Closing a credit card usually lowers your credit score, but the damage is temporary and smaller than many people fear.

When you close a credit card account, your credit score typically drops by 10 to 50 points, depending on your overall credit profile. The drop happens because closing an account changes two things that credit bureaus measure: your credit utilization ratio (how much 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've damaged your credit beyond repair.

The size of the hit depends on which card you're closing and what your credit looks like right now. If you have five cards and close one, the impact is smaller than if you have two cards and close one. If you're carrying high balances on your remaining cards, the impact is larger than if you pay them off in full each month. The score recovers over time as you use credit responsibly — usually within a few months to a year.

Key Takeaways

  • Closing a card reduces your available credit, which raises your credit utilization ratio and typically lowers your score by 10 to 50 points.
  • The closed account stays on your credit report for up to 10 years, so the damage to your score history is not permanent.
  • Closing your oldest card does more damage than closing a newer one, because it lowers the average age of your accounts.
  • Paying down balances on your remaining cards before closing one can reduce the impact on your score.
  • A lower score from closing a card is less damaging than the score damage from missed payments or high balances.

Why closing a card lowers your credit utilization ratio

Your credit utilization ratio is the percentage of your total available credit that you're currently using. If you have three cards with $5,000 limits each (total $15,000 available) and you're carrying $3,000 in balances, 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. If you close a $5,000 card, your available credit drops from $15,000 to $10,000. If you still owe $3,000, your utilization jumps from 20 percent to 30 percent. That higher ratio signals to lenders that you're using more of your available credit, which is seen as riskier. The score drop is usually 10 to 30 points, depending on how much your utilization rises.

You can reduce this damage by paying down balances before you close the card. If you pay the $3,000 balance to zero before closing, your utilization stays at 0 percent even after the card is closed. This is the single most effective way to minimize the score impact.

How closing your oldest card does more damage

Credit bureaus also track the average age of your accounts — how long you've had credit open, on average. Older accounts are weighted more heavily than newer ones. If you have one card that's 15 years old and four cards that are 2 years old, your average age is about 4.6 years. That long history is valuable to your score.

When you close your oldest card, that average age drops. If you close the 15-year-old card in the example above, your average age falls to about 2 years. That's a significant change, and it usually costs 10 to 50 points depending on how old the card was and how many other accounts you have.

For this reason, it's usually better to close a newer card if you must close one. If you have a card you opened last year and a card you opened 10 years ago, close the newer one. The older card's history will continue to help your score even if you never use it again.

What happens to the closed account on your credit report

Closing a card does not immediately erase it from your credit report. The account stays visible to credit bureaus for up to 10 years, listed as "closed" or "inactive." During that time, it still counts toward your average age of accounts (though with less weight as it gets older), and it still shows your payment history on that card.

This is actually good news for your score. Because the account remains on your report, the damage from closing it is temporary. As time passes and you open new accounts or age existing ones, your average account age rises again. Within a year or two, the score impact from closing the card is usually gone.

The only exception is if you closed the card with a negative history — late payments, high balances, or a charge-off. In that case, the closed account still reports that history, and it continues to hurt your score until it ages off your report (usually 7 years from the date of the negative event).

When closing a card is worth the score hit

A temporary score drop of 10 to 50 points is usually worth it if closing the card solves a bigger problem. If you're paying an annual fee on a card you don't use, closing it saves money and removes a temptation to carry a balance. If you have too many cards and you're struggling to keep track of payments, closing one reduces that burden and lowers the risk of a missed payment — which costs 100+ points and stays on your report for 7 years.

Closing a card is also worth it if you're about to apply for a mortgage or auto loan and you want to improve your score beforehand. The short-term hit is less damaging than carrying high balances on multiple cards, which lenders see as a sign of financial stress.

Closing a card is usually not worth it if your only reason is to "clean up" your credit report or if you're trying to avoid the temptation to use the card. Keeping the card open and unused actually helps your score more than closing it, because it keeps your available credit high and your utilization low. If you're worried about overspending, you can freeze the card or leave it at home instead of closing it.

How to close a card with the least damage

If you've decided to close a card, take these steps to minimize the score impact. First, pay off the full balance on the card you're closing. This prevents your utilization ratio from spiking when you lose that card's credit limit. Second, pay down balances on your remaining cards if possible. The lower your overall utilization after closing the card, the smaller the score hit.

Third, close a newer card rather than your oldest one, if you have a choice. The age of your accounts matters, and closing a newer card does less damage. Fourth, close the card by calling the issuer's customer service number on the back of the card or logging into your online account. Ask them to confirm the account is closed and request written confirmation by mail or email. Keep that confirmation in case there are billing disputes later.

Finally, don't close multiple cards at once. If you need to close more than one, space them out by several months. This spreads the score impact over time and gives your score a chance to recover between closures.

Frequently Asked Questions

Will closing a credit card hurt my chances of getting approved for a loan?

A closed card alone usually won't disqualify you, but it can lower your score at a time when you're trying to get approved. If you're planning to apply for a mortgage or auto loan within the next few months, it's better to wait until after you're approved to close the card. If you must close it beforehand, do so at least 3 to 6 months before you apply, so your score has time to recover.

Does it matter if I close the card online or by phone?

Phone is safer because you can confirm the closure immediately and ask the issuer to send written confirmation. Online closure can sometimes fail to process or create confusion about whether the account is actually closed. Either way, check your credit report 30 to 60 days later to confirm the account shows as closed.

What if I close a card and then change my mind?

Call the issuer within a few days and ask if they can reopen the account. Many issuers will reopen a recently closed account without requiring a new application. The longer you wait, the less likely they are to reopen it. If they won't reopen it, you may be able to open a new account with the same issuer, though it will have a new account age.

Should I close a card with a $0 balance or pay it off first?

Pay it off first if you can. A card with a $0 balance that you then close has less impact on your utilization ratio than a card with a balance. If the card already has a $0 balance, closing it immediately is fine — there's no additional damage to prevent.

Does closing a card affect my ability to use rewards I've earned?

That depends on the card issuer's policy. Some issuers let you redeem rewards after closing the card; others require you to redeem before closure. Check your card's terms or call customer service before closing to find out when you need to redeem your points or miles.