How Closing a Credit Card Can Hurt Your Score
It might seem smart to close a credit card you don’t use. Fewer accounts, fewer temptations, right?
But when it comes to your credit score, that “clean-up” move can actually backfire.
Closing an old or unused credit card can lower your score by increasing your utilization ratio and shortening your credit history. Two major factors that make up your credit profile.
1. It Raises Your Credit Utilization
Your credit utilization is the percentage of your total credit limit that you’re using.
When you close a card, you lose that available credit, which makes your utilization ratio jump, even if your balances stay the same.
Example:
- Before closing: You have $5,000 in balances and $20,000 in total limits = 25% utilization.
- After closing a $5,000 limit card: $5,000 / $15,000 = 33% utilization.
That 8% difference can easily drop your credit score by 20–40 points.
2. It Shortens Your Credit History
The age of your credit accounts makes up about 15% of your credit score.
When you close an old card, you shorten your average credit age, which can cause a noticeable dip.
Even though closed accounts can stay on your report for up to 10 years, they stop aging with your active credit lines. Over time, that reduces your score’s strength.
3. It Can Reduce Your “Credit Mix”
Credit bureaus like to see a balance of revolving (credit cards) and installment (loans) accounts.
Closing one of your few credit cards can make your mix look thinner, especially if it was your oldest or only revolving line.
4. Better Alternatives to Closing a Card
If you’re thinking about closing a card, consider these options first:
Use it occasionally: Buy something small every few months and pay it off.
Downgrade it: Ask your lender for a no-annual-fee version of the card.
Store it safely: Keep it open for credit history, but avoid temptation by tucking it away.
Final Thoughts
Closing a credit card might feel like tidying up your finances, but it often does more harm than good.
Unless it’s costing you money in fees, you’re usually better off keeping old accounts open and active.
At CreditNerds.com, we help people make smarter credit moves that protect their scores, even the ones that seem small. Start your credit journey today.
