The Credit Score Mistake Almost Everyone Makes

Closing an old credit card might seem like the responsible thing to do.

But depending on your credit profile, closing a card you rarely use can have an unexpected effect on your credit profile.

Why closing an old credit card can matter

One important factor in your credit profile is credit utilisation.

When you close a credit card, you may reduce the total amount of credit available to you.

For example, imagine you have:

• Credit Card A: ₹1,00,000 limit
• Credit Card B: ₹1,00,000 limit

Your total available credit is ₹2,00,000.

If you close Card B, your available credit can fall to ₹1,00,000.

That can change your utilisation ratio even if your spending hasn’t changed.

What should you do instead?

Don’t automatically close an old card simply because you don’t use it.

Consider factors such as:

• Annual fees
• Credit limit
• How long you’ve held the card
• Your overall credit utilisation
• Whether the card provides useful benefits