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### Timing Is Everything

It would seem to make sense to cancel any of your credit cards with large credit limits that you do not use. However, taking that step could actually harm your credit score. To understand this seemingly contradictory proposition, we need to do a little math. One of the factors in determining your credit score is the total amount of debt that you carry on your credit cards divided by the total amount of your available credit lines on those cards. If the result of that computation is 1, you are in trouble because it means you have borrowed to your utmost limit—not a good sign. Using this formula, the lower the resulting fraction, the better your credit score. So, for example, if you were carrying \$5,000 of debt on five credit cards with total available credit lines of \$20,000, you are using one-fourth of your available credit. If, however, you canceled a credit card that you did not use anyway that carried a credit limit of \$5,000, you would now be using one-third of your available credit and your credit score would be adversely affected.

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