Closing a card usually lowers your credit score, but the damage depends on how much credit you're using and how old the card is
When you close a credit card account, your credit score typically drops. The drop is not automatic or permanent, but it happens because closing a card changes two of the five factors that make up your score: your credit utilization ratio (how much of your available credit you're using) and your length of credit history (how long you've had accounts open).
The size of the drop varies. If you close a card with a high balance, the impact is usually larger. If you close an old card, the impact is usually larger. If you close a new card with a zero balance, the impact is usually smaller. The score typically recovers within a few months as long as you don't miss payments or run up balances on your remaining cards.
Key Takeaways
- Closing a card reduces your total available credit, which raises your credit utilization ratio and lowers your score.
- Closing an old card removes years of payment history from your active accounts, which can lower your score more than closing a new card.
- The damage is usually temporary if you keep balances low on your other cards and make all payments on time.
- If you want to close a card without harming your score, pay off the balance first and close a newer card rather than an older one.
How credit utilization ratio works when you close a card
Your credit utilization ratio is the total balance you owe divided by your total available credit across all your cards. If you have three cards with $1,000 limits each ($3,000 total) and you owe $600 across them, your utilization is 20 percent. Credit scoring models favor utilization below 30 percent.
When you close a card, you lose that card's credit limit. If you close one of the $1,000 cards above, your total available credit drops to $2,000. If you still owe $600, your utilization jumps to 30 percent. That change alone can lower your score by a few points. If the card you're closing has a balance on it, the damage is worse: closing a card with a $500 balance would push utilization to 55 percent in the example above.
This is why paying off the balance before closing is important. A zero-balance card closing removes the limit but adds nothing to your owed balance, so the ratio improves slightly compared to closing a card you still owe on.
Why closing an old card costs more points than closing a new one
Credit scoring models care about how long you've had accounts open. An account that's been open for 10 years carries more weight than one that's been open for 10 months. When you close an old account, you remove years of positive history from your active accounts.
The account doesn't disappear from your credit report when ready — closed accounts stay on your report for up to 10 years — but they stop counting toward your average age of accounts once they're closed. If you have five cards, four of them new and one that's 15 years old, closing the old one cuts your average account age significantly. A newer card closing has less impact because the average age doesn't drop as far.
This is why financial advisors often recommend keeping your oldest card open even if you don't use it. The score hit from closing it is usually larger than the benefit of closing it.
How long the score drop lasts
A credit score drop from closing a card is not permanent. The damage typically peaks within a month and begins to recover within three to six months, assuming you don't add new negative information (missed payments, new debt, hard inquiries from new card applications).
The recovery speed depends on your overall credit behavior. If you have a long history of on-time payments and low balances, your score recovers faster because the scoring model sees the closed card as a minor change in an otherwise stable profile. If you have recent late payments or high balances, recovery takes longer because the model is already viewing you as higher-risk.
When closing a card makes sense despite the score hit
A lower score for a few months is sometimes worth it. Close a card if you're paying an annual fee you don't want to pay anymore, especially if the card is newer and has a small limit. The fee cost over time usually outweighs a temporary score drop.
Close a card if you're carrying a balance on it and the card has a high interest rate. Paying off the balance and closing it stops you from accumulating more debt on that account. The score hit is temporary; the interest you'd pay if you kept the card open is real money.
Do not close a card just because you're not using it. An unused card with a zero balance helps your utilization ratio and your account age. The only reason to close it is if it has an annual fee or if you're concerned about fraud risk (though you can usually call the issuer and ask them to flag the account as inactive instead).
Steps to minimize the score impact if you decide to close a card
Pay off the full balance before you close the account. This removes the balance from your utilization calculation and prevents the issuer from reporting a high balance to the credit bureaus after you close it.
Close a newer card rather than an old one if you have a choice. The older the card, the more history you lose. If you have a card that's been open for two years and one that's been open for 15 years, close the two-year-old card.
Wait to close the card until after a major financial event (a mortgage process, a car loan process, a job that requires a credit check). These events trigger hard inquiries and can lower your score temporarily. Closing a card at the same time compounds the damage. Wait at least three months after the event before closing.
Call the issuer and ask if they'll convert the card to a no-annual-fee version instead of closing it. Many issuers will do this to keep the account open. You keep the credit limit and the history, and you avoid the fee.
The difference between closing a card and paying it off
Paying off a card and closing a card are not the same thing. You can pay off a balance and keep the account open. The account still counts toward your age of accounts and your available credit. Your utilization improves because the balance is zero. There is no score hit.
Closing a card means telling the issuer you want the account terminated. The account stops being active, and the credit limit no longer counts toward your available credit. This is what causes the score drop. If you want to keep a card but stop using it, just pay it off and leave it open. You get all the benefits with none of the damage.
Frequently Asked Questions
Will closing a card hurt my credit score?
Yes, usually. Closing a card reduces your available credit and removes the account from your active history, both of which lower your score. The drop is typically a few points to 20 or 30 points depending on the card's age and balance. The damage is temporary if you keep other balances low and make on-time payments.
How much will my score drop if I close a card?
There's no fixed amount — it depends on the card's age, the balance you're closing with, and your overall credit profile. Closing a new card with a zero balance might drop your score by 5 to 10 points. Closing an old card with a balance might drop it by 20 to 50 points. The drop is usually largest in the first month and recovers over three to six months.
Should I close a credit card I'm not using?
Usually no. An unused card with a zero balance helps your credit utilization and your account age. Keep it open unless it has an annual fee. If it does have a fee, call the issuer and ask if they'll convert it to a no-fee version before you close it.
Does it matter which card I close if I have multiple cards?
Yes. Close a newer card rather than an old one. Closing an old card removes more history from your profile and usually causes a larger score drop. If you have a choice between closing a card that's two years old and one that's 15 years old, close the two-year-old card.
Can I reopen a card after I close it?
Sometimes. Some issuers will reopen a closed account if you ask within a certain window (often 30 to 60 days). Others will not. If you're unsure whether you want to close a card, call the issuer and ask about their policy before you close it. Reopening is easier than explore for a new card because the issuer already has your information.