How Closing a Credit Card Affects Your Credit Score
At some point, you may think about closing a credit card maybe it has high fees, you don’t use it anymore, or you simply want to simplify your wallet. But before you cut up that card, it’s important to understand how closing a credit card can impact your credit score.
While it may seem harmless, closing an account can affect several key factors that make up your credit score. Let’s break it down.
1. Credit Utilization Ratio May Increase
Your credit utilization ratio is the percentage of available credit you’re using. It’s one of the most important factors in your credit score, making up about 30% of your FICO score.
-
Example: If you have two cards with a combined limit of $10,000 and a balance of $2,000, your utilization is 20%. But if you close one card with a $5,000 limit, your available credit drops to $5,000—suddenly your utilization jumps to 40%.
👉 Higher utilization = lower credit score.
2. Your Credit Mix Might Change
Credit mix (the variety of credit accounts you have, such as credit cards, loans, and mortgages) makes up about 10% of your score.
If the card you’re closing is your only credit card, you could hurt your mix by reducing account diversity.
3. It Could Affect Your Credit History Length
Credit scoring models reward borrowers with a long credit history. Closing an older card won’t immediately erase it from your report, but eventually (after about 7–10 years), it will drop off.
If the closed account is your oldest credit line, your average account age will shrink once it disappears—potentially lowering your score.
4. Payment History Stays Intact
Here’s some good news: your payment history (the biggest scoring factor, at 35%) won’t be erased when you close a card. Positive payment history remains on your credit report for years, so you won’t lose that track record right away.
5. Annual Fees vs. Score Impact
Sometimes keeping a card open isn’t worth the cost—especially if it has a high annual fee and you’re not getting enough value from rewards. In this case, the short-term dip in your score may be worth the long-term savings.
👉 Tip: Before canceling, call the issuer to see if they’ll downgrade the card to a no-annual-fee version. This way, you keep the account (and its history) without paying fees.
When Closing a Card Makes Sense
Closing a card could be the right choice if:
-
The fees outweigh the benefits.
-
You have multiple cards and won’t lose too much available credit.
-
You struggle with overspending and need fewer temptations.
When You Should Think Twice
Keep the card open if:
-
It’s your oldest account.
-
It carries a high credit limit that helps keep your utilization low.
-
It’s your only credit card (to maintain your credit mix).
Final Thoughts
Closing a credit card isn’t necessarily bad, but it can cause unintended consequences for your credit score. Always weigh the pros and cons, and consider alternatives like downgrading the card or keeping it open with minimal use.
Remember: your credit score is a long game. A single decision won’t make or break it, but managing your accounts wisely will keep you on the path to strong financial health.
