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[quote=Anonymous][quote=Anonymous]why does cancelling a card hurt your credit? I've never heard that before.  I have excellent credit (over 800) and cancel cards periodically.  Does it help if you hold onto a card for certain magical period of time and then cancel? 
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Here is an extreme example....In the boom years, I picked up some easy credit....I had two cards with 50K limits....One was Citi, and one was Bank of America.  I never used those cards.  The card I used had a 10K limit, and I was carrying a balance of between 5-8K on it.

When the credit crash hit in 2008-2009, banks were trying to limit their exposure.  BOA canceled my card because I never used it....Around the same time, Citi put a $100 annual fee, so I canceled it.

Suddenly, I went from less than 10% utilization to 80%.   Score dropped from ~800 to about 700.  Because of that drop my used credit card max was cut to my current balance.   Around that time, I went to borrow some money for a car.  My score was down to 640, and I did not qualify for the best rates.  That was when I looked into the issue.  I was amazed how minimal actions....through no fault of my own, had such a big impact on my "credit worthiness".

I was worried about my next Periodic Review for my security clearance.  But they only really care about delinquencies.

FWIW, I did not buy the car then, paid down the 8K owned to the other card, and my score shot up 130 points

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