Closing credit card accounts can seem like a smart way to simplify your finances—but if done improperly, it can cause a dip in your credit score. After a recent financial seminar, a participant asked a great question about this. She wanted to streamline her cards and wondered how it might affect her credit standing.
Here’s how to close credit card accounts without hurting your credit score, and what you should know before you do.
Does Closing an Old Credit Card Still Affect My Score?
If you closed a card years ago, the good news is that it’s likely no longer impacting your credit score. Credit scoring models like FICO and VantageScore place greater emphasis on recent credit behavior.
Generally, any impact from closing an account more than 6–12 months ago will have faded. However, keep in mind that closing accounts affects your credit utilization ratio, which plays a big role in your credit score.
What Happens When You Close a Card?
When a credit card account is closed—whether by you or the lender—it shows up on your credit report as:
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“Closed by creditor” or
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“Closed at consumer request”
From a scoring perspective, there’s no difference between the two notations. The real concern is how the closure affects your available credit and utilization.
Credit Utilization Example
If you have:
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Two cards with $5,000 limits each
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You close one card
Your total available credit drops from $10,000 to $5,000. If you carry a $3,000 balance on the remaining card, your utilization jumps to 60%, which can hurt your credit score.
Store Cards vs. Major Credit Cards
Retail store cards like Macy’s, Nordstrom, or Eddie Bauer do affect your credit score, just like national cards (Visa, Mastercard, Amex). The key difference is that:
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Major cards often have higher credit limits
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Closing those cards can hurt your utilization ratio more
So while it’s fine to close unused store cards, be cautious if those cards carry a significant portion of your available credit.
Best Practices to Close Credit Cards Safely
To avoid damaging your credit score, follow these five tips:
1. Don’t Close Multiple Accounts at Once
If you plan to close several cards, spread them out over time—every 6 to 12 months.
2. Maintain a Low Utilization Rate
Try to keep your credit usage below 30% of your total available credit. Closing a card can shrink your total credit line and spike your utilization percentage.
3. Keep at Least One Major Card Active
Even if you’re living debt-free, having a national credit card helps maintain your credit profile and proves your ability to manage credit responsibly.
4. Use and Pay Off Your Card Monthly
Charge only what you can afford and pay the balance in full each month. This avoids interest and helps keep your credit healthy.
5. Let Inactive Accounts Close Naturally (When Possible)
If a creditor closes your account due to inactivity, the impact is typically the same as if you closed it yourself. However, keeping it open with small purchases can preserve your score longer.
Final Thoughts: Close Cards the Right Way
While streamlining your credit accounts can bring peace of mind, it’s important to close credit card accounts without hurting your credit score. By understanding the impact on your credit utilization and following a gradual, thoughtful process, you can simplify your wallet and maintain your strong credit profile.
Keep your credit usage low, your payments on time, and always keep at least one national credit card open for emergencies and ongoing credit health.
FAQs
Does closing a credit card hurt my score?
It can, especially if it increases your credit utilization or shortens your credit history. But the impact is usually minimal if managed correctly.
Should I close store credit cards?
Yes, if they’re unused—but do it one at a time. Store cards with low limits affect your credit score less than major cards.
What if a store closes my card due to inactivity?
It still shows as a closed account on your credit report and can impact your credit utilization ratio.
How long does a closed account affect my credit score?
Typically, the effect lasts for 6 to 12 months, depending on your credit profile and how many accounts you’ve closed.
Is it better to close a credit card or leave it open?
Leave it open if it doesn’t charge fees and helps your utilization. If you must close it, do so gradually and with a plan.
