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Was I stupid to pay off three credit cards and then cancel them? Not the pay off part, but the cancel part.


You’re being too hard on yourself if you think you were stupid, but you did make one key mistake. One component of your credit score is how much credit you’re using – how much you’ve borrowed on credit cards and through other consumer loans – in relation to how much credit is available to you. By canceling those cards, you made less credit available for yourself, so the proportion of available credit that you’re using went up. You probably canceled the cards to avoid the temptation to use them or just to simplify your financial life. Those are laudable goals, but credit scoring agencies don’t see it that way. In the future, cut up your cards, but don’t tell anyone about it.

-Conrad de Aenlle