Does Closing a Credit Card Affect Credit Score? (2024)

FAQs

Does Closing a Credit Card Affect Credit Score? ›

There are times when canceling a credit card can be the right call. However, closing a credit card can hurt your credit, especially if it's one of your oldest accounts and it's in good standing (meaning you're making payments on time and as agreed).

In general, keep unused credit cards open so you benefit from longer average credit history and lower credit utilization. Consider putting one small regular purchase on the card and paying it off automatically to keep the card active. At Experian, one of our priorities is consumer credit and finance education.

While there's truth to the idea that closing a credit account can lower your score, the magnitude of the effect depends on various factors, such as how many other credit accounts you have and how old those accounts are. Sometimes the impact is minimal and your score drops just a few points.

Highlights: Closing a credit card could change your debt to credit utilization ratio, which may impact credit scores. Closing a credit card account you've had for a long time may impact the length of your credit history. Paid-off credit cards that aren't used for a certain period of time may be closed by the lender.

If you pay off all your credit card accounts (not just the one you're canceling) to $0 before canceling your card, you can avoid a decrease in your credit score. Typically, leaving your credit card accounts open is the best option, even if you're not using them.

However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.

“Ideally, if you want to protect yourself, pay every balance down to zero before picking the card you want to close,” says McClary. If your CUR is 0%, it's still going to be 0% when you close a card. No jump in CUR or late payments means no credit score penalty.

If you take out a loan to consolidate debt, you could see a temporary drop because of the hard inquiry for the new loan. Your credit score can take 30 to 60 days to improve after paying off revolving debt. Your score could also drop because of changes to your credit mix and the age of accounts you leave open.

Credit card inactivity will eventually result in your account being closed. A closed account can have a negative impact on your credit score, so consider keeping your cards open and active whenever possible.

When you open a new credit account, it lowers the overall age of your credit. In addition to the age of credit, opening up any new credit account generally requires a hard inquiry, which could ding your credit score a few points temporarily.

What is the average credit score in the US? ›

What is the average credit score? The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024.

More often than not, issuers will let you reopen a closed credit card account. But your request may be unsuccessful if your timing doesn't abide by the issuer's policies.

If you can no longer afford the annual fees associated with the card or if you don't use the card very much and don't feel like you're getting any value for the fee you're paying, it may also make sense to close your credit card.

Keeping a zero balance is a sign that you're being responsible with the credit extended to you. As long as you keep utilization low and continue on-time payments with a zero balance, there's a good chance you'll see your credit score rise, as well.

If you have a zero balance because you simply never use it, your credit card may stop sending updates to the credit bureaus, and that inactive credit card could potentially lower your credit score over time.

Paying down or paying off your credit cards is great for credit scores, but closing those accounts will likely cause your credit scores to dip, at least for a little while. This is especially true if you close more than one card. When you close an account, you lose that account's available credit limit.

Experts generally don't recommend you ever cancel a credit card, unless you're paying for it (such as in the form of an annual fee) and not ever using it. And if this is the case, canceling a card once probably won't hurt you as long as you have a healthy credit history otherwise.

If you've had your card for less than a year, closing it reduces the length of your credit history and has the potential to increase your credit utilization ratio — both of which can negatively affect your credit score.

It's generally never a good idea to stop paying your credit card bills. Missing a payment by a single day can be costly, and the longer you go without paying the minimum amount due, the more damaging it can be to your credit score and financial well-being.

The other risk of leaving a card inactive is the issuer might decide to close the account. If you haven't used a card for a long period, it generally will not hurt your credit score. However, if a lender notices your inactivity and decides to close the account, it can cause your score to slip.