How To Close A Credit Card Without Affecting CIBIL Score

That unused credit card sitting in your wallet may seem harmless. But what if it comes with an annual fee? In such a case, closing it can seem like the obvious choice. Then comes the bigger question: Will closing it hurt your CIBIL Score?

The answer is not as simple as yes or no. Closing a credit card can affect certain factors that contribute to your credit score. However, the impact depends on your overall credit profile and how you handle the closure. A little planning before cancelling the card can help you avoid unnecessary surprises.

Does Closing a Credit Card Affect Your CIBIL Score?

Closing a credit card can affect your CIBIL Score, but it does not automatically reduce it.

1. One reason is credit utilisation. When you close a card, its credit limit is removed from your total available credit. If you continue using other cards with similar outstanding balances, your overall credit utilisation may increase. Higher utilisation can negatively affect your score.
2. The age of the account can also matter. Closing an older card may reduce the depth of your credit history over time.
3. However, the closure itself is not treated like a missed payment or loan default. The effect on your score depends on how the closure changes your overall credit profile.

When Can Closing a Credit Card Hurt Your CIBIL Score?

Closing a card is more likely to affect your score in certain situations:

The Card Has a High Credit Limit has a high credit limit

Closing a card with a large limit reduces your total available credit. If your outstanding balances remain unchanged, your credit utilisation ratio can rise.

It Is One of Your Oldest Accounts

An older credit card may contribute to the length of your credit history. Closing it can reduce the number of long-standing accounts in your profile.

You Have Few Other Credit Accounts

If the card is an important part of an otherwise limited credit history, closing it can have a greater effect than it would for someone with several well-managed accounts.

How To Close a Credit Card Without Hurting Your CIBIL Score?

Follow these 6 steps to close the card responsibly:

Clear All Outstanding Dues

Pay the complete amount due, including any applicable charges or pending transactions.

Check for Pending Transactions

Wait for recent transactions to be processed before requesting closure.

Redeem Your Rewards

Use eligible reward points, cashback or other benefits before closing the account.

Request Closure Through the Issuer

Contact your card issuer through its official channel and clearly request account closure.

Ask for Confirmation

Keep the closure request number and written confirmation for your records.

Check Your CIBIL Report

Make sure the account is eventually reported as closed and does not show an incorrect outstanding balance.

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What Happens to Your CIBIL Report After Card Closure?

Closing a credit card does not mean that the account disappears from your CIBIL Report. The account can continue to appear as part of your credit history, but its status should show as “closed” once the lender reports the closure.

Your past repayment history associated with the account can also remain part of your credit record. This is why “closed” does not mean “deleted.”

After some time, check your updated CIBIL Report to ensure the account status and outstanding balance have been reported correctly.

To learn more about credit score and factors affecting your CIBIL Report, click here.

Common Mistakes to Avoid When Closing A Credit Card

A quick reminder before you decide to close your credit card:

Should You Close the Credit Card Or Keep It? Check These Five Things First

Closing a card is not always the best option. Before making the decision, consider these five factors:

Final Words

Closing a credit card does not have to mean taking an unnecessary hit to your CIBIL Score. The key is to understand how the closure affects your credit utilisation and credit history, clear your dues and verify the account status afterwards. For more practical tips on managing credit cards, improving your credit profile and making smarter financial decisions, explore JioFinance.