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Does Closing a Credit Card Hurt Your Credit Score?

Written by Allison Martin

Allison Martin is a personal finance enthusiast and a passionate entrepreneur. With over a decade of experience, Allison has made a name for herself as a syndicated financial writer. Her articles are published in leading publications, like, Bankrate, The Wall Street Journal, MSN Money, and Investopedia. When she’s not busy creating content, Allison travels nationwide, sharing her knowledge and expertise in financial literacy and entrepreneurship through interactive workshops and programs. She also works as a Certified Financial Education Instructor (CFEI) dedicated to helping people from all walks of life achieve financial freedom and success.

Updated April 29, 2024​

5 min. read​

Have you considered closing a credit card? Maybe you’ve recently paid it off or plan to do so soon and have no interest in digging out of another debt hole. Or perhaps you haven’t used the card in a while and see no need to keep it open.

Regardless of your reasoning, closing a credit card may not be in your best interest as it can affect several factors contributing to your credit score. Here’s what you need to consider before moving forward.

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Credit Cards and Your Credit Score

Contrary to popular belief, credit cards aren’t always a bad thing. In fact, when managed wisely, they can be a powerful tool to establish a strong credit score.

Your credit score represents your creditworthiness in numbers. Lenders and creditors assess credit scores when you apply for debt products to determine whether you’re a worthwhile candidate for funding.

The FICO score is the most prevalent model—used by 90 percent of creditors and lenders to make lending decisions—ranging from 300 to 850. A higher credit score shows you have responsibly managed credit obligations in the past and are less likely to default on a new loan. However, lenders perceive borrowers with lower credit scores as risky and often assess higher interest rates to protect their interest.

Here’s how FICO scores are calculated:

  • Payment history (35 percent)
  • Amounts owed (30 percent)
  • Length of credit history (15 percent)
  • Credit mix (10 percent)
  • New credit (10 percent)

When you open a credit card, it generally appears on your credit report within 30- to 60 days. The hard inquiry from the application could slightly dip your score, but the impact is temporary.

That said, as you make timely payments, your payment history will improve, potentially boosting your credit rating. If you keep your utilization at or below 30 percent, you could also see an improvement in your credit score.

Does Closing a Credit Card Hurt Your Credit?

Closing a credit card can impact your credit health in the short- and long-term.

Immediate Effects on Your Credit Score

Your credit utilization, or how much of your available credit you’re using, may increase when you close an account. Consequently, it’s not uncommon to see a drop in your credit score.

To illustrate, assume you have four credit cards with $2,500 limits, bringing your total credit limit to $10,000, and you owe the following:

  • Card 1: $2,000
  • Card 2: $1,000
  • Card 3: $1,750
  • Card 4: $750

Based on these figures, your total utilization rate would be 55 percent ($5,500/$10,000). If you pay off card 4 and close it, the utilization rate jumps to 63 percent ($4,750/$7,500), which could ding your credit score.

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Long-Term Impact on Your Credit Score

Closing a credit card can also negatively impact your credit age, accounting for 15 percent of your credit score. If the account is older, your credit history age will appear shorter when you close it, potentially reducing your score. But closing a credit card doesn’t completely remove it from your credit report. If your account was in good standing when it closed, it will linger for ten years.

If you are looking to improve your credit score after closing a credit card, contact The Credit Pros for personalized solutions and expert guidance on how to effectively manage your credit accounts and achieve financial stability. With their proven track record of fast and effective results, The Credit Pros can help you develop a strategic plan to address any credit inquiries and improve your overall financial situation.

Call (888) 558-1602 to talk to a specialist or fill out a form to get started on improving your credit score and achieving financial stability. With their 100% 90-day money-back guarantee and affordable pricing with no long-term contracts, you can trust that The Credit Pros are committed to helping you succeed. Let them help you navigate the complexities of credit management and achieve your financial goals.

Factors to Consider Before Closing a Credit Card

Before calling your credit card issuer to shut down your card, keep these considerations in mind.

Credit Utilization Ratio

Will it rise above 30 percent if you close your credit card account? If so, you may want to hold off and pay down your balances before requesting an account closure.

Length of Credit History

If you’ve had the card for an extended period, closing it may not be in your best interest. As previously mentioned, it could decrease your average age of accounts.

Credit Mix

Removing a credit card from your arsenal of debt products could hurt this component of your credit score, particularly if your credit profile isn’t diverse. But if you have an array of revolving and installment accounts, the impact could be minimal.

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Is There a Right Way to Close a Credit Card?

Are you ready to close your credit card? Here’s the most effective way to do so.

When to Close a Credit Card

You might consider closing a credit card if it’s no longer beneficial due to a high annual fee or if it’s an unused credit card that’s adding little to your credit history.

Prior to closure, ensure that all balances are fully paid off to avoid incurring additional interest or fees.

How to Close a Credit Card without Hurting Your Credit Score

Below is a step-by-step breakdown to preserve your score:

  • Step 1 – Pay off or transfer your balance: Your card balance should be $0. If you have a remaining balance, pay it off or transfer it to another card with better terms.
  • Step 2 – Redeem rewards: Use any accumulated rewards before closing the card. Once the account is closed, you might lose the opportunity to capitalize on these benefits.
  • Step 3 – Contact your credit card issuer: Call the customer service number and confirm that your balance is zero. Subsequently, ask for the account to be closed.
  • Step 4 – Follow up in writing: Send a confirmation letter to the issuer with your name, address, and account number stating your request to close your account.
  • Step 5 – Check your credit report: After a month, review your credit report to ensure the account is marked as “closed.”

Final Thoughts on Closing a Credit Card

Closing a card, particularly one with a high credit limit and no balance, can increase your credit utilization ratio and potentially lower your score. Furthermore, shutting down an older card may decrease the average length of your credit history, which can also negatively affect your score over time.

Before deciding to close a credit card, take a look at your unique financial situation. If the card has a high annual fee that isn’t justified by your use of it, or if you have other cards with higher interest rates that could benefit from a balance transfer to a card with a lower rate, closing the card might make sense. However, if the card has a long history of positive use, it could be beneficial to keep it open for your credit score.

Ultimately, the benefits of closing the card should outweigh the costs for this strategy to make sense.

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FAQs About Closing a Credit Card

Is It Better to Cancel Unused Credit Cards or Keep Them?

It is typically better to keep unused credit cards open because they contribute to a more extensive credit history and a larger amount of available credit, potentially impacting your credit score in a positive manner. However, if the card carries a steep annual fee or if having an open line of credit leads to the temptation of overspending, it might make sense to cancel it.

How Much Will Your Credit Score Go Down If You Close a Credit Card?

The impact depends on your credit profile. Carrying balances on other cards can increase your credit utilization rate, and you could see a decrease in your score.

Is It Better to Close a Credit Card or Leave It Open with a Zero Balance?

Leaving a credit card open with a zero balance can be a good strategy to maintain a healthy credit score. An open account with a zero balance lowers your available credit and can help establish a long credit history. However, if the card has hefty fees or you’re concerned about potential fraud or mismanagement, closing it might be an option to consider.

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