that particular account will reflect a good credit score. Closing such an account will unnecessarily let go of your good credit history. Therefore, it may not be such a good idea. You can still continue to use it for making small, routine purchases such as groceries. Also, it is important to make the full payment in every billing cycle, so that your account is always in good light.
Closing an account which has been in use for a long time is also a bad idea. The longer your credit history, the better your credit scores. Hence, if you must take this step, choose a recent one, rather than the one with a long and good credit history. Normally, a credit account remains on the report for seven years after deactivation or the last transaction. Hence, your account will eventually fall off the credit report. When you opt to close a card with a balance in it, this is nullified and may imply that you have consumed your credit limit. Hence, it is better to close those accounts which have a zero balance, as you don't have much to lose.
Once a decision for canceling the card is made, it is a must to pay off or transfer the balance in full. Next, gather the customer care number and mailing address of the card issuer. You may call their customer service center and firstly, confirm that the balance is zeroed out. Do not assume that the balance is zero because you paid the total amount on your most recent bill. Interest may have continued to accumulate between the time the issuer sent the bill and your payment was made.
Once you're certain it is zero, inform them of your decision to close the account. While some companies may allow you to cancel without even speaking to a representative, others may be less obliging. They may try to fix a meeting or a call with their representative to change your mind. So, if this is what you have decided, tell them politely again that you would like to have the account closed immediately. After this telephonic request, make sure you also convey your decision in writing.
Once your account has been canceled, it is important to have it reflected in your credit report. Check the report thoroughly for the closed credit line. Make sure that it clearly mentions that the account has been closed on your request and not on the issuer's. A statement citing the closure on issuer's demand may adversely impact your rating.
To maintain a clean history, it is necessary to apply for only as many credit cards as you can afford. Having only those cards which you use on a regular basis will curtail unnecessary expenditure. Besides, your credit score also remains unaffected.