Canceling a credit card usually lowers your credit score, but the damage is temporary and the size depends on how much credit you were using
When you close a credit card account, your credit score typically drops. The drop happens because of two mechanics: your total available credit shrinks, and the card's payment history stops being actively reported. How much your score falls depends on how much of your credit limit you were using and how old the account is. A drop of 10 to 50 points is common; larger drops occur if you were carrying a high balance or closing an old account.
The good news is that this damage is not permanent. Your score will recover over time as you continue making on-time payments on other accounts and as the closed account ages. The closed account stays on your credit report for up to 10 years, so it continues to help your score during that period — it just stops being counted as an active account.
Key Takeaways
- Your credit score drops when you close a card because your available credit decreases, which raises your credit utilization ratio.
- Closing an old account hurts more than closing a new one, because the closed account stops contributing to your average account age.
- If you were carrying a balance on the card you closed, your score will recover faster than if you were using very little of the limit.
- The closed account remains on your report for up to 10 years and continues to help your score if it has a clean payment history.
- Paying down balances on your remaining cards before closing one can reduce the score damage.
Why closing a card lowers your credit utilization ratio
Your credit utilization ratio is the percentage of your total available credit that you are currently using. If you have three cards with $5,000 limits each (totaling $15,000 available) and you carry $3,000 in balances, your utilization is 20 percent. When you close one of those $5,000 cards, your available credit drops to $10,000. If your balances stay the same, your utilization jumps to 30 percent.
Credit scoring models treat higher utilization as a sign of financial stress, so your score drops. The impact is largest if you were using very little of the card you closed — closing a card you barely used still removes its credit limit from your available total. This is why closing a $10,000 card with a $200 balance can hurt more than closing a $5,000 card with a $4,500 balance.
You can reduce this damage before you close the card by paying down balances on your remaining cards. If you move some of your balance to a card you plan to keep, your utilization on that card rises, but your total utilization across all accounts may stay the same or even improve.
How account age affects the score drop
Closing an old account hurts your score more than closing a new one. Credit scoring models weight average account age — the average length of time you have held all your accounts. An old account with a clean history is valuable to your score. When you close it, that account stops being counted in your average age calculation, which can lower your score.
If you close a card you opened last year, the damage from lost account age is small. If you close a card you opened 15 years ago, the damage is larger because you are removing a long history of on-time payments from the active calculation. This is why financial advisors often recommend keeping old cards open even if you do not use them — the account age benefit usually outweighs the risk of carrying a card you do not need.
The closed account does not disappear when ready. It stays on your credit report for up to 10 years, and during that time it still contributes to your credit history — it just stops being counted as an active account. This means the score damage from closing an old account is real but temporary.
The difference between closing a card with a balance and closing one you paid off
If you close a card that you paid off completely, your score drop is usually smaller than if you close a card carrying a balance. This is because the utilization damage is smaller — you were not using much of that card's credit limit anyway. However, you still lose the account age benefit and the available credit, so your score will still drop.
If you close a card with an outstanding balance, you must pay that balance in full before or at the time of closing. Your score will drop more sharply because your utilization ratio rises significantly. However, your score will also recover faster, because as you pay down balances on your remaining cards over the following months, your overall utilization improves.
Some people close a card to force themselves to pay off a balance faster. If that is your goal, consider instead moving the balance to a card you plan to keep, or to a balance transfer card with a 0 percent introductory rate. You will get the same behavioral benefit without the score damage from closing the account.
How long it takes your score to recover
Most people see their score begin to recover within one to three months of closing a card, assuming they continue making on-time payments on their other accounts. The recovery is gradual. A 30-point drop might take six months to fully recover; a 50-point drop might take a year or longer.
The recovery timeline depends on what else is happening on your credit report. If you are paying down balances on your remaining cards, your utilization improves and your score recovers faster. If you are opening new cards or missing payments, your score will not recover as quickly. If you are doing nothing else — just keeping your existing accounts open and paying on time — your score will slowly improve as the closed account ages and becomes less recent in the credit bureaus' calculations.
The closed account itself helps your score during the recovery period. Even though it is no longer active, it remains on your report with its payment history intact. After seven years, negative marks on that account (like late payments) fall off your report. After 10 years, the entire account may fall off. Until then, a closed account with a clean history is an asset to your credit profile.
When closing a card might not hurt your score much
Closing a card has the smallest impact if you are closing a new card with a low limit that you barely used. For example, closing a store credit card you opened six months ago with a $1,000 limit, on which you charged $50 total, will lower your score less than closing a 10-year-old card with a $10,000 limit.
Closing a card also hurts less if you have many other accounts open. If you have 10 credit cards and close one, the loss of account age is spread across nine remaining accounts. If you have two credit cards and close one, the impact on your average account age is much larger. Similarly, if you have a mortgage and several installment loans in addition to credit cards, closing one card is a smaller percentage of your total credit profile.
If you have recently closed other accounts or opened new ones, closing another card may have less additional impact because your credit report is already in flux. The scoring models are less sensitive to changes when your profile is actively changing.
What to do before you close a card to minimize damage
If you have decided to close a card, take these steps in the weeks before you close it:
- Pay off any balance on the card you plan to close, or transfer it to another card.
- Pay down balances on your remaining cards to lower your overall utilization ratio.
- Make sure you have moved any recurring charges (subscriptions, automatic payments) to another card so they do not get declined after you close the account.
- Request your free credit report from annualcreditreport.com to see your current utilization and account age, so you know what to expect.
- Close the card by calling the card issuer's customer service number on the back of your card, not by just stopping use of it.
After you close the card, continue making on-time payments on all your other accounts. This is the single most important factor in score recovery. A missed payment will set back your recovery much more than the card closure itself.
Frequently Asked Questions
Will my closed card still show up on my credit report?
Yes. The closed account will remain on your credit report for up to 10 years. During that time, it continues to show your payment history and account age, which helps your score. It will be marked as "closed" or "closed by consumer," but it is still part of your credit profile.
Does closing a card hurt my score more than missing a payment?
Yes. A missed payment typically damages your score more severely and for longer than closing a card. A missed payment can lower your score by 100 points or more and stays on your report for seven years. Closing a card usually lowers your score by 10 to 50 points and the damage recovers within months to a year.
Should I close a card I am not using to improve my score?
No. Closing an unused card will lower your score, not improve it. The card is helping your score by adding to your available credit and your account age. If you are worried about fraud or temptation, ask the issuer to freeze the account instead, or straightforward keep it in a safe place and do not use it.
What if I close a card and my score drops below 620?
A score below 620 makes it harder to borrow money at reasonable rates, but it is not permanent. Continue making on-time payments on all your accounts and pay down balances on your remaining cards. Your score will recover over time. If you need to borrow money soon, explore options like credit unions or lenders that work with lower scores rather than opening new cards.
Can I reopen a card after I close it to undo the damage?
Reopening a closed card will not restore your score to what it was before you closed it. The account's history of being closed remains on your report. If you want to keep an account active, it is better not to close it in the first place. If you have already closed it, focus on recovering through on-time payments and lower utilization on your remaining cards.