Yes, cancelling a credit card typically lowers your score, usually within a few points to 10 or more points depending on your situation
When you close a credit card account, your credit score often drops. The size of the drop depends on how much of your available credit that card represented, how long you've held it, and what your overall credit profile looks like. The damage is not permanent — your score will recover over time — but the hit is real and immediate.
The score drop happens because closing an account changes two of the five factors that make up your credit score: your credit utilization ratio (how much of your available credit you're using) and your average age of accounts (how old your credit history is on average). Both of these shift the moment the account closes, even if you pay off the balance first.
Key Takeaways
- Closing a card reduces your total available credit, which raises your utilization ratio and typically lowers your score by a few points to 10 or more.
- If the card you're closing is your oldest account, your average account age drops, which can cause an additional score decrease.
- The score damage is temporary; your score will begin to recover within a few months as the closed account ages and new account activity builds your history.
- Paying off the balance before closing does not prevent the score drop — the damage comes from losing the available credit, not from carrying a balance.
- Keeping the account open but unused preserves your available credit and average age without any ongoing cost if the card has no annual fee.
How Credit Utilization Ratio Changes When You Close a Card
Your credit utilization ratio is the percentage of your total available credit that you're currently using. It accounts for about 30 percent of your credit score. When you close a card, you lose the credit limit on that card, which shrinks your total available credit even if you owe nothing on any of your cards.
Example: You have three cards with limits of $5,000, $3,000, and $2,000, for a total of $10,000 available. You carry a $2,000 balance across all three cards. Your utilization is 20 percent ($2,000 ÷ $10,000). If you close the $2,000-limit card, your available credit drops to $8,000. Your utilization jumps to 25 percent ($2,000 ÷ $8,000), even though you haven't charged anything new. That 5-point increase in utilization ratio typically causes a score drop.
The impact is larger if the card you're closing has a high limit or if you already carry balances on your other cards. If you're using 50 percent of your available credit and you close a card that represented 20 percent of your total limits, your utilization could jump from 50 percent to over 60 percent, causing a more significant score drop.
The Effect on Your Average Account Age
The age of your accounts makes up about 15 percent of your credit score. Credit bureaus calculate this as the average age of all your open accounts. When you close an account, that account stops counting toward your average age immediately, which can lower the average.
The damage is worst if you're closing your oldest account. If your oldest card is 15 years old and your other cards average 5 years old, closing that 15-year card will pull down your average significantly. If you have many accounts of similar age, closing one has a smaller effect.
Over time, this damage fades. The closed account remains on your credit report for up to 10 years, and after a few months it stops affecting your average age calculation as much because your remaining open accounts continue to age. A closed account that was 15 years old when you closed it becomes 15.5 years old six months later, but it no longer pulls down your average because it's no longer open.
Why Paying Off the Balance First Doesn't Prevent the Score Drop
Many people think that paying off a card's balance before closing it will protect their score. This is not how it works. The score damage from closing a card comes from losing the available credit and the account history, not from carrying a balance on that card.
Whether you close the card with a zero balance or a balance of several thousand dollars, the utilization ratio and average age effects are the same. Paying off the balance is the right financial move — it saves you interest and improves your score before you close — but it does not prevent the score drop that happens when the account closes.
How Long the Score Drop Lasts
The initial score drop from closing a card usually appears within one or two billing cycles. The damage is not permanent. Your score begins to recover within a few months as the closed account ages and as you continue to build positive history with your remaining open accounts.
Most people see their score return to its pre-closure level within 6 to 12 months, depending on how much of their credit profile the closed card represented and how active they are with their remaining accounts. If you close a card that was 30 percent of your available credit, recovery takes longer than if you close a card that was 5 percent of your available credit.
The closed account stays on your credit report for up to 10 years, but its impact on your score fades significantly after the first year. After three to five years, a closed account has almost no effect on your score.
When Closing a Card Causes the Biggest Score Drop
The score damage is most severe in these situations: you're closing your oldest account; the card has a high credit limit relative to your other cards; you carry balances on your remaining cards; or you have few open accounts to begin with.
If you have five credit cards and you close one, the impact is smaller than if you have two credit cards and you close one. If you have $50,000 in total available credit and you close a $5,000-limit card, the impact is smaller than if you have $10,000 in total available credit and you close a $5,000-limit card.
The score drop is smallest if you're closing a newer card with a low limit, especially if you have many other older accounts and you carry no balances. In this scenario, you might see a drop of only a few points, or none at all.
Alternatives to Closing a Card
If you want to stop using a card but don't want the score damage, keeping the account open is usually the better choice. If the card has no annual fee, there is no cost to leaving it open. You can put it in a drawer and never use it again. The account will stay on your credit report, your available credit stays intact, and your average account age is preserved.
Some cards do charge an annual fee. If you're paying $95 or $150 per year to keep a card open, closing it may make financial sense even if your score drops a few points. Weigh the annual fee against the score damage and the time it takes to recover. If you use the card's rewards or benefits, the fee may be worth paying to keep the account open.
If you have multiple cards and want to reduce the number you're managing, close the newest card with the lowest limit and no annual fee. This minimizes the score impact. Avoid closing your oldest card or your highest-limit card unless you have a specific reason to do so.
Frequently Asked Questions
Will my score recover if I close a card?
Yes. Your score typically recovers within 6 to 12 months. The closed account stays on your report for up to 10 years, but its impact on your score fades after the first year. Building positive history with your remaining cards speeds up recovery.
Does it matter if I close the card right after opening it versus after years of use?
Yes. Closing a newer card causes less damage than closing an older card because the older card contributes more to your average account age. Closing a card you've held for 10 years has a bigger impact than closing one you've held for 1 year.
What if I close a card and my score drops below 650?
A single closed card rarely causes a score to drop below 650 unless your score was already low or the card represented a very large portion of your available credit. If your score does drop significantly, focus on paying down balances on your remaining cards and making all payments on time. These actions rebuild your score faster than anything else.
Should I close a card with an annual fee or keep paying it?
If you don't use the card's rewards or benefits, close it. The annual fee is money out of your pocket. The score damage is temporary, but the fee is permanent. If you do use the card's benefits and the rewards exceed the fee, keep it open.
Can I reopen a card after I close it to undo the score damage?
Reopening a closed card does not restore it to its original status. The account remains marked as closed on your credit report. You can request that the issuer reopen the account, but this is treated as a new application and may result in a hard inquiry. In most cases, reopening does not reverse the score damage from closing.