Closing Credit Card Can Harm CIBIL Score: Experts Warn Against High Utilization Ratio

• Closing a credit card reduces your total available credit limit, increasing your Credit Utilization Ratio (CUR).
• A higher CUR (e.g., 50% instead of 25%) is seen as a risk by banks and credit bureaus, negatively impacting your CIBIL score.
• Closing old cards shortens your credit history and reduces credit diversity, both crucial factors for a strong CIBIL score.
• Experts advise against closing cards with no annual fee; instead, use them less to maintain credit history and limit.
• Responsible credit card use, timely payments, and keeping utilization below 30% are key to financial health.

Why It Matters: Closing a credit card can negatively impact your CIBIL score by increasing utilization and shortening credit history.