What Happens to Your Credit Score When You Close a Credit Card

Closing a credit card usually does hurt your credit score, but how much depends on which card you close and what your other accounts look like

When you close a credit card, your credit score typically drops. The drop is not automatic or permanent — it happens because closing an account changes two things that credit bureaus measure: your available credit and your account history. A card you have held for years will cause more damage than a new one. A card that carries a balance will cause more damage than one you have paid off. And if it is your only credit card, the damage is usually worse than if you have others.

The good news is that the damage is temporary. Your score will recover over time, usually within a few months to a year, as long as you keep paying your other accounts on time. The bad news is that if you are about to apply for a mortgage, car loan, or another form of credit, closing a card right before that application can cost you real money in higher interest rates.

Key Takeaways

• Closing a credit card reduces your available credit, which can raise your credit utilization ratio and lower your score by anywhere from a few points to 50 or more, depending on your situation.
• Closing an old card hurts more than closing a new one because credit bureaus value the length of your credit history, and closing an account removes it from that calculation.
• Closing a card with a balance causes more damage than closing one you have paid off, because the balance gets added to your other cards' totals and can spike your utilization.
• Your score will usually recover within several months to a year after closing a card, as long as you pay your other accounts on time.
• If you are planning to borrow money soon, closing a card in the weeks before you apply for a loan or mortgage can raise the interest rate you are offered.

How closing a card affects your credit utilization ratio

Credit utilization is the amount of credit you are using compared to the amount available to you. If you have two credit cards with $5,000 limits each and you carry a $2,000 balance on one, your utilization is 20 percent ($2,000 divided by $10,000). Credit bureaus use this ratio to calculate your score — lower utilization is better.

When you close a card, you lose the credit limit on that card. If you close one of the two $5,000 cards above, your available credit drops from $10,000 to $5,000. If you still owe $2,000, your utilization jumps from 20 percent to 40 percent. That jump alone can lower your score by 10 to 30 points, depending on how close you were to the threshold that credit bureaus flag as risky (usually around 30 percent utilization).

The damage is smaller if you close a card you have paid off. If you owed nothing on either card and closed one, your utilization stays at zero percent, and this particular damage does not happen. But you still lose the available credit, which matters to credit bureaus as a sign that you can handle multiple accounts responsibly.

Why closing an old account costs more than closing a new one

Credit bureaus track how long you have had each account open. The longer your average account age, the higher your score tends to be — it shows you have a stable history of managing credit. When you close an account, that account eventually stops counting toward your average age.

If you close a card you opened five years ago, you are removing five years of history from the calculation. If you close a card you opened last month, you are removing almost nothing. A card that is five years old might lower your score by 20 to 50 points when closed. A card that is six months old might lower it by 5 to 15 points.

The damage from closing an old account is not immediate. The account stays on your credit report for about 10 years after you close it, and it still counts toward your history during that time. But its weight in the calculation gradually decreases, so the score impact grows over months and years, not all at once.

What happens if you close a card with a balance

If you close a card while you still owe money on it, the balance does not disappear — you still have to pay it. But the way it shows up on your credit report changes. The card moves from "open" to "closed," and the balance now counts against you in a different way.

Before closing, the balance was spread across your available credit on that card. After closing, that balance is still there but no longer has a dedicated credit limit. If you have other open cards, the balance you transferred (or that stayed on the closed card) now counts toward their utilization. This can spike your utilization ratio and lower your score by 20 to 60 points or more, depending on how much you owed.

The best practice is to pay off a card completely before closing it, or to transfer the balance to another card first. If you cannot do either, closing the card is still usually better than keeping it open and paying interest, but understand that your score will take a bigger hit in the short term.

How your score recovers after closing a card

Your credit score does not stay damaged forever. The recovery timeline depends on what else is on your credit report. If you have other cards with low balances and a history of on-time payments, your score will usually bounce back within three to six months. If you have other accounts with high balances or missed payments, recovery can take longer — up to a year or more.

The recovery happens because credit bureaus weight recent behavior more heavily than old behavior. As months pass after you close the card, the damage from that single action becomes a smaller part of your overall score calculation. Meanwhile, every on-time payment you make on your other accounts pushes your score back up.

One thing that speeds recovery: if you close a card and then open a new one, do not expect the new card to offset the damage right away. A brand-new account actually lowers your score slightly because it is new and has no history. The benefit of having multiple accounts comes over time, not immediately.

When closing a card before applying for a loan matters most

If you are planning to borrow money — for a mortgage, car loan, or personal loan — the timing of closing a card can cost you real money. Lenders pull your credit score at the moment you apply, and they use that score to decide your interest rate. A score that is 50 points lower can mean paying 0.5 to 1 percent more in interest over the life of a loan.

On a $300,000 mortgage, a 0.5 percent higher interest rate costs you tens of thousands of dollars over 30 years. On a $25,000 car loan, it costs you hundreds. If you know you are applying for a loan in the next few months, do not close a card. Wait until after the loan closes and your credit report has stabilized.

If you have already closed a card and are now applying for a loan, do not panic. Lenders understand that credit scores fluctuate. A single closed account is not a deal-breaker, especially if the rest of your credit history is solid. But if you have the flexibility to wait three to six months before applying, your score will be higher and your interest rate will be better.

Whether to close a card or keep it open

The decision to close a card depends on why you want to close it. If you are closing it because you want to simplify your finances or because you are worried about overspending, keeping it open with a zero balance is usually better for your score. You get the psychological benefit of having fewer active accounts without the credit score damage.

If the card charges an annual fee and you are not using it, closing it makes sense. The fee costs you real money every year, while the score damage is temporary. Calculate whether the fee is worth the score hit — usually it is not, but if the fee is high and you have other cards, it might be.

If you are closing the card because you are paying off debt and want to avoid running up a balance again, that is a valid reason. But consider asking the card issuer to waive the annual fee instead of closing the account. Many issuers will do this if you ask, and you keep the account open for your credit history without paying anything.

Frequently Asked Questions

How many points will my score drop if I close a credit card?

The drop ranges from 5 to 100 points depending on the card's age, your current utilization, and how much you owe. Closing a new card with a zero balance might drop your score by 5 to 10 points. Closing an old card with a high balance can drop it by 50 to 100 points. Most people see a drop between 10 and 50 points.

Should I close a credit card I am not using?

Not necessarily. A card you are not using but have paid off does not hurt your score — it actually helps by keeping your available credit high and your utilization low. If there is no annual fee, leaving it open costs you nothing and protects your score. If there is an annual fee, call and ask the issuer to waive it before you close it.

Does it matter which card I close?

Yes. Close a newer card rather than an older one if you can. Close a card with a zero balance rather than one with a balance. If you have to choose between closing a card with a $500 limit and one with a $5,000 limit, close the smaller one — the impact on your utilization will be less. If all your cards are similar, close the newest one.

Will my score ever fully recover after closing a card?

Yes, but it takes time. Your score will usually return to its previous level within six months to a year, as long as you keep paying your other accounts on time. The closed account stays on your credit report for about 10 years, but its impact on your score fades as time passes.

Can I reopen a credit card after I close it?

It depends on the card issuer. Some will reopen a closed account if you ask within a certain window (often 30 to 60 days). Others will not. If you are thinking you might want the card back, call the issuer before closing it and ask whether they allow reopening. If they do, you can close it and reopen it later without the damage of opening a brand-new account.