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POSTED BY ON November 21, 2012 8:44 pm COMMENTS (10)
i am using my hdfc bank credit card and paying regularly since long. i am also having one more credit card of the same bank connected with my father’s saving account (he holds primary credit card) ,both are not used at all. now we like to surrender/cancel both these unused credit cards . would it affect my cibil score?
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@Credexpert
thank you.
We already acted as your conclusive advice. i don’t why but we have been offered hdfc credit cards again and again, though we are not saving much with them or in fact with any other, nor we have any loan! now we kept only one credit card, which is enough.
Dear Mr.Shah,
Closing unused credit cards or credit cards with low balances will affect the credit utilisation ratio and this ratio is considered in calculation of credit scores. However, it would be difficult to quantify the impact it will have on your score.
Having said that, closing the unused credit card is a logical decision and we do not see any strong reason that should stop you from doing so.
Regards,
Credexpert
bemoneyaware and bond bhai
thank you very much for exhaustive information about credit card.
Quoting from our article FAQ on CIBIL CIR Report and Score
The Cibil CIR captures details on all the credit facilities that one has availed like home loan, auto loan, credit cards etc. Details of unused credit cards, like the date of opening and credit limit, will also reflect in the “Accounts” section of the CIR and have an impact on the credit score.Credit utilisation and trade attributes such as the age of the credit account, type of credit, mix or balance of credit instruments etc. impact your credit score. However, unused credit cards will not drastically impact your credit score if you have been regular at payment on all your other credit accounts, along with these credit cards in the past.
In fact, if you have been regularly paying your EMIs on all the credit facilities availed by you and still have unused credit cards showing on your CIR, it will provide a positive indication of your financial security. You must keep in mind some basic facts on credit cards for managing them prudently and using them to your benefit for building a good credit score:
Credit cards are unsecured form of credit. If you have been using the credit card for over a year and have been regular on payments, you have actually built a good credit history on your CIR and ultimately a good credit score. This will provide the lender with additional confidence on your repayment capability as you have shown a disciplined track record on an unsecured form of credit.
It is also advisable not to apply for too many credit cards. If you have made applications for credit cards, this will reflect in the “Enquiry” section of your CIR and will negatively impact your credit score.
However, once you have availed a credit card, it is advisable to keep it for at least 12 months before closing it. The velocity of “opening” and “closing” a credit card account reflects on your CIR and credit score and impacts the lenders assessment of your credit management capacity. 12 months of history on the credit card, whether used or unused, is good enough for a lender to assess your financial standing and repayment capacity.
Please remember though that it is important to be careful and keep a track of your credit cards regularly. Even though the credit cards have been lying unused, you must ensure that they are kept securely and all the terms and conditions on the credit card account are adhered to. You may not like to have surprises in the form of penalties or additional charges that have been levied on the credit card accounts. It is also advisable to access and review your credit score and CIR frequently, as it will give you a detail status of all your credit accounts, which will help you manage them better.
In the US, Credit score is calculated by the total limit you have and the amount of the limit you utilize. For Ex: If you have 3 Credit Cards each having a limit of 1L, your total credit limit is 3L. If you hit this limit regularly, your credit rating might go down. This applies even if you are paying off your debts on time. The reason behind this is, they assume you are mostly in “need” of credit all the times and hence your credit rating can go down! For this reason, they advise not to “cancel” your credit cards in US (I mean, if you have 2-3 CCs its still fine). At the same time they advise you not to apply for too many cards as well!
Now, I am not sure if this is applicable in India as well. Somebody with the knowledge of how CIBIL actually works can throw some light on this. It might be as Krishna said, No issues at all.
thank you for reply and caution.
“Not” missing in my first sentence.
No it will NOT have any effect….
No it will have any effect on your cibil score.
Cibil score records your unpayment loan or late credit card bills.
Before clossing make sure you dont have any outstanding balance with both the cards & also sont forget to get NOC letter from the bank.
No it will have any effect on your cibil score.
Cibil score records your unpayment loan or late credit card bills.
Before clossing make sure you dont have any outstanding balance with both the cards & also sont forget to get NOC letter from the bank.
My Question is for Mr. Krishna Kishore Appala on his above suggestion :
I have 3 credit cards which i have closed long back since i wasnt using it and/or after paying full payment it appears as closed in cibil report. Apart from this what NOC i have to take from bank ? And after so many years will the banks be ready to issue me a NOC ?
Many thanks to respond to my query, please.