True or False?

I have credit cards that I never use. I want to cancel them to reduce my risk of losing them and to reduce my risk of identify theft. What I cancel can affect my credit score.

True.

Canceling credit cards can have a negative effect on your credit score because it can result in your utilization rate going up and your average length of credit going down.

If you decide to cancel some cards, take the following into account when considering which cards to cancel.

• Credit cards that do not report your credit limit to the bureau.

• If you have multiple Visa or MasterCards cancel the following first:

  • the newest ones.

  • The one with the lowest limit.

  • The one with the highest interest rate.

  • Read the fine print on the credit card agreement. All other things being equal, cancel the ones that have the Universal Default provision.

An alternative to canceling credit cards is don't cancel them, just cut them up. If you ever decide that you need the credit again, just request a new card.

Remember, if you’re not working the system, it’s working you.

PapaJoe

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