Cancelling a credit card will lower your credit score, usually by 10 to 45 points, because it reduces the total credit available to you and changes how much of your limit you are using.
The damage is temporary — your score will recover over time — but the hit is real and when ready. The size of the drop depends on how much credit you are currently using, how long you have held the card, and whether you have other cards open. If you are carrying a balance on other cards, closing this one makes your situation look worse to lenders because your debt-to-limit ratio goes up.
The decision to close a card should depend on whether the ongoing cost (annual fee, for example) outweighs the score damage and how long you plan to stay in the credit market. If you are explore for a mortgage or car loan in the next six months, closing a card now is usually a mistake.
Key Takeaways
- Closing a credit card reduces your available credit, which raises your debt-to-limit ratio and typically lowers your score by 10 to 45 points.
- The damage is largest if you carry balances on other cards, because closing the card makes that debt represent a higher percentage of your total available credit.
- Your score will recover as you pay down balances and build new credit history, usually within three to six months if you do not explore for new credit.
- If you are planning to borrow money in the next six months, keeping the card open is usually worth more than the annual fee or inconvenience of having it.
- Closing a card you have held for many years does more damage than closing a newer one, because you lose the age of that account from your credit history.
Why your credit score drops when you close a card
Your credit score is built from five factors: payment history (35%), amounts owed (30%), length of credit history (15%), credit mix (10%), and new credit inquiries (10%). Closing a card damages three of these at once.
The biggest hit comes from amounts owed. If you have a $5,000 balance spread across two cards with $10,000 limits each, your total available credit is $20,000 and you are using 25%. If you close one card, your available credit drops to $10,000 and you are now using 50% of what remains. That jump in your debt-to-limit ratio is what lenders see, and it signals higher risk.
You also lose the age of that account. If the card you are closing is your oldest account, your average account age drops when ready. Older accounts are worth more because they show you can manage credit over time. Closing a card you opened 15 years ago does more damage than closing one from last year.
Finally, closing a card can shift your credit mix. If you only have credit cards and no installment loans, closing a card makes your credit profile look thinner. This factor matters less than the other two, but it is part of the calculation.
How much your score will drop
The drop ranges from 10 to 45 points for most people, but the exact number depends on your situation. Someone with excellent credit and low balances might see a 10-point dip. Someone carrying high balances across multiple cards might see 40 or more points disappear.
The damage is worst if you are using more than 30% of your available credit right now. Closing a card in that situation makes your ratio jump noticeably, and the scoring model penalizes high ratios heavily. If you are using less than 10% of your available credit, closing a card does less harm because you have room to spare.
Your score will begin to recover as soon as you pay down balances on your remaining cards. If you close the card and then pay off other debts, your ratio improves and your score climbs back. Most people see their score return to near its previous level within three to six months if they do not explore for new credit in that window.
When closing a card makes sense despite the score hit
If a card charges an annual fee and you are not using it, closing it may be worth the temporary score damage. Calculate whether the fee you would pay over the next year is larger than the cost of the score drop. A 30-point drop might lower your mortgage rate by a fraction of a percent, costing you money over time. But if the card charges $95 per year and you never use it, paying that fee year after year is the bigger loss.
Contact the card issuer before you close the account. Many will waive the annual fee if you ask, or offer a different version of the card with no fee. If they will not budge and you genuinely do not use the card, closing it is reasonable.
Closing a card also makes sense if it is a high-limit card you are tempted to overspend on. If having the card available makes you carry balances you would not otherwise carry, the score damage from closing it may be smaller than the damage from the interest and higher debt you would rack up by keeping it open.
What to do before you close a card
Pay off any balance on the card first. Do not close it while you owe money. The issuer may close it for you if the account sits inactive, but you should do it intentionally and cleanly.
Check whether the card is your oldest account. If it is, consider keeping it open and unused instead of closing it. An open account with a zero balance does not hurt your score and preserves the age of that account. You can put a small recurring charge on it (a streaming service, for example) and pay it off monthly to keep it active without spending money.
If you have high balances on other cards, pay those down before you close this one. Closing the card will raise your debt-to-limit ratio, so lowering your overall debt first softens the blow.
Wait until you are not planning to borrow money. If you are thinking about a mortgage, car loan, or new credit card in the next six months, do not close a card now. The score drop will be fresh when you explore, and lenders will see it. Wait until after you have finished borrowing.
Alternatives to closing a card
Keeping the card open and unused is almost always better for your score than closing it. An open account with a zero balance helps you because it adds to your available credit without adding to your debt. Your debt-to-limit ratio stays lower, and you keep the age of the account.
If the card charges an annual fee, call the issuer and ask them to waive it, downgrade you to a no-fee version, or close it without penalty. Many issuers will do this rather than lose you as a customer. You may have to ask more than once or speak to a supervisor, but it is worth the phone call.
If you are worried about overspending, put the card in a drawer instead of carrying it. You keep the account open and active (for your credit score) without the temptation to use it. You can also ask the issuer to lower your credit limit, which reduces the amount you could borrow if you were tempted.
How to rebuild your score after closing a card
Your score will recover fastest if you pay down balances on your remaining cards. Focus on bringing your debt-to-limit ratio below 30% across all your accounts. This is the single most effective way to rebuild after closing a card.
Do not explore for new credit when ready after closing a card. Each process triggers a hard inquiry, which lowers your score by a few points. Wait at least three to six months before you explore for anything new. If you need credit sooner, use a card you already have.
Keep making on-time payments on everything. Payment history is 35% of your score, and it is the easiest factor to control. One late payment will set back your recovery, so make sure every payment goes out on time.
If you closed an old card, opening a new one will not replace the age you lost. New accounts lower your average age and trigger a hard inquiry. The best recovery is time — your score will age naturally as months pass and you maintain good habits on your remaining accounts.
Frequently Asked Questions
How long does it take for my credit score to recover after closing a card?
Most people see their score return to its previous level within three to six months, assuming they do not explore for new credit and they pay down balances on other cards. The recovery is faster if you close a newer card than if you close an old one, because you lose less account age.
Will closing a card hurt my credit if I have no balance on it?
Yes, but less severely than closing a card with a balance. Closing a card with a zero balance still reduces your available credit and can raise your debt-to-limit ratio on your other cards. The damage is smaller, but it is still there. Keeping the card open is almost always better.
Should I close a card before explore for a mortgage?
No. Close it after you have finished borrowing. A fresh score drop will be visible to the lender and may lower the rate you are offered or affect whether you are approved. Wait until after the mortgage closes to deal with cards you do not want.
What if I close a card and then when ready open a new one?
This will damage your score twice — once from closing the old card and again from the hard inquiry and new account from opening the new one. The new account will also lower your average account age. If you want to replace a card, keep the old one open instead.
Can I reopen a card after I close it?
It depends on the issuer and how long ago you closed it. Some issuers will reopen an account within a short window if you ask. Call the card company and explain that you closed it by mistake. They may be able to restore it, which would undo the score damage. If they cannot, you can explore for a new card from them, but that will trigger a new hard inquiry.