Can You Apply to Credit Card Again After Cancelling

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Canceling a credit card you no longer want may have consequences.

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Key points

• Canceling a credit card can ding your credit score.
• Working with a credit bill of fare company to find an agreeable solution is generally your all-time selection.

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You lot see an ad for a credit carte, and at outset glance, it looks like a great deal. It's a prestigious carte du jour offer valuable rewards points. You like the idea of paying all your monthly expenses with the new carte, racking up points, and dipping into your bank business relationship to pay information technology off at the finish of each month. You use for the card before reading the small impress. Information technology's just later you lot learn more most the almanac fee and terms and weather that you decide it's non the correct card for you. Hither'south what happens side by side, and what you can exercise to make the most of the situation.

Await a credit check anyway

The credit menu company has no way of knowing that you've inverse your listen until you make it clear. They probably ran a credit check within minutes of receiving your awarding. Information technology'due south worth noting that a hard credit bank check (like the ane creditors run before approving an application) likely lowered your credit score past a few points at most. A few months of regular payments on all of your financial obligations ought to plump that score correct support.

Read more: What's the Deviation Betwixt Hard and Soft Credit Checks?

If your awarding is approved

Let's say you receive notification that your application has been approved and your new card is in the post. Because you can't put the genie back in the bottle at this signal, you might equally well look on the bright side: Your credit score and payment history were stiff enough to qualify, and that ways you're on the right fiscal rails.

But being on the right runway doesn't hateful y'all must use the card. Hither's a look at your bones options.

Phone call the credit card company

If you're sure yous don't desire the card, give the company a telephone call and explain your concerns. For example, if the annual fee is property you back, ask them to waive it.

If they refuse, ask if yous tin downgrade the menu to 1 with no fee. A high annual fee is likely tied to a card that comes with all the bells and whistles. Find out almost switching over to a less enhanced card with no fee. The pregnant advantage of downgrading a credit card rather than canceling is that your credit score will not be impacted.

Don't activate the card

If the reason you lot no longer desire the card is because you're afraid you'll overspend, don't activate it. Credit cards come with a sticker on them, and on that sticker is a phone number to call to actuate the card. Go out that sticker in place and never make the call. That way, yous can't use it. But it'southward worth noting that if a credit card has an annual fee, you'll yet exist responsible for paying that fee, whether y'all activate the card or not.

The potential danger of non activating the card

The annual fee typically shows up on your kickoff bill. If you don't activate the card, there's a hazard you won't see the first bill, and the fee will become a missed payment.

Payment history is the nearly meaning gene when information technology comes to your FICO®

Score, and even i missed payment tin can hurt your score. If y'all determine not to activate the new credit carte, brand it a point to check the mail for the bill. If you signed up for electronic statements, keep an eye on your email.

Read more: The Complete Guide to Agreement Your Credit Score

The advantage of keeping the card

Even if you lot never plan to use the card and never activate it, the credit card visitor considers your account open. An open account can benefit your credit score by improving your credit utilization ratio.

Here's how it works:

• Say you already have two open credit card accounts, each with $5,000 in available credit, giving yous $10,000 in total bachelor credit.
• Y'all owe $2,000 on one of the cards.
• To effigy your credit utilization ratio, a lender divides the total amount y'all owe ($2,000) by your total available credit ($10,000) to come up up with a ratio of xx% ($2,000 ÷ $10,000 = 0.20).

Now let's say yous go on the new credit bill of fare but never actuate it:

• You now take $15,000 in total available credit ($5,000 on three cards).
• A lender divides the total corporeality you owe ($2,000) by your total available credit ($15,000).
• Your credit utilization rate drops to thirteen% ($2,000 ÷ $xv,000 = 0.13).

Credit utilization ratio matters because creditors feel safer lending you money when they see how you manage the funds already bachelor to y'all. The general rule is to keep credit utilization below thirty%, although the lower, the meliorate.

I affair to go on in mind: If y'all never actuate and use the card, the credit bill of fare company is likely to abolish it at some signal. Information technology costs a credit card visitor money to keep accounts open, and never-used accounts are considered dead weight. If your card is canceled, your credit score may take the hit.

Abolish the credit card

If all else fails and you tin can't notice a way to make the menu work for you lot, yous tin can cancel it. Before y'all do, though, exist aware of these possible outcomes of canceling the card:

• You'll take less available credit. Anytime yous accept on new debt, your credit utilization ratio is college.
• Your "credit mix" may be impacted. Typically, lenders want to know that yous can manage many types of credit. If you're canceling your just credit card, it could ding your credit score.
• Canceling too chop-chop can raise a reddish flag for lenders. Even if it doesn't impact your credit score, lenders may wonder if you're an impulsive borrower or if financial trouble led to the cancellation.

If you're sure you lot want to cancel the credit card, exercise it earlier the end of the first billing cycle. It's possible the credit card company won't report the counterfoil to the credit bureau if it's cancelled early enough. Only if the carte du jour carries an annual fee, you may nevertheless be on the hook for paying it whether the card is canceled or not.

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Source: https://www.fool.com/the-ascent/credit-cards/articles/what-happens-if-i-change-my-mind-after-applying-for-a-credit-card/

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