May 5, 2021
Canceling a credit card without credit score harm
Many people believe that canceling a credit card is as simple as cutting it into pieces. This will indeed destroy the credit card and keep you from using it anymore, but it does not cancel the card. To completely cancel the card, call the credit card company and inform them you want to cancel it. You will need to pay off the credit card balance before canceling the card.
Should you cancel your credit card?
Consider whether canceling the credit card is the right thing to do. When you cancel a credit card, you lower the amount of total credit available to you. This raises your credit utilization rate, which is a negative factor in the calculation of your credit score.
Another factor to keep in mind is that when you cancel a credit card, you lose the benefit of getting a positive mark on your credit report each month. Even if a credit card has a zero balance, it is reported as being paid each month.
An additional consideration is that if the credit card you are canceling is a card that you have had for a longer period than other credit cards, it could impact your credit score by making your credit history appear to be shorter.
You might also want to check if there are any unredeemed rewards balance attached to the credit card as you will almost certainly lose these when you cancel the credit card.
If, despite considering all the negative factors related to canceling a credit card, you find you need to cancel the card because you cannot properly control your spending or you are not using the credit card but are paying an annual fee, canceling the credit card is in your best overall interests. Another reason to cancel a credit card is if you are expecting divorce proceedings and you have a joint credit card account.
Mitigate the loss of credit by increasing credit limit on other cards
One way to lower the negative credit score factors associated with canceling a credit card is to request a higher credit limit on one of your other credit cards to offset the loss of the total credit limit.
If you are canceling a credit card because of annual fees, replace the credit card with a no-annual-fee card before you cancel the account.
One more way to ease the effect on credit utilization is to pay down existing balances on some of your other credit cards in an amount that approximates the credit limit on the credit card that you are canceling.
Paying down existing credit card debt with a car title loan
Even though paying down debt seems like a straightforward way to keep your credit score from being harmed when canceling a credit card, you may not have the cash readily available to make such a payment, or you may not want to deplete your savings accounts that are used for future emergencies.
You may not realize it, but you might have the money that you need to pay down credit card balances readily available to you without tapping into your savings account.
When you are asking yourself what affects my credit, a car title loan might just be the answer to your cash and credit needs because it represents a different loan category than credit cards. It is listed under short-term loans.
So, by paying off existing credit card debt with a car title loan, you can reduce the amount of credit utilization you have, even if you cancel one of your credit cards.
Car title loans in Kansas City
Midwest Title Loans is the premier source of title loans in Kansas City and the surrounding area. We have been offering title loans to our satisfied customers for years, helping with many credit needs and securing our position as leading low credit lenders in Kansas City.
We pride ourselves on making the entire process of making a title loan to you as easy as 1,2,3, with a total completion time that’s less than 30 minutes. Drive to one of our four convenient locations in the Kansas City area, and fill out a simple application form while our professionals evaluate your car to determine the amount of the loan for which you are qualified. Provide us with your lien-free vehicle title, and drive away from our office in your car with your cash.
Let us help to protect and improve your credit score with a title loan that can provide you with the cash to pay down credit card balances today.