Closing a credit card usually lowers your score, but the damage is temporary and depends on which card you close

When you close a credit card, your credit score typically drops because two major scoring factors change when ready: your credit utilization ratio (the percentage of your available credit you are using) goes up, and your average account age may go down. The hit is usually between 10 and 45 points, though it can be larger if the card you are closing is old or has a high credit limit. The damage is not permanent — your score recovers as you pay down balances and as time passes — but the recovery takes months, not weeks.

The size of the damage depends on three things: how much credit limit you are losing, how old the card is, and whether you carry a balance on other cards. Closing a new card with a small limit hurts less than closing a 15-year-old card with a $10,000 limit. If you already carry balances on other cards, closing a card makes your utilization ratio worse and the score drop is larger.

Key Takeaways

  • Closing a credit card raises your credit utilization ratio because your total available credit shrinks, which typically lowers your score by 10 to 45 points.
  • Older cards hurt your score more when closed because closing them lowers your average account age, a factor that makes up about 15 percent of your score.
  • If you carry balances on other cards, closing a card makes the damage worse because your utilization ratio worsens.
  • Your score recovers within three to six months if you keep paying on time and do not open new accounts, because utilization and age are the only factors affected.
  • Keeping the card open but unused preserves both your credit limit and your account age, and costs nothing if there is no annual fee.

Why closing a card lowers your utilization ratio

Credit utilization is the total balance you owe across all cards divided by your total credit limit across all cards. If you have three cards with $5,000 limits each ($15,000 total) and you owe $3,000 across them, 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 effect is largest if you already carry high balances. If you owe nothing on any card, closing one has almost no effect on utilization because you are at zero percent either way. If you owe $8,000 across your cards, closing a card can push you from 53 percent utilization to 80 percent, and the score drop will be much larger.

This is why the most common information is to keep cards open even after you stop using them — as long as there is no annual fee. An open card with a zero balance helps your utilization ratio and costs you nothing.

How account age affects your score when you close a card

The age of your accounts makes up roughly 15 percent of your credit score. Credit scoring models assume that older accounts show a longer history of managing credit responsibly. When you close an account, that account stops aging and eventually falls off your credit report entirely — usually after seven to ten years, depending on the scoring model.

The damage is worst if you close an old card. Closing a card you opened 20 years ago removes a long history from your report and lowers your average account age. Closing a card you opened six months ago has almost no effect on average age. If the card you want to close is one of your oldest, the score drop from losing account age can be larger than the drop from utilization alone.

This damage also recovers over time. As you keep your other accounts open and active, your average account age rises again, and the score recovers. The recovery is slower than the utilization recovery — it can take a year or more — but it happens automatically.

The difference between closing a card and just stopping using it

You have two choices: close the card formally (by calling the issuer and asking them to close it) or straightforward stop using it. The difference matters for your credit.

If you stop using a card but keep it open, the account stays on your credit report, your credit limit stays in your utilization calculation, and the account keeps aging. Your score is unaffected. The only downside is that the issuer may close the account for inactivity after 12 to 24 months of no use — though many issuers will keep accounts open indefinitely if there is no annual fee.

If you formally close the card, the damage happens when ready. Your credit limit disappears from your utilization calculation, and the account stops aging. If the card has no annual fee, there is no reason to close it. If it has an annual fee and you do not want to pay it, call the issuer and ask if they will waive the fee or downgrade you to a no-fee version of the same card. Many will, which lets you keep the account open without paying.

How long it takes your score to recover

Your score usually recovers within three to six months if you keep paying all bills on time and do not open new accounts. The recovery happens in two stages: utilization recovers first (within a few months), and account age recovers more slowly (over a year or more).

The speed of recovery depends on what you do after closing the card. If you pay down balances on your remaining cards, your utilization drops and your score rises faster. If you open a new card right after closing one, the new account lowers your average age further and slows recovery. If you miss a payment, the recovery stops.

The initial score drop is the worst part. After the first month, the damage usually stabilizes and begins to shrink. By month three or four, most people see their score back to where it was before the closure, assuming they have not made other changes.

When closing a card makes sense despite the score hit

A temporary score drop is worth accepting if the card has an annual fee you do not want to pay and the issuer will not waive it. The damage is usually small enough that it does not affect your ability to borrow — a 30-point drop on a 750 score still leaves you in good standing for most loans.

Closing a card also makes sense if you are carrying a balance on it and the interest rate is high. Paying off the balance and then closing the card is better than keeping the card open and paying interest indefinitely. The score hit is temporary; the interest you save is permanent.

Closing a card does not make sense if it has no annual fee. The cost of keeping it open is zero, and the benefit to your score is real. Even if you never use the card again, leaving it open preserves your credit limit and your account history.

What to do before you close a card

Before you call the issuer to close a card, do three things. First, make sure you have paid off any balance on that card — closing a card with a balance still owed does not forgive the debt, and it can trigger a higher interest rate. Second, check whether the card has an annual fee and whether the issuer will waive it or downgrade you to a no-fee card instead. Third, if you have automatic payments set up on that card, move them to another card or account so they do not fail after closure.

When you call to close the card, ask the issuer to confirm the closure in writing and to send you a letter stating that the account was closed at your request. This protects you if there is a dispute later. After closure, check your credit report within 30 days to make sure the card is marked as closed by you, not by the issuer.

Frequently Asked Questions

Will closing a credit card hurt my score enough to affect a loan I am explore for?

It depends on the timing and your score. If you close a card and then explore for a loan within a few weeks, the score drop could cost you a better interest rate or affect approval. If you close a card now and explore for a loan in three months, the score will have mostly recovered. A 30-point drop on a 750 score usually does not change your loan terms, but a 30-point drop on a 650 score might.

Is it better to close an old card or a new card?

Close the new card if you must close one. Closing an old card lowers your average account age more and causes a larger score drop. If both cards have no annual fee, do not close either one — keep both open.

What if the issuer closes my card for inactivity?

If the issuer closes the card, the damage to your score is the same as if you closed it yourself — your utilization ratio rises and your account age is affected. The difference is that you have no control over the timing. To prevent this, use the card once or twice a year, even for a small purchase you pay off when ready.

Can I reopen a card after I close it?

You can ask the issuer to reopen the account, but they are not required to say yes. If they do reopen it, the account history usually stays on your credit report, so your score recovers faster than if you had opened a brand-new card. Call the issuer within 30 days of closure for the best chance of reopening.

Does closing a card affect my credit history permanently?

No. Closed accounts stay on your credit report for seven to ten years, and they continue to show your payment history during the time you had them open. After they fall off, they no longer affect your score. The temporary score drop from closure is the only lasting effect, and it fades within months.