want to close one of the cards which has a credit limit of Rs.50,000 as you are not using this card - Then your overall credit utilisation will be 75% (75,000/100,000). This can suggest that you are credit hungry in nature.
Does this mean that you should not close unused cards? No. It is better to close unused cards to prevent misuse or fraud. However, if you wish to close more than 1 card, you should do so gradually and not all at once. Further, the older the credit history, the better it is for your credit score. A long track record will help lenders judge your track record and hence determine future behaviour and default chances. Hence you must always look at keeping older credit cards alive, and close the newer ones if the need arises. This is because the history of closed unused cards goes off the report after some years. Remember, if you already have a weak score, then work on improving your score first before proceeding to cancel the cards.
What are the effects if the credit card is not closed properly?
If you do not follow the proper steps in closing the card, there may be a case when there is an outstanding balance on your card. For instance, if you do not get an acknowledgement from the bank, the bank may charge renewal fees which will get showed as unpaid dues, even though you may have cut the card. This will get carried on month after month, attracting penalties. This will automatically affect your credit score, affecting your future prospects of availing a loan. So remember to actively follow up with the lender and get your credit card closed.