Thinking about closing a credit card? You might want to think twice!
Many people assume that closing a credit card will help their credit score, but in reality, it can hurt more than it helps.
In this guide, we’ll explain how closing a credit card impacts your credit score, when it makes sense to close an account, and how to minimize any negative effects.
1. How Closing a Credit Card Affects Your Credit Score
Closing a credit card can lower your credit score in two major ways:
📉 A. It Reduces Your Credit History Length (15% of Your Score)
The longer your credit history, the better for your score.
When you close an account, you lose that age over time, which can lower your score—especially if it was one of your oldest accounts.
🔹 Example: If you close a 10-year-old credit card, your overall credit history could appear shorter, which may lower your score.
👉 Pro Tip: The longer you’ve had a credit card, the more valuable it is to keep open.
📉 B. It Increases Your Credit Utilization Ratio (30% of Your Score)
Your credit utilization ratio is the percentage of available credit you’re using. The lower, the better!
When you close a credit card, your total available credit decreases, which increases your utilization ratio and may lower your score.
🔹 Example:
- You have two credit cards with a total credit limit of $10,000.
- You owe $2,500 across both cards → Utilization: 25% (Good!).
- If you close one card with a $5,000 limit, your total credit limit drops to $5,000.
- Now, your utilization jumps to 50% → Score drop!
👉 Pro Tip: Keeping accounts open helps maintain a lower utilization ratio.
2. When Closing a Credit Card Makes Sense
There are some situations where closing a credit card might be a good idea:
✅ High Annual Fees – If a card’s benefits don’t outweigh the cost.
✅ High-Interest Rates – If you’re not using it and there’s no reason to keep it open.
✅ Fraud or Security Concerns – If the card was compromised and needs to be shut down permanently.
✅ You Have Too Many Credit Cards – If managing multiple accounts becomes overwhelming.
👉 Pro Tip: If you’re closing a card due to fees, ask the issuer for a fee waiver or see if they’ll downgrade you to a no-fee card instead.
3. How to Close a Credit Card Without Hurting Your Score
If you must close a credit card, follow these steps to minimize credit score damage:
✅ Step 1: Pay Off the Balance
Make sure the card has a $0 balance before closing it—closing a card with a balance can hurt your credit score even more.
✅ Step 2: Transfer the Credit Line
Some banks allow you to transfer your credit limit to another card with them, preventing a drop in available credit.
✅ Step 3: Keep Other Credit Card Balances Low
Since closing a card increases your utilization ratio, try to pay down balances on your other cards before closing the account.
✅ Step 4: Keep Your Oldest Accounts Open
If possible, close newer accounts instead of older ones to preserve your credit history length.
✅ Step 5: Request a Credit Report Update
After closing the account, check your credit report to ensure it reflects accurate information and that the account was closed voluntarily (this looks better to lenders).
👉 Pro Tip: If you no longer want to use a card but don’t want to hurt your score, consider keeping it open and using it for small purchases every few months.
4. Alternative to Closing a Credit Card
If you’re tempted to close a credit card but don’t want to hurt your score, consider these alternatives:
🔄 Product Change – Many issuers allow you to switch to a no-fee version of the card without closing the account.
💳 Lock the Card – If you’re worried about overspending, lock the card via your bank’s app instead of closing it.
🛒 Use It for Small Purchases – Charge a small amount every few months to keep it active and build your credit history.
5.Should You Close a Credit Card?
Closing a credit card can hurt your score by shortening your credit history and increasing your credit utilization ratio.
🎯 Before closing a card, consider:
✅ Will it reduce my available credit?
✅ Is it my oldest credit card?
✅ Are there alternatives to closing it?
📞 Need help managing your credit score? Contact Credit Restore Lab for a FREE consultation today!
CreditRepair #CloseCreditCard #FixCreditScore #IncreaseCreditScore #CreditUtilization #CreditScoreTips #ImproveCreditScore #FinancialHealth #DebtManagement #CreditReportErrors #RebuildCredit #CreditScoreBoost #BadCreditFix #RaiseCreditScore #CreditEducation