Closing a credit card will lower your credit score, usually by 10 to 50 points, because it reduces the total credit available to you and may raise the percentage of credit you are actively using.
The damage is temporary. Your score will recover over time as you build a positive payment history on your remaining cards. The hit is smaller if you close a card with a low balance or if you have other cards with available credit. It is larger if you close your oldest card or your only card with a high credit limit.
Whether you should close a card depends on whether the cost of keeping it open (annual fee, temptation to spend) outweighs the credit score damage. For most people, the score recovery happens within three to six months of closing the card, so the decision is not permanent.
Key Takeaways
- Closing a credit card reduces your available credit, which raises your credit utilization ratio and typically lowers your score by 10 to 50 points.
- The damage is usually temporary; your score will recover within three to six months if you keep other accounts in good standing.
- Closing your oldest card or your only high-limit card causes more damage than closing a newer or lower-limit card.
- If the card has no annual fee and you are not tempted to use it, keeping it open costs you nothing and protects your score.
- Closing a card does not erase the payment history attached to it; that history stays on your credit report for seven years.
Why closing a card hurts your credit utilization ratio
Credit utilization is the percentage of your total available credit that you are currently using. If you have three cards with $5,000 limits each (total $15,000 available) and you carry a $3,000 balance, your utilization is 20 percent. If you close one of those cards, your available credit drops to $10,000, and your utilization jumps to 30 percent — even though you did not spend any more money.
Credit scoring models treat higher utilization as a sign of financial stress. A utilization above 30 percent starts to lower your score; above 50 percent lowers it more. Closing a card can push you over that threshold. The effect is strongest if you close a high-limit card or if you already carry balances on your other cards.
You can reduce this damage by paying down balances before you close the card. If you pay the card to zero before closing it, the utilization hit is smaller because you are not carrying a balance on the remaining cards.
How the age of the card matters
Credit scoring models also look at the average age of your accounts. Closing your oldest card lowers that average and can hurt your score more than closing a newer card. If your oldest card is 15 years old and you close it, the average age of your remaining accounts drops when ready.
This is one reason to keep old cards open even if you do not use them. The card itself does not hurt you if it sits unused; the damage comes only when you close it. If the card has no annual fee, there is no cost to leaving it open.
If the card does charge an annual fee and you want to close it, the score damage is usually worth it. You will recover the points within a few months, and you will save the fee amount every year going forward.
What happens to your payment history when you close a card
Closing a card does not erase the payment history you built on it. That history stays on your credit report for seven years, continuing to help your score as long as the account shows on-time payments. The account will show as "closed" on your report, but the positive history remains.
This means closing a card does not undo the benefit of years of on-time payments. It only removes the card from your active credit mix and reduces your available credit. The historical record stays intact.
When the score damage is smallest
Closing a card hurts less if you close a newer card rather than an old one, or if you close a low-limit card rather than a high-limit one. The damage is also smaller if you have other cards with available credit and you are not carrying high balances on them.
If you have five cards and you close one, the impact is smaller than if you have two cards and you close one. The more credit available to you overall, the less the loss of one card matters to your utilization ratio.
You can also time the closure to minimize the damage. If you are planning to explore for a loan or mortgage in the next few months, close the card now rather than right before you explore. Your score will have time to recover before the lender pulls your credit report.
Alternatives to closing a card
If you want to stop using a card but do not want to close it, you can straightforward stop charging to it and leave it open. This keeps your available credit intact and preserves the account age. The card issuer may close it for inactivity after a year or two, but you can prevent this by making a small charge every few months.
If the card has an annual fee and you want to avoid paying it, call the issuer and ask if they will waive the fee or convert the card to a no-fee version. Many issuers will do this to keep the account open. If they refuse, then closing the card may be worth the score hit.
If you are closing the card because you are tempted to overspend, cutting up the physical card or removing it from your digital wallet is enough. You do not have to close the account itself.
How long the score recovery takes
Most people see their score recover within three to six months of closing a card, assuming they continue to pay their other bills on time and do not increase their balances. The recovery is faster if you pay down balances on your remaining cards, because that lowers your utilization ratio back down.
The exact timeline depends on your overall credit profile. If you have a long history of on-time payments and low utilization on your other cards, you will recover faster. If you have recent late payments or high balances elsewhere, the recovery may take longer.
The score damage from closing a card is not permanent. It is a temporary dip that reverses as your credit history continues to build. This is different from a late payment, which stays on your report for seven years and continues to hurt your score the whole time.
Frequently Asked Questions
Will closing a credit card hurt my score if I have no balance on it?
Yes, but less than if you had a balance. Closing the card still reduces your available credit and may raise your utilization ratio on your other cards. The damage is smaller because you are not losing a card that was carrying debt, but the available credit loss still matters.
Should I close a card with an annual fee?
Usually yes. The annual fee costs you money every year, while the score damage from closing is temporary and typically recovers within three to six months. Call the issuer first and ask if they will waive the fee or convert the card to a no-fee product. If they refuse, closing the card is usually the better choice.
What if I close a card and my score drops right before I explore for a mortgage?
The timing matters. If you close a card and then explore for a mortgage within a month, the score drop will be reflected in the lender's credit pull. If you can wait three to six months, your score will recover. If you cannot wait, it is better to keep the card open until after the mortgage closes.
Can I reopen a credit card after I close it?
It depends on the issuer. Some will reopen a closed account if you ask within a short window, usually 30 to 60 days. After that, you would have to explore for a new card, which counts as a new account and resets the age clock. If you think you might want the card back, ask the issuer about their reopen policy before you close it.
Does closing a card affect my ability to get approved for new credit?
Closing a card lowers your score, which can make it slightly harder to get approved for new credit or get the best interest rates. The effect is usually small and temporary. A bigger factor in approval is your payment history and current debt levels. One closed card is unlikely to cause a denial if your overall credit is solid.