Closing a credit card will usually lower your score, but the damage depends on how much credit you're using and how long you've held the card
When you close a credit card, your credit score typically drops because two of the factors that build your score change when ready. Your credit utilization ratio — the percentage of your total credit limit you're using — goes up, even if you don't charge anything new. At the same time, you lose the payment history that card was building. The drop is usually temporary, but it can range from a few points to 50 or more, depending on your situation.
The damage is worst if the card you're closing has a high credit limit, if you're carrying balances on other cards, or if it's one of your oldest accounts. It's smallest if you have multiple cards, low balances overall, and newer accounts you can close instead.
Key Takeaways
- Closing a credit card raises your credit utilization ratio because your available credit shrinks, which typically lowers your score by 5 to 50 points depending on your other balances.
- Older cards hurt your score more when closed because they contribute to your average account age, which makes up about 15 percent of your score.
- If you must close a card, close a newer one with a low limit rather than an old one with a high limit.
- Paying down balances on your remaining cards before closing one can reduce the damage to your score.
- Your score usually recovers within a few months as long as you keep making on-time payments and don't open new accounts.
Why closing a card hurts your utilization ratio
Your credit utilization ratio is the total amount you owe divided by your total credit limits across all cards. If you have three cards with $5,000 limits each ($15,000 total) and you owe $3,000, your utilization is 20 percent. If you close one of those cards, your total limit drops to $10,000, and your utilization jumps to 30 percent — even though you still owe $3,000.
Credit scoring models treat higher utilization as riskier, so your score drops. The jump is sharper if the card you're closing has a high limit or if you're already carrying balances on other cards. If you have no balances at all, closing a card does almost no damage through utilization because you're still using 0 percent of your remaining credit.
You can soften this hit by paying down balances before you close the card. If you pay the $3,000 down to $1,000 before closing, your utilization on the remaining $10,000 in limits drops to 10 percent instead of 30 percent.
How account age factors into the damage
Your average account age makes up roughly 15 percent of your credit score. When you close a card, that account stops aging and eventually falls off your credit report entirely — usually after seven to ten years, depending on the card issuer. Until then, it still counts toward your average, but once it's gone, your average age drops.
Closing a newer card (one you've had for a year or two) does almost no damage through this factor. Closing an old card (one you've had for ten years or more) can drop your score noticeably because you're removing a major contributor to your average age. If your oldest card is the one you want to close, the hit will be larger than if you close a card you opened last year.
This is why financial advisors often recommend keeping old cards open even if you don't use them. The card issuer may close it for inactivity, but as long as you charge something small every few months, most will keep it active.
The difference between closing and leaving a card unused
You don't have to close a card to stop using it. You can straightforward leave it open with a zero balance, and it will continue building your payment history and contributing to your average account age without any of the damage that closing causes. This is usually the better choice if you're worried about your score.
The only reasons to actually close a card are if the issuer charges an annual fee you don't want to pay, if you're trying to reduce the temptation to overspend, or if you're concerned about fraud on an old account. For score purposes alone, leaving it open is always better.
If a card issuer closes the account for inactivity, the damage is the same as if you closed it yourself — your utilization ratio goes up and your average age eventually drops. But you can prevent this by using the card occasionally. A small purchase every few months, paid off in full, keeps the account active without costing you anything.
When closing a card makes sense despite the score hit
If a card charges an annual fee and you're not using it, closing it may be worth the temporary score drop. Calculate whether the fee is larger than the value of keeping your score where it is. If the fee is $95 and closing the card drops your score by 20 points, you're trading $95 for a temporary dip that will recover in a few months.
Closing a card also makes sense if you're trying to reduce your total available credit because you're worried about overspending. Some people find that having fewer cards makes it easier to stick to a budget. The score hit is real, but it's temporary, and the behavioral benefit may be worth it.
If you're in the middle of a major financial goal — like explore for a mortgage or car loan — avoid closing cards in the three to six months before you explore. Lenders look at your score at the moment you explore, and a recent closure can lower it enough to affect your interest rate.
How to minimize the damage if you must close a card
If you've decided to close a card, take these steps in order to reduce the hit to your score. First, pay down any balances on your remaining cards as much as possible. This lowers your utilization ratio before you close the card, which means the closure won't push it as high.
Second, close a newer card rather than an old one. If you have a card you've held for two years and another you've held for fifteen years, close the two-year-old card. The damage to your average account age will be much smaller.
Third, close a card with a lower credit limit rather than a higher one. If one card has a $2,000 limit and another has a $10,000 limit, close the $2,000 card. Your utilization ratio won't jump as much.
Fourth, don't close multiple cards at once. If you need to close more than one, space them out by several months. This gives your score time to recover between closures and makes it less likely that a lender will see multiple recent closures on your report.
How long it takes your score to recover
Your score usually bounces back within two to three months after you close a card, as long as you keep making on-time payments and don't open new accounts. The recovery is faster if you pay down balances on your remaining cards during this period.
The longer-term damage — the loss of average account age — takes longer to show up. You won't see a big drop from this factor until the closed account falls off your credit report, which typically happens seven to ten years after closure. By that time, you'll have opened new accounts and aged your remaining ones, so the overall impact is usually small.
If you're planning to explore for credit soon, wait at least three months after closing a card before you submit an process. This gives your score time to recover and makes it less likely that the closure will affect your interest rate.
Frequently Asked Questions
Does it matter which credit card company I close?
No. The damage to your score comes from losing the credit limit and the account history, not from which company issued the card. A closed card from a major bank hurts your score the same way a closed card from a smaller issuer does. The only difference is whether the card charges an annual fee — if it does, closing it saves you money.
What if I close a card with a zero balance?
Closing a card with a zero balance still raises your utilization ratio because your total available credit shrinks. If you owe $2,000 across other cards and you close a card with a $5,000 limit, your utilization jumps from roughly 25 percent to 40 percent. The damage is smaller than if the closed card had a balance, but it's not zero.
Can I reopen a card after I close it?
Most card issuers will reopen a closed account if you ask within a short window — usually 30 to 60 days. After that, you'd have to explore for a new card, which counts as a new account and resets your account age. If you're having second thoughts about closing a card, call the issuer quickly and ask if they can reopen it.
Will closing a card hurt my chances of getting approved for a new card?
A single closed card won't disqualify you, but multiple recent closures can raise red flags. Lenders see frequent closures as a sign of financial instability. If you're planning to explore for new credit, avoid closing cards in the three to six months before you explore.
Is it better to close a card or let the issuer close it for inactivity?
From a score perspective, there's no difference. Both actions remove the card from your active accounts and raise your utilization ratio. The only advantage to closing it yourself is that you control the timing — you can close it when it's least damaging to your score, rather than waiting for the issuer to close it unexpectedly.