Closing a credit card usually lowers your credit score, but the damage is temporary and smaller than most people fear
When you close a credit card, your credit score typically drops by a few points to as much as 50 points, depending on which card you close and how you're using your other cards. The drop happens because closing an account changes two things that credit bureaus track: your total available credit and the age of your credit history. Neither change is permanent, and neither is a reason to keep a card you don't want.
The size of the hit depends on what role that card plays in your credit profile right now. If you're closing your oldest card, the damage is usually larger. If you're closing a card you rarely use while you have other cards open, the damage is usually smaller. The good news: your score bounces back within a few months if you keep paying other bills on time.
Key Takeaways
- Closing a credit card reduces your available credit, which can raise your credit utilization ratio and lower your score temporarily.
- If the card you're closing is your oldest account, closing it shortens your average account age, which also lowers your score.
- The score drop is usually temporary — most people see their score recover within three to six months of closing the card.
- Closing a card you're not using is often better than keeping it open if you're worried about fraud or tempted to overspend.
Why closing a card affects your credit utilization ratio
Credit utilization is the percentage of your total available credit that you're actually using. If you have three cards with $5,000 limits each and you're carrying a $3,000 balance on one of them, your utilization is 20 percent ($3,000 divided by $15,000). Credit bureaus like to see utilization below 30 percent, and closing a card shrinks the denominator.
If you close one of those $5,000 cards, your total available credit drops to $10,000. That same $3,000 balance now represents 30 percent utilization instead of 20 percent. Your score drops because the ratio moved in the wrong direction. The effect is larger if you're already carrying high balances across your remaining cards.
This is why closing a card you don't use is less damaging than closing one you do use. If you close a card with a zero balance, you're reducing available credit but not changing the numerator — the amount you actually owe. The utilization ratio still rises, but the damage is smaller.
How closing your oldest card affects your credit age
Credit bureaus track the average age of your accounts. An older credit history suggests you've managed credit responsibly over time. When you close your oldest card, that account stops counting toward your average age, which can lower your score.
The damage is usually bigger if the card you're closing is significantly older than your other accounts. If you're closing a card you've had for 15 years and your other cards are only three years old, closing it pulls down your average age more noticeably than if all your cards are roughly the same age.
One thing to know: closing a card doesn't erase it from your credit history when ready. The account stays on your report for seven to ten years after you close it, and during that time it still counts toward your average age — just with less weight than an active account. So the damage to your credit age is real but not as severe as losing the account entirely.
When closing a card is worth the score drop
A temporary score drop is worth it if keeping the card open costs you money or puts you at risk. If a card has an annual fee and you're not using it, closing it saves you that fee every year. If you're worried you'll overspend on a card you don't need, closing it removes that temptation. If you're concerned about fraud or identity theft, closing unused accounts reduces the number of accounts a thief could potentially open in your name.
The score drop also matters less if you're not planning to borrow money soon. If you're not explore for a mortgage, car loan, or new credit card in the next few months, the temporary hit to your score has no practical consequence. Your score will recover before you need it.
Compare the cost of keeping the card open against the cost of the score drop. If the annual fee is $95 and the score drop costs you nothing because you're not borrowing, close it. If the card is free and you're explore for a mortgage next month, keeping it open is probably the better choice.
How to minimize the damage if you decide to close a card
If you've decided to close a card, a few steps can soften the blow. First, pay down any balance on that card to zero before you close it. This prevents your utilization ratio from spiking on your remaining cards when the available credit disappears.
Second, don't close multiple cards at once. Closing several accounts in a short time creates a bigger utilization spike and makes a larger dent in your average account age. If you have three cards you want to close, space them out over several months.
Third, keep making on-time payments on your other accounts while you're waiting for your score to recover. Payment history is the single largest factor in your credit score, and consistent on-time payments will offset the damage from closing the card faster than anything else.
What happens to the closed account on your credit report
After you close a card, the account stays on your credit report but shows a status of "closed by consumer" or "closed by cardholder." This status tells lenders you made the decision to close it, which is better than "closed by creditor" (which suggests the lender closed it, usually because of missed payments).
The account remains on your report for seven to ten years, depending on your state and the type of account. During that time, it still appears in your credit history and still counts toward your average account age, though with less weight than an active account. After seven to ten years, the account falls off your report entirely.
If you closed the account in good standing — meaning you paid it off and didn't miss payments — the closed account actually helps your credit profile slightly by showing you can manage credit responsibly. It's only the temporary drop in available credit and average age that causes the score dip.
The difference between closing a card and just not using it
If you're unsure about closing a card, you have another option: stop using it but leave it open. This preserves your available credit and keeps the account age intact, so your score doesn't drop at all. The downside is that you have to monitor the account to make sure it doesn't get compromised, and you have to keep track of one more card.
Some people leave old cards open specifically to preserve their credit age and available credit. If a card is free and you're comfortable leaving it alone, this is a reasonable approach. If the card has an annual fee or you're worried about fraud, closing it is the better choice despite the temporary score hit.
One caution: if you leave a card open but unused, make sure the issuer doesn't close it for inactivity. Some card companies close accounts that haven't been used in 12 months or longer. If you want to keep an old card open, use it occasionally — even a small purchase every few months is enough to keep the account active.
Frequently Asked Questions
How much will my score drop if I close a credit card?
The drop usually ranges from a few points to 50 points, depending on which card you close and your current credit profile. Closing your oldest card or a card with a high limit typically causes a bigger drop than closing a newer card with a low limit. The drop is temporary — most people see their score recover within three to six months.
Should I close a credit card before explore for a mortgage?
No. Close cards at least three to six months before you explore for a mortgage, so your score has time to recover. If you're explore for a mortgage soon, leave cards open even if you don't use them. The temporary score drop from closing a card can cost you a higher interest rate on a mortgage, which is much more expensive than any annual fee.
Will closing a card hurt my credit if I have other cards open?
Yes, but less than if it's your only card. The damage depends on how much credit you're using across your remaining cards. If you have other cards with low balances, the impact is smaller. If your remaining cards are nearly maxed out, closing a card will raise your utilization ratio more noticeably.
Can I reopen a credit card after I close it?
It depends on the card issuer. Some issuers will reopen a recently closed account if you call and ask. Others treat a closed account as a new process, which means a hard inquiry and a new account age. Call the issuer before you close the card if you think you might want to reopen it later.
Does closing a card affect my ability to get new credit?
Closing a card lowers your score temporarily, which can make it slightly harder to get approved for new credit in the short term. But the effect is small and temporary. If you're not planning to explore for new credit for several months, closing a card has no practical impact on your ability to borrow.