Is it better to keep a credit card with no balance or cancel it?

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asked Mar 5, 2020 in Credit by lauriwillis (420 points)
Is it better to keep a credit card with no balance or cancel it?

1 Answer

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answered Mar 5, 2020 by Shawn (105,070 points)
If you have a credit card open with no balance and have used that credit card often and paid off the balance on time then that is good for your credit score and credit history.

When you have used a credit card and paid it on time and have no balance it's best to keep that credit card open so that it shows a good credit utilization.

Even if you use that credit card just sometimes and then pay off the balance every time you use it it helps to build your credit score.

That can help you get home loans, car loans and other credit cards as well as many other loans that you may need.

If you cancel the credit card with no balance it could lower your credit score for at least awhile and then that credit card won't help you build a good credit history anymore.

So keep the credit card with no balance but use it once in awhile to keep the credit card open and then pay off the balance in full to help keep your credit score high.

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