Canceling Your Credit Card the Right Way

When it comes to canceling a credit card, it is important that you go about it the right way. You do not want to find yourself in a situation in which your canceled credit card results in a significantly lower credit score. Here are the steps to canceling your credit card in a way that will reduce the chances that you credit score is negatively affected:

1. Pay off your credit card. Before you cancel, you need to make sure that your card account is paid off. Do not cancel before you have paid of the credit card. It looks bad, and will be reflected i your credit report.
2. Call the issuer and ask to cancel the card. Let the credit card issuer know you are closing the account over the phone.
3. Write a letter. After you have called, sit down to the computer and type a letter informing the credit card company that you are closing your account. Request that the issuer report the account closure to the credit bureaus as a customer request. Your name, account number and address need to be included. Keep a copy for your records and send the letter by certified mail in order to prove that the credit card issuer received the request.
4. Follow up by checking your credit report. Make sure that your credit report accurately reflects the fact that you requested the account closure. Your credit score suffers when the issuer closes your account. Give it 30, and then check your report. If there is a problem, you’ll have to get the issuer to fix the mistake. Using certified mail (after calling) enclose a letter asking the creditor to fix the mistake and enclose a copy of your original credit card cancellation letter.

When you should wait to cancel a credit card

If you are planning to apply for a car loan or a home mortgage, you should wait to close your credit card account until your funding comes through. Closing a credit card will reflect in your credit report as a loss of available credit, and that can impact your credit score and reduce your chances of a loan approval.

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