By Larry Goldberg
Canceling credit cards is not always a wise option. You may think it will improve your overall credit report score; however, that is not always the case. Depending on the number of credit cards you have open and available for access, and the amount of debt you have compiled, canceling credit cards could make your financial situation look worse. Your credit report score is based on a number of things, one of which is the ratio of your available credit to your outstanding debt. Canceling credit cards with lines of credit open and accessible will reduce your credit available to debt outstanding ratio.
It can actually be good to keep a few lines of credit open and available, especially carrying zero balances on them, to help your available credit to debt ratio look better. It is suggested that you have no more than seven available lines of credit open at one time. Carrying more than seven open lines of credit could begin to hurt your overall credit score.
If you happen to have one line of credit that has a negative history attached to it, that’s the one to cancel.