Closing a credit card usually lowers your credit score, sometimes by 10 to 50 points, because it shrinks the total credit you have available and may raise the percentage of credit you're using on your remaining cards
The damage depends on three things: how much available credit you're losing, how much of your remaining credit you'll be using, and how old the card is. If you close a card with a $5,000 limit and you're carrying balances on other cards, your score will drop more than if you close a card you never used. If the card is very old, closing it also removes a long payment history from your report, which can hurt you further.
The good news is that the drop is usually temporary. Your score will recover over a few months as you keep paying on time and your credit usage settles into a new pattern. The bad news is that closing a card is permanent — you can't undo it — so it's worth understanding what happens before you do it.
Key Takeaways
- Closing a credit card reduces your available credit, which raises your credit utilization ratio (the percentage of your credit limit you're using) and typically lowers your score by 10 to 50 points.
- The older the card, the more your score may drop, because closing it removes a long payment history from your credit report.
- If you're carrying balances on other cards, closing a card with a high limit will hurt your score more than closing one with a low limit.
- Your score will usually recover within a few months of closing the card, as long as you keep paying on time and don't increase your balances on other cards.
- Downgrading to a no-annual-fee version of the same card, or straightforward not using the card, avoids the score drop while keeping the account open.
Why available credit matters to your score
Credit scoring models care about credit utilization — the percentage of your total available credit that you're actually using. If you have $10,000 in available credit across all your cards and you're carrying a $2,000 balance, your utilization is 20 percent. If you close a card with a $5,000 limit, your available credit drops to $5,000, and that same $2,000 balance now represents 40 percent utilization. The scoring model sees higher utilization as riskier, so your score drops.
This is why closing your oldest or highest-limit card does the most damage. A $500-limit card you opened last year will hurt less than a $10,000-limit card you've had for 15 years. The high-limit card is doing more work for your score by sitting there unused.
The utilization hit is temporary because it's based on your current balances and available credit. Once you close the card, the damage is done, but it won't get worse. If you then pay down your balances on your remaining cards, your utilization will improve and your score will climb back up.
How the age of the card affects the damage
Every account on your credit report contributes to your average age of accounts, which makes up about 15 percent of your credit score. When you close a card, it doesn't disappear from your report when ready — it stays there for about 10 years — but it stops being counted as an active account. This can lower your average age, especially if the card is very old.
If you have five cards and four are new, closing your oldest card will hurt more than closing a newer one. The older the card, the more it was helping your score by being there. This is one reason financial advisors often recommend keeping your oldest card open even if you don't use it.
The age hit is also temporary. As your other cards age, your average account age will climb back up, and the closed card will eventually fall off your report after 10 years.
What happens to your payment history when you close a card
Closing a card does not erase your payment history on that card. The account will stay on your credit report for about 10 years, and all the on-time payments you made will remain visible to lenders. This is different from the utilization hit or the age hit — your payment history doesn't get worse when you close the card.
However, a closed account stops building new payment history. If you were using the card regularly and paying it off each month, closing it means you lose that monthly demonstration of responsible credit use. This is a small effect compared to the utilization hit, but it's worth knowing.
When closing a card makes sense despite the score drop
If you have an annual fee and you're not using the card, closing it may be worth the score hit. Call the card issuer and ask if they'll downgrade you to a no-annual-fee version of the same card instead — many will do this without closing the account. You keep the available credit and the payment history, and you stop paying the fee. This is the best outcome.
If downgrading isn't an option and the annual fee is high, closing the card might still make sense. A $95 annual fee over five years is $475 — more than the temporary score drop will cost you in higher interest rates. Just don't close multiple cards at once, and try to close the newest card rather than the oldest.
Closing a card also makes sense if you're trying to reduce the temptation to overspend or if you're recovering from debt and need to simplify your accounts. The score hit is real, but it's temporary. Your financial health matters more than a three-digit number.
How to minimize the score damage if you must close a card
If you've decided to close a card, do these things in order to limit the damage. First, pay down any balance on the card to zero before you close it. Closing a card with a balance can hurt your score more than closing one that's paid off, because the balance gets reported as part of your utilization on that card right up until it closes.
Second, wait at least a few months after closing the card before you explore for new credit. A new process triggers a hard inquiry, which lowers your score slightly. If you explore right after closing a card, the two hits stack up. Waiting gives your score time to recover from the closure before you add another dent.
Third, don't close multiple cards in a short period. Each closure lowers your available credit and your average age. Spread them out over several months or years if you can. And if you have a choice, close the newest card rather than the oldest — you'll lose less of your average age.
The difference between closing a card and stopping using it
You don't have to close a card to stop using it. You can straightforward put it in a drawer and never charge on it again. The account stays open, your available credit stays the same, and your average age keeps growing. The only downside is that some issuers will close inactive accounts after 12 to 24 months of no activity, though this is becoming less common.
If you're worried about an annual fee, call and ask to downgrade to a no-fee version. If you're worried about fraud on an old account, you can ask the issuer to freeze it or set it to require a call before any charges go through. These options let you keep the score benefits of the account without paying a fee or using the card.
The only real reason to close a card is if you want the account completely gone — because you're simplifying your finances, because you're trying to break a spending habit, or because the issuer is closing it for you. If you're closing it just to "clean up" your credit report, stopping using it is a better move.
Frequently Asked Questions
How much will my score drop if I close a credit card?
Most people see a drop of 10 to 50 points, depending on how much available credit they're losing and how much of their remaining credit they're using. If you're closing a high-limit card and carrying balances on other cards, the drop will be on the higher end. If you're closing a low-limit card you never used, the drop will be smaller.
Will my score recover after I close a card?
Yes, usually within a few months. The drop is temporary because it's based on your current utilization and account age. As you pay down balances and your other accounts age, your score will climb back up. The closed account will stay on your report for about 10 years, so the damage is not permanent.
Should I close a credit card before explore for a mortgage?
No. Closing a card lowers your score right before you explore for a mortgage, which will increase the interest rate the lender offers you. If you want to close a card, do it at least six months before you plan to explore for a mortgage, so your score has time to recover.
What if the card issuer closes my account without asking?
Issuers sometimes close accounts due to inactivity or because they're reducing their portfolio. If this happens, the damage to your score is the same as if you closed it yourself — your available credit drops and your average age may fall. You can't prevent this, but you can minimize it by using all your cards occasionally, even if it's just a small charge every few months.
Is it better to close a card or let it sit unused?
Letting it sit unused is almost always better. You keep the available credit, the payment history, and the account age. The only downside is that the issuer might close it for inactivity, but this is rare. If the card has an annual fee, call and ask to downgrade to a no-fee version instead of closing it.