Does Cancelling A Credit Card In India Affect Your CIBIL™ Rating

Your CIBIL™ Rating is influenced by a lot of factors. Credit cards give you revolving credit which forms an important part of your credit report. 

Cancelling your credit card can impact your credit score. So, you need to be aware of all the impacts due to the cancellation. 

  1. If you close your credit card without paying the outstanding due amount, it could have a negative impact on your credit report. 

  2. If you have used the credit card for a long time, say 10 years, it has a strong credit history. When you cancel this card, the associated credit history drops from your credit profile, which can impact your current score. 

  3. When you use multiple credit cards and you cancel one of them, your credit limit is reduced overall. This could lead to a higher credit utilization ratio in the future which can have an impact on your credit score as well. 

  4. If you use only one credit card and you want to cancel it, it could prevent you from having a credit mix on your portfolio which is one of the parameters in the credit score calculation. This can impact your current score negatively. 

Remember: When a credit card has resulted in a debt trap, it is absolutely fine to close it. But when you know how to use it prudently, it can give you numerous benefits. Hence make an informed decision about closing a credit card.