Closing a Credit Card Lowers Your Score, Usually by 10 to 50 Points
Closing a credit card typically hurts your credit score because it removes available credit from your account and can change the ratio between what you owe and what you can borrow. The damage is not permanent — your score will recover over time — but the drop happens when ready when you close the account.
The size of the hit depends on how much credit you were using. If you had a $5,000 limit and carried a $1,000 balance, closing that card raises your overall credit utilization ratio (the percentage of your total available credit that you are using). That ratio is one of the largest factors in how credit bureaus calculate your score.
The damage is usually smaller if you close a card with a zero balance or if you have other cards with available credit. It is larger if the card you are closing is your oldest account, because credit bureaus also weight how long you have held credit.
Key Takeaways
- Closing a credit card removes available credit from your account, which raises your credit utilization ratio and typically lowers your score by 10 to 50 points.
- The damage is temporary and your score will recover as you pay down balances and build new credit history, usually within three to six months.
- Closing your oldest card causes more damage than closing a newer one, because credit age is a significant scoring factor.
- If you want to close a card without harming your score, pay the balance to zero first and close a newer card rather than your oldest one.
Why Credit Utilization Matters More Than You Think
Credit utilization is the percentage of your total credit limit that you are currently using across all your cards. If you have three cards with $5,000 limits each (total $15,000) and you owe $3,000 total, your utilization is 20 percent. Credit bureaus prefer to see utilization below 30 percent.
When you close a card, you lose that card's credit limit from the total available to you. If you close one of the $5,000-limit cards in the example above, your total available credit drops to $10,000, and your utilization jumps from 20 percent to 30 percent — even though you still owe $3,000. That change alone can lower your score.
The damage is worse if you carry a balance on your remaining cards. If you close a card and still owe $3,000 on other cards, but now have only $10,000 total available, you have moved from a healthy utilization ratio to one that credit bureaus flag as riskier.
How Long It Takes Your Score to Recover
Your score will begin to recover as soon as you close the card, but the recovery is gradual. Most people see their score return to its previous level within three to six months, depending on how much damage the closure caused and how quickly you pay down any remaining balances.
The recovery speeds up if you actively work to lower your utilization ratio. Paying down balances on your remaining cards will raise your score faster than waiting for time to pass. Each payment you make reduces the percentage of credit you are using, which is one of the fastest ways to improve a score after a closure.
If you closed your oldest card, the recovery takes longer because credit age does not improve quickly. Your score will still recover, but the loss of that account's history will weigh on your score for several years, even as the when ready damage from the closure fades.
When Closing a Card Does Less Damage
Closing a card with a zero balance causes less damage than closing one with a balance, because you are not raising your utilization ratio. If you paid off the card completely before closing it, the closure itself is the only negative factor — you are not also dealing with higher utilization on your remaining cards.
Closing a newer card causes less damage than closing your oldest card. Credit bureaus weight the age of your accounts, so losing a card you opened two years ago is less harmful than losing one you opened ten years ago. If you have to close a card, closing a newer one protects your credit age.
Closing a card when you have other cards with high available credit also softens the blow. If you have five cards and close one, the impact on your total available credit is smaller than if you have only two cards and close one. The more credit you have available elsewhere, the less your utilization ratio will rise.
Reasons to Keep a Card Open Even If You Do Not Use It
Many people close cards they no longer use, thinking an unused card does not matter. In fact, an unused card with a zero balance helps your credit score by keeping your utilization ratio low. The card counts toward your total available credit even if you never charge anything to it.
An old card that you never use is especially valuable to keep open. The longer you hold an account, the higher your average account age becomes. Closing your oldest card removes that history from your credit report, which can lower your score for years.
If you are worried about fraud or temptation, you can keep the card open without using it. You do not have to carry a balance or make purchases. Just let it sit in a drawer or safe place. The card will continue to help your score by existing.
What Happens to Your Credit Report After You Close a Card
When you close a credit card, the account stays on your credit report for seven to ten years, depending on whether the account was in good standing. During that time, the closed account still counts toward your credit history, but it no longer contributes to your available credit.
The account will show as "closed" on your report, which is different from "open." Credit bureaus can see that you closed it, but they also see that you held the account for however long you had it. That history does not disappear when you close the card.
After seven to ten years, the closed account will fall off your credit report entirely. At that point, it no longer affects your score at all. Until then, it remains part of your credit history, which is why closing an old card can hurt your score for years.
Steps to Minimize Damage If You Must Close a Card
If you have decided to close a card, take these steps to reduce the impact on your score. First, pay the balance to zero before you close it. This prevents your utilization ratio from rising when you lose that card's credit limit.
Second, close a newer card rather than your oldest one if you have a choice. Your oldest card has more credit history attached to it, so keeping it open protects your average account age. If you opened one card five years ago and another two years ago, close the newer one.
Third, wait to close the card if you are about to explore for a loan or mortgage. Closing a card lowers your score, and a lower score can affect the interest rate you receive. If you can wait three to six months after closing the card, your score will have time to recover before you explore for new credit.
Fourth, do not close multiple cards at once. Each closure lowers your score, and closing several cards in a short time can cause a significant drop. If you need to close more than one card, space the closures out over several months.
Frequently Asked Questions
Will closing a credit card remove it from my credit report?
No. Closed accounts stay on your credit report for seven to ten years. The account will show as "closed," but it remains part of your credit history and continues to affect your score during that time. After seven to ten years, it will fall off your report entirely.
Is it better to close a card or just stop using it?
Stopping using it is better. An unused card with a zero balance helps your score by keeping your available credit high and your utilization ratio low. You can keep the card open indefinitely without using it. Closing it removes that benefit and lowers your score.
Can I close a card without hurting my credit score?
You cannot close a card without any impact, but you can minimize the damage. Pay the balance to zero first, close a newer card instead of your oldest one, and wait until you do not need your score for a loan or mortgage process. The damage will be smaller and will fade within three to six months.
Does closing a card affect my ability to get new credit?
Closing a card lowers your score, which can make it harder to get new credit or cause you to receive a higher interest rate. The effect is temporary — your score will recover within a few months — but if you are planning to explore for a loan or mortgage soon, it is better to wait until after your score has recovered.
What if I closed a card and my score dropped more than I expected?
The drop is temporary. Focus on paying down balances on your remaining cards to lower your utilization ratio, which is the fastest way to raise your score after a closure. Your score should return to its previous level within three to six months. Avoid closing any other cards during this time.