CIBIL Score: Closing the old credit card worsens the CIBIL score, know the rules..
CIBIL Score: In today's time, people have high expectations, and to fulfill them they often need to take a loan. In such a situation, if the CIBIL score is not good, then you may have to face trouble. So now you know how to make your CIBIL score good and what are the reasons that reduce the level of your CIBIL score.
How important is a credit card for CIBIL score
CIBIL score is very important for taking a loan. If your CIBIL score is good, then there is a possibility that you can get a loan easily. Apart from this, if your credit card is right, then your financial transactions will be easy, and along with this, the credit card also affects your CIBIL score.
You have already come to know that if you are running your credit card, then undoubtedly your CIBIL score will also be good. Now the question is if you think of closing your five-year-old credit card for any reason, can it spoil your CIBIL score? To gather complete information about this, read our special news and know the answer to all your questions related to CIBIL scores and credit cards.
In the present times, the use of credit cards is very popular. Most of the people associated with finance use credit cards to do their work. Along with this, if you use the credit card with understanding and intelligence, then it will help you on time and your CIBIL score will also remain excellent.
Negligence can spoil the CIBIL score
At the same time, if you do not deposit your credit card bill on time, then be careful now. This negligence of yours in paying the bill can spoil your CIBIL score. Apart from this, it is often seen that some people want to close their old credit card due to many reasons.
But before taking this step, they are afraid that doing so will not affect their credit CIBIL score. If this question is coming to your mind, then know the complete details about it. Also, know what should be done in such a situation.
Effect of closing a credit card on Cibil Score
If a credit card is closed, then the duration of its credit history is reduced. The more positive your credit history, the better your CIBIL score will be. Along with this, if your old card was active for 5 years or more, then closing it can reduce your average credit history, which can hurt your CIBIL score.
Apart from this, closing the credit card can increase your Credit Utilization Ratio (CUR), that is, the ratio of using credit.
To understand this, assume that you had a credit limit of Rs 2 lakh. If you close your card with this limit, then your existing credit limit (CIBIL Score) will be reduced to Rs 1 lakh, then your credit card ratio will increase, this hurts your CIBIL score.
Know the way to close a credit card.
Before closing the credit card, know some important things that can be beneficial for you and can save you from economic crises. If you do not have any annual fee, then you can keep your card active.
At the same time, if you still want to close your card, then first of all keep the use of your other cards to a fixed limit. By doing this your credit utilization will be less and you will get its benefit.
Continuing the old card is most beneficial
Before closing the credit card, make sure that you have already deposited all the outstanding bills related to your card. At the same time, if this card of yours is many years old, then keeping it active can be a right decision. By doing this you can maintain a very good and long credit history.
Disclaimer: This content has been sourced and edited from Hr Breaking. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
