Closing a credit card will usually lower your credit score, at least temporarily

When you close a credit card account, your credit score typically drops because two major factors that make up your score change when ready. The first is your credit utilization ratio — the percentage of your available credit you are currently using. When you close an account, you lose that available credit, which makes your utilization ratio go up even if you haven't charged anything new. The second is your account age and the total number of accounts you have open. Closing an account removes one of your accounts from the mix, which can lower the average age of your accounts and reduce the diversity lenders see in your credit history.

The size of the score drop depends on how much available credit that card represented and how long you've had it. Closing a card you've held for 15 years will usually hurt more than closing one you opened last month. Similarly, if that card was one of only two accounts you had open, the impact is larger than if you have eight other cards active.

Key Takeaways

  • Closing a credit card reduces your total available credit, which raises your credit utilization ratio and typically lowers your score by 10 to 50 points.
  • The older the account and the higher its credit limit, the more your score will drop when you close it.
  • If you must close a card, paying down balances on other cards first can reduce the damage to your utilization ratio.
  • Your score usually recovers within a few months as the closed account ages and other factors stabilize, assuming you keep other accounts in good standing.
  • Closing a card does not erase its history — the account remains on your credit report for up to 10 years, which can actually help your score over time.

Why closing a card changes your credit utilization ratio

Your credit utilization ratio is the total amount you owe divided by the total credit available to you across all your cards. If you have three cards with $5,000 limits each and you owe $3,000 total, your utilization is 20 percent ($3,000 ÷ $15,000). If you close one of those cards, your available credit drops to $10,000, and your utilization jumps to 30 percent ($3,000 ÷ $10,000) — even though you haven't charged anything new.

Credit scoring models treat high utilization as a sign of financial stress. A ratio above 30 percent can lower your score. This is why closing a card with a high limit or zero balance can hurt more than closing a card with a small limit — you lose more available credit in the calculation.

You can reduce this damage before you close the card by paying down balances on your other cards. If you bring your total debt down to $1,500 before closing that card, your new utilization would be 15 percent ($1,500 ÷ $10,000), which is better than the 30 percent you would have had otherwise.

How account age and account mix factor into the drop

Credit scoring models reward you for having a long history with credit accounts. When you close a card, you lose one account from your active portfolio. If that card was older than your average account, closing it lowers the average age of all your open accounts, which can reduce your score.

The models also look at your account mix — whether you have different types of credit, such as credit cards, auto loans, and mortgages. Closing a credit card reduces the diversity of your credit profile, though this factor is usually less important than utilization and payment history. If you have five credit cards and one auto loan, closing one card has a smaller impact on your mix than if you have only two cards total.

The good news is that closing an account does not erase it from your credit report. The closed account stays on your report for up to 10 years, which means it continues to contribute to your account history and average age even after you close it. This helps your score recover over time.

When the score drop is temporary versus lasting

Most people see their score recover within three to six months after closing a card, assuming they continue to pay their other bills on time and keep their utilization low on remaining cards. The closed account is still reporting to the credit bureaus during this time, so it is still part of your credit history — it is just no longer active.

The drop becomes more lasting if you close multiple cards in a short period or if closing the card causes your utilization to spike and you then carry high balances on other cards. For example, if you close a card and then max out your remaining cards, your score will stay depressed as long as your utilization stays high.

The impact also lasts longer if the closed card was significantly older than your other accounts. In that case, the average age of your accounts stays lower for years, which can keep your score slightly below where it would have been if you had kept the card open.

Steps to minimize damage if you need to close a card

If you have decided to close a credit card, you can take steps to reduce the hit to your score. First, pay down balances on your other cards as much as possible before you close the account. This keeps your utilization ratio lower after you lose that available credit.

Second, close the card with the smallest credit limit and shortest history if you have multiple cards you are considering. This removes less available credit from your utilization calculation and has less impact on your average account age.

Third, do not close multiple cards at once. If you need to close more than one, space them out by several months so your score has time to recover between closures.

Finally, contact the card issuer directly and ask them to close the account. Do not straightforward stop using the card and assume it will close on its own — some issuers keep inactive accounts open indefinitely. When you call, confirm that the account will be reported as "closed by consumer" rather than "closed by issuer," which looks better to future lenders.

What happens to the closed account on your credit report

When you close a credit card, the account does not disappear from your credit report. Instead, it is marked as "closed" and continues to appear on your report for up to 10 years from the date you close it. During that time, it still counts toward your credit history and average account age, which helps your score.

The closed account will also continue to show your payment history on that card. If you always paid on time, that positive history stays visible to lenders. If you had late payments, those remain visible too, but they become less important as they age.

After 10 years, the closed account falls off your credit report entirely. By that point, the damage from closing it is usually long gone, and your score has fully recovered.

Alternatives to closing a card if you want to reduce your accounts

If your main reason for closing a card is to simplify your finances or reduce the number of accounts you manage, you have other options that do not hurt your score. You can keep the card open but stop using it. As long as the issuer does not close it for inactivity, it will continue to count toward your available credit and account history.

Some people worry about keeping unused cards open because they fear the issuer will raise the credit limit without their permission, or they are concerned about fraud. You can address these concerns by calling the issuer and asking them to freeze the card or lower the credit limit to a small amount, such as $100. This keeps the account open and active without tempting you to use it.

If you have a card with an annual fee and you do not want to pay it, you can call the issuer and ask them to downgrade the card to a no-fee version instead of closing it. Many issuers offer this option, and it preserves your account history and available credit without costing you anything.

Frequently Asked Questions

How many points will my score drop if I close a credit card?

The drop typically ranges from 10 to 50 points, depending on the card's credit limit, how long you have held it, and how many other accounts you have. A card with a high limit that you have held for many years will cause a larger drop than a newer card with a small limit. Your score usually recovers within three to six months.

Should I close a credit card before explore for a mortgage or car loan?

No. Closing a card lowers your score right before a lender pulls it, which works against you. If you want to close a card, do it after you have secured the loan and the lender has finished checking your credit. If you are planning to explore for a loan soon, keep all your cards open.

What if I close a card and my utilization goes above 30 percent?

Your score will drop more than it would if your utilization stayed below 30 percent. Pay down balances on your remaining cards to bring your utilization back down. Once you do, your score will start to recover, even if the closed account is still recent.

Does closing a card hurt my score if I have no balance on it?

Yes, because you lose the available credit that card represented. Even a zero-balance card contributes to your utilization ratio by adding to your total available credit. Closing it raises your utilization ratio on your remaining cards, which can lower your score.

Can I reopen a credit card after I close it?

It depends on the issuer. Some will reopen a recently closed account if you call within a short window, usually 30 to 60 days. Others will treat a reopened account as a new account, which resets the account age. If you think you might want the card back, ask the issuer about their policy before you close it.