Significance

• The balance you carry on each credit card compared with your spending limit is your debt utilization ratio. The higher your debt utilization ratio, the better your credit score. Canceling credit cards lowers your debt utilization ratio and can cause your credit score to drop.
  
  

Time Frame

• The length of your credit history accounts for 15 percent of your credit score. If a credit card is your oldest account, canceling it shortens the length of your credit history and can adversely impact your credit rating.
  
  

Considerations

• Although canceling your credit cards may hurt your credit temporarily, keeping them open and charging high balances that you cannot afford to pay will leave you with a negative entry on your credit report for up to seven years. If open credit cards tempt you to spend beyond your means, closing the accounts is likely the best option to preserve your credit rating over the long term.