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Does Closing a Credit Card Hurt My Credit Score?

4 min read

Last Updated: October 30, 2024

Table of contents

Key Takeaways

When you close a credit card account it can impact your credit score.
A closed credit card account can affect factors that make up your credit score, including length of credit history and your credit utilization ratio.
Based on your financial situation, there are times when it’s best for you to cancel your credit card account rather than leave it open.

You’ve paid your remaining credit card balance. Now it’s time to cut the card up to keep you from using it again and to close the account. But should you close your account? Does closing a credit card hurt your credit? Your credit score is based on several factors in your credit report, and closing a credit card account can have an impact. It’s important to weigh the pros and cons first before canceling a credit card.

Why close a credit card account?

Closing a credit card account may hurt your credit score, but there are cases where it might make sense for you. If your credit card terms have changed or are costing you money overall, it may make sense to close the account.

If your credit card company announced a new higher annual fee, you may decide to close your old credit card and apply for a new credit card better suited for you that doesn’t have an annual fee. Discover has no annual fee on any of our cards.

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Perhaps you find you’re using your credit card for purchases when you shouldn’t, and you’re living outside your means. In this case, it could be the most responsible thing to close the account. Even though closing an account can impact your credit score, having too much credit card debt could lead to late or missed payments, and that could hurt your score even more. Responsible debt management is important, and your credit score will eventually rebound from the account closure.

After careful consideration, determine what makes the most sense for you.

Credit score factors that can change when closing credit card accounts

Closing credit cards will impact some of the factors that make up a good credit score, but not others. These are the credit score factors with the most impact when you close a credit card account.

Avoid closing your oldest account

If you must close an account, consider closing new accounts, not your oldest credit card. Length of credit history is one factor used to calculate your credit score. Typically, the longer an account has been open, the better it is for your credit score.

This is especially true if you’re younger and have a less substantial credit history. Closing an account early in your credit history may indicate risk and negatively affect your credit score. Instead, consider canceling cards with high interest rates or annual fees.

Why credit utilization ratio important

When closing a credit card account, consider that it has the potential to negatively affect your credit utilization rate, which is a factor that helps determine your credit score. Your credit utilization ratio is based on the amount of credit you’ve used versus your total available credit.

Having more credit available with less credit used is usually beneficial to your credit score. While you’ll end up with fewer credit accounts, you’ll end up with a smaller total credit limit.

Closing an account could reduce your credit mix

Another credit score factor is your mix of credit. Showing you can manage several different types of credit (credit cards, car loans, personal loan, mortgage, etc.) at the same time can show you’re a responsible borrower. If you close your credit card account and it’s your only revolving credit account, you’ll have one less type of credit in the mix. If you have multiple credit cards, closing one may not be as big of a deal, but remember to consider the age of your accounts.

Did you know?

If your financial goal is to reduce the amount of interest you’re paying, you could try a balance transfer credit card with Discover. If approved for new credit, you could take advantage of an introductory balance transfer APR.

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If there aren’t any annual fees, it’s okay to keep an unused credit card with high interest if you’re not tempted to use it.

How to cancel a credit card

If you’ve decided that canceling a credit card is right for you, it’s best to be thorough and deliberate. After paying your balance in full, get specific account closing instructions from the credit card issuer’s customer service department. The operators may try to persuade you to keep your credit account open. Be polite, but firm. Confirm with the operator that your account will indeed be closed, then verify the account was closed through email and another call, if necessary.

The bottom line is that closing a credit card account could impact your credit score. The key is balancing responsible credit management and the desire to maintain or improve your credit score. Understanding your specific credit situation, including your spending habits, credit utilization ratio, and aspects of your credit score that could be impacted, can help you make the right decision.

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