Cancelling a credit card will lower your credit score, usually by 10 to 50 points, but the damage is temporary if you manage what happens next.
When you close a card, your credit score drops because two things change when ready: your total available credit shrinks, and the ratio between what you owe and what you can borrow gets worse. A card with a $5,000 limit that you never used was helping your score by sitting there unused. Once it closes, that $5,000 disappears from your available credit, even if you owe nothing on it.
The score hit is not permanent. Most of the damage fades within three to six months as long as you keep your remaining cards in good standing. The bigger risk is what you do with the credit you still have — if you close a card and then run up balances on your other cards, your score will stay down much longer.
Key Takeaways
- Closing a card reduces your total available credit, which makes your credit utilization ratio worse and typically lowers your score by 10 to 50 points.
- The score drop is temporary if you do not increase balances on your remaining cards, and most damage recovers within three to six months.
- Older cards hurt your score more when closed because they contribute to the length of your credit history, which makes up 15 percent of your score.
- Keeping a card open but unused is usually better for your score than closing it, even if you never plan to use it again.
- If you must close a card, do it when your credit utilization is already low and you have no plans to borrow money soon.
Why closing a card damages 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 limits of $5,000 each (total $15,000 available) and you carry a $3,000 balance, your utilization is 20 percent. Close one card, and your available credit drops to $10,000, making that same $3,000 balance equal 30 percent utilization.
Credit scoring models treat higher utilization as riskier, so your score drops even though you owe the same amount of money. This is the main reason closing a card hurts. The effect is strongest if you close a card with a high limit or if you already carry balances on your other cards.
You can reduce this damage by paying down balances before you close the card, or by closing the card with the lowest limit rather than the highest. If you have $10,000 in total limits and $5,000 in balances, closing a $2,000 card leaves you with $8,000 available and 62 percent utilization. Closing a $5,000 card leaves you with $5,000 available and 100 percent utilization — much worse.
How the age of the card affects the score drop
Older cards hurt your score more when you close them. Your credit history length makes up 15 percent of your credit score. When you close your oldest card, you are removing the account that has been helping you the most on this factor. A card you opened 15 years ago is worth more to your score than a card you opened last year.
If you have a choice between closing an old card and closing a new one, close the new one. If your oldest card is the one you want to close, consider keeping it open instead — use it once or twice a year for a small purchase and pay it off when ready, just to keep the account active.
The age of the card also affects how long the damage lasts. Closing a new card might cost you 10 points for a few months. Closing a card you have had for a decade might cost you 30 to 50 points, and the recovery takes longer because the scoring model is adjusting to a shorter average age across all your accounts.
What happens to your credit report after you close a card
The card does not disappear from your credit report when you close it. It stays on your report for seven years, marked as "closed by consumer" or "closed by issuer." During those seven years, the account still counts toward your credit history length, though with less weight than an open account.
After seven years, the closed account falls off your report entirely. At that point, if it was your oldest account, your average account age drops again and your score may dip a second time — but this is usually smaller than the initial drop because you have had years to build other history.
If the card had a late payment or other negative mark on it, closing the card does not erase that mark. The negative information stays for seven years regardless of whether the account is open or closed.
When closing a card does less damage
The score hit is smallest when you close a card and your credit utilization is already low. If you use only 10 percent of your available credit across all your cards, closing one card might barely move your score because you still have plenty of unused credit left.
Closing a card also does less damage if you are not planning to borrow money soon. Credit scores matter most when you are explore for a mortgage, auto loan, or new credit card. If you close a card six months before you plan to explore for a mortgage, your score will have recovered by the time the lender pulls it. If you close a card two weeks before you explore, the lender sees the lower score.
Closing a newer card (one you have had for less than two years) does less damage than closing an old one, because the age factor is smaller. A card you opened last month is not contributing much to your credit history length yet, so removing it is less costly.
Reasons to keep a card open instead of closing it
The simplest way to avoid the score drop is to not close the card. Keep it open, stop using it if you want, and let it sit. The card will continue to help your score by adding to your available credit and your account age, with no effort on your part.
Some people worry about annual fees, but most cards with annual fees also have a way to downgrade to a no-fee version of the same card. Call the issuer and ask if you can switch to a different card in their product line that has no annual fee. This keeps the account open and preserves your history, but eliminates the cost.
If the card has no annual fee and you are not tempted to overspend, there is almost no reason to close it. The only real reasons to close a card are if it charges an annual fee you cannot avoid, if the issuer is closing it for you, or if keeping it open creates a genuine risk that you will overspend.
Steps to take if you decide to close a card
If you have decided to close the card, do it strategically. First, pay off any balance on the card so you are closing it with a zero balance. This prevents the issuer from reporting a balance after the account closes, which can confuse your utilization calculation.
Second, wait until your credit utilization on your other cards is low. If you normally carry a balance, pay it down before you close the card. This gives you room to absorb the loss of available credit without your utilization spiking.
Third, call the issuer and ask them to close the account. Do not just stop using it — an unused card might be closed by the issuer after a long period of inactivity, and you want to control the timing. When you call, confirm that they will report the account as "closed by consumer" and ask them to send you written confirmation.
Fourth, do not close multiple cards at once. If you need to close more than one, space them out by several months so your score has time to recover between closures.
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 the card's limit, age, and how much credit you have available elsewhere. Closing an old card with a high limit hurts more than closing a new card with a low limit. The drop is usually largest in the first month and then gradually recovers.
Will my score recover if I close a card?
Yes, most of the damage recovers within three to six months as long as you do not increase balances on your remaining cards. The closed account stays on your report for seven years and continues to help your credit history length, so the recovery is usually complete within half a year.
Is it better to close a card or leave it open and unused?
Leaving it open is almost always better for your score. An unused card with no annual fee costs you nothing and helps your score by adding available credit and account age. Close it only if it charges an annual fee you cannot avoid or if you genuinely cannot trust yourself not to overspend.
Can I reopen a card after I close it?
Some issuers will reopen a recently closed account if you call within a few weeks, but this is not may provide. If you close a card and then change your mind, contact the issuer when ready. Even if they reopen it, the account may be reported as closed for a period, so reopening is not a clean solution.
Should I close a card before explore for a mortgage?
No. Close cards at least six months before you explore for a mortgage so your score has time to recover. If you are planning to explore soon, keep all your cards open and focus on paying down balances instead.