How do credit cards affect credit score?
A few months back, I cancelled a credit card and it had a negative impact on my credit score.
This generally happens in the following situations:
- Missed or delayed payment
- If the credit utilisation ratio (credit usage/credit limit) is high
- In case you have multiple credit cards and you want to close one of them
To avoid a credit score reduction, ensure you pay your bills within the due date. If not possible, I would suggest that you pay at least the minimum amount due to avoid a negative impact on your credit score.