Closing a credit card usually does hurt your credit score, but the damage is temporary and often smaller than people fear
When you close a credit card, your credit score typically drops. The drop happens because closing the account changes two things that credit bureaus track: your credit utilization ratio (the percentage of your available credit you're using) and your average age of accounts (how old your credit history is on average). Neither change is permanent, and neither means you made a mistake by closing the card.
The size of the drop depends on which card you're closing and what your credit profile looks like right now. If you're closing a card with a high credit limit and a zero balance, the hit is usually bigger than closing a card with a small limit. If you have only three credit cards total, closing one hurts more than if you have ten. Most people see a drop of 5 to 25 points, though it can be larger in specific situations.
The good news: the damage reverses on its own. Your score bounces back as you keep making on-time payments and as the closed account ages. Within a few months to a year, most people recover the points they lost.
Key Takeaways
- Closing a credit card lowers your utilization ratio (the percentage of credit you're using), which usually causes a temporary score drop of 5 to 25 points.
- The older the card you're closing, the more your average account age drops, which can make the score hit larger.
- Your score recovers on its own as you continue making on-time payments and as months pass.
- Closing a card is sometimes worth the temporary score drop if you're paying annual fees, carrying a balance, or managing accounts you don't use.
How closing a card changes your credit utilization
Credit utilization is the total balance you owe divided by your total available credit across all cards. If you have three cards with $5,000 limits each ($15,000 total) and you owe $3,000 across them, your utilization is 20 percent. Credit bureaus like to see utilization below 30 percent.
When you close a card, you lose that card's credit limit. If you close one of the $5,000-limit cards in the example above, your total available credit drops to $10,000. If you still owe $3,000, your utilization jumps to 30 percent. That change is what causes the score drop. The bureaus see you as using a higher percentage of your available credit, even though you haven't borrowed any more money.
This effect is strongest if the card you're closing has a high limit or if you're closing one of only a few cards you own. If you have ten cards and close one, the utilization shift is usually small. If you have three cards and close one, the shift is larger.
Why the age of your accounts matters
Credit bureaus also track the average age of your accounts. A longer credit history is seen as lower risk. When you close a card, that account still appears on your credit report for seven to ten years, but it stops being counted as an "open" account. Your average age of open accounts drops when ready.
The impact depends on which card you're closing. If you're closing your oldest card — the one you've had for fifteen years — the drop in average age is usually noticeable. If you're closing a card you opened two years ago and you have other older cards still open, the impact is smaller.
Like the utilization hit, this damage is temporary. As time passes and your remaining cards age, your average account age climbs back up.
When closing a card is worth the score drop
A temporary score dip doesn't mean you shouldn't close the card. You might close a card and accept the hit if you're paying an annual fee you don't want to keep paying, if you're carrying a balance and want to stop using the card, or if you're managing too many accounts and need to simplify.
The score drop matters most if you're about to explore for a mortgage, car loan, or other large loan where your score directly affects the interest rate you'll receive. If you're planning to borrow in the next few months, closing a card right before you explore can cost you money in higher interest. If you're not borrowing soon, the temporary drop is usually not worth worrying about.
You might also close a card if it's a high-limit card you're not using. Unused cards sometimes get closed by the card issuer for inactivity, which you can't control. Closing it yourself on your timeline is often better than waiting for the issuer to do it.
Steps to minimize the damage if you decide to close
If you've decided to close a card, a few moves can reduce the score hit. First, pay off any balance on the card before you close it. Closing a card with a balance can damage your score more than closing one with a zero balance.
Second, don't close multiple cards at once. If you need to close more than one, space them out by a few months. Closing three cards in the same month hits your score harder than closing one card per month.
Third, keep your other cards open and active. Use them occasionally and pay the balances in full. This keeps your available credit high and your utilization low, which helps offset the loss of the closed card's limit.
Finally, don't close your oldest card if you can avoid it. If you have a choice between closing a card you've had for two years and one you've had for ten years, close the newer one. The older card does more work for your credit history.
What happens to the closed account on your credit report
After you close a card, the account stays on your credit report for seven to ten years (the exact timeline depends on your state and the card issuer's policy). During that time, it still shows up when lenders pull your report, but it's marked as "closed" or "inactive."
The closed account continues to help your credit history in one way: it shows that you had credit and managed it responsibly. It stops helping in other ways — it no longer counts toward your total available credit, and it no longer counts as an open account for the purpose of calculating average account age.
You can't reopen a closed account by calling the card issuer. If you change your mind, you'll need to explore for a new card from that issuer (or a different one), which means a new account with a new opening date.
How long until your score recovers
Most people see their score recover within three to six months of closing a card, assuming they continue making on-time payments and keep their utilization low on their remaining cards. Some people recover faster; others take longer. The recovery depends on how much damage was done and how actively you're rebuilding.
You can speed up recovery by keeping your utilization low. If you closed a high-limit card and your utilization jumped, paying down balances on your remaining cards brings utilization back down and helps your score rebound faster.
The closed account itself stops hurting your score over time. After a few years, the impact of closing the card becomes almost invisible on your report.
Frequently Asked Questions
Will closing a credit card hurt my score if I have no balance on it?
Yes, but usually less than closing a card with a balance. A zero-balance card still affects your utilization ratio and average account age, but the damage is typically smaller. Closing a card with a balance can cause a larger drop because it affects utilization more severely.
Should I close a card before or after explore for a loan?
Close it after, if possible. Lenders pull your credit score right before they approve you, so closing a card beforehand can lower the score they see and raise the interest rate they offer. If you need to close a card, wait until after the loan is funded and the lender has stopped checking your credit.
What if I close a card and my score drops more than I expected?
A larger-than-expected drop usually means the card you closed had a high limit or was one of your oldest accounts. The score will still recover on its own as you make on-time payments. You can speed recovery by paying down balances on your remaining cards to lower your utilization ratio.
Can I reopen a card I just closed?
You cannot reopen a closed account. If you change your mind, you must explore for a new card, which creates a new account with a new opening date. Some issuers may deny a new process if you closed the previous card very recently, so check their policy first.
Does closing a store credit card hurt my score differently than closing a regular credit card?
The mechanics are the same — utilization and average account age both change. Store cards often have lower limits, so closing one usually causes a smaller utilization hit than closing a general-purpose card with a higher limit. The score impact is usually smaller, but the recovery timeline is similar.