What Happens to Your Credit Score When You Close a Card?
Closing a card can change your available credit, but the effect depends on your whole credit file. Here is what to weigh before making the call.
By CreditCardDebt Staff3 min read
Closing a credit card can lower your score, mainly because it reduces the total credit you have available. If you carry balances on other cards, those balances suddenly look larger relative to your limits. If you carry no balances at all, the effect is often small. Your credit history doesn’t vanish when you close a card, either; a closed account in good standing usually stays on your report for years.
The utilization math
Credit utilization is your total card balances divided by your total card limits. Under FICO’s model, “amounts owed” makes up about 30% of the score, and utilization is a big part of that.
An example: you have three cards with limits of $5,000, $3,000 and $2,000, so $10,000 in total. You owe $2,500 across them, which is 25% utilization. Close the $5,000 card, which you never use, and your limits drop to $5,000. You still owe $2,500, but now you’re at 50%. Nothing about your spending changed, and the score can still dip.
If you pay your cards in full every month and the statements show low balances, closing an unused card matters much less. Utilization is also calculated fresh each month, so once balances come down the score usually recovers.
What happens to your credit history
People often avoid closing their oldest card because they fear losing years of history. In practice, a closed account in good standing generally stays on your credit report for up to 10 years, and FICO scores still count it toward the age of your accounts while it’s there. The effect on account age usually comes much later, when the account finally drops off the report.
That doesn’t mean age never matters. If the card you’re closing is your only old account and you’re planning a mortgage application, it may be worth waiting.
Good reasons to close a card anyway
A score isn’t the only thing that matters. Closing can be the right call when:
- the annual fee costs more than the card gives back
- having the card makes it too easy to overspend
- you’re juggling more accounts than you can keep track of
- it’s a joint card with an ex or a card someone else can still use
If the fee is the problem, ask the issuer whether you can switch to a no-fee card from the same bank. A product change often keeps the same account and history, though policies differ, so ask what will happen to the limit and account age.
Understanding Credit Score covers the other scoring factors, and Choosing the Right Credit Card can help you decide whether the card still earns its place.
How to close it cleanly
- Move any automatic charges, such as streaming or utilities, to another card.
- Redeem rewards first; most programs forfeit points when the account closes.
- Pay the balance in full if you can. If you can’t, the debt doesn’t disappear: you still owe it, interest keeps accruing, and the issuer can still charge fees that were assessed before you closed it.
- Call or message the issuer, ask to close the account, and request written confirmation.
- A month or two later, check your credit report to make sure it shows “closed by consumer” and the right balance. How to Check Your Credit Score for Free explains where to look.
If you plan to apply for a loan soon, consider waiting until after it closes, and pay down other balances first so the utilization jump is smaller.
Sources
- myFICO: Does closing a credit card boost your FICO Score?
- Experian: How long do closed accounts stay on your credit report?
- OCC HelpWithMyBank: Can the bank charge interest and fees on a closed credit card account?
This article is for educational purposes and is not financial advice.