Impact of Closing a Credit Card on Your CIBIL Score in India

Deciding to close a credit card can feel liberating—no more temptation to overspend or annual fees to pay. Yet, this action can have lasting consequences on your CIBIL score if not handled correctly. MyExcellentScore breaks down the factors you need to consider before hitting “close account.”

Impact of Closing a Credit Card on Your CIBIL Score in India | MyExcellentScore

Credit Utilization Ratio Shifts

Your utilization ratio—the percentage of available credit you’re using—directly influences your CIBIL score. Closing a card reduces your total credit limit, potentially raising your utilization on other cards. For example, if your total limit drops from ₹2 lakh to ₹1 lakh and you carry a ₹20 000 balance, your utilization jumps from 10% to 20%.

Short‐Term vs. Long‐Term Effects

In the short term (up to three months), you might notice a slight score drop as credit agencies recalculate your ratios. Over the long term, consistent on‐time payments on remaining accounts can offset this dip. At MyExcellentScore, we advise monitoring your score weekly for at least one billing cycle post‐closure.

Alternatives to Closure

Consider requesting a credit limit decrease instead of full closure. This reduces the risk of accidental overspending while maintaining total available credit. Alternatively, downgrading to a no‐fee variant can save costs without impacting your utilization ratio dramatically.

Best Practices

• Always pay off any outstanding balance before requesting closure.

• Space out closures—avoid closing multiple cards within six months.

• Keep older cards active if they have no or low fees—they improve your average account age.

Conclusion

While closing a credit card can offer short‐term relief, its impact on your CIBIL score demands careful planning. Need a customized strategy? Explore MyExcellentScore’s credit analysis tools to craft the perfect credit management plan.

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