Why Closing Credit Cards Can Hurt Your Credit Score

When you’re trying to get out of debt, closing a credit card can feel like real progress. Less temptation, fewer accounts to manage, and a sense of control.

The problem is that credit scores do not measure discipline. They measure ratios, timelines, and patterns. If you close a card at the wrong point in your payoff journey, your score can drop even while your financial habits are improving.

Utilization can rise even if spending does not change

Credit utilization is the percentage of your available revolving credit that is currently in use. When you close a credit card, your total available credit decreases. If balances remain on other cards, those balances now represent a larger share of your available credit, which can raise your utilization and lower your score.

This is why the move often feels unfair. From your perspective, you removed a problem. From the scoring model’s perspective, you look more leveraged. TransUnion illustrates how closing a single card can increase utilization even when spending stays the same. While staying below 30 percent utilization is commonly cited, both FICO and Experian indicate that the highest scores are typically associated with utilization that is far lower, often in the single digits. Exact thresholds vary by scoring model, but lower utilization is consistently rewarded. (Source: TransUnion)

Closing older cards can weaken credit age over time

Length of credit history is another major scoring factor. Closing a card that has been open for many years can reduce the long-term strength of your credit profile, particularly if it is one of your oldest accounts.

The effect is usually delayed, which is why it is easy to underestimate. A closed account in good standing can remain on your credit report for up to ten years, so your age of credit history does not disappear immediately. However, closing the account reduces available credit right away, which can affect utilization. Over time, once older closed accounts eventually fall off your report, your average account age can trend younger. Experian explains that this combination of immediate utilization impact and delayed age impact is why closing accounts can still hurt scores. (Source: Experian)

The 2025 debt environment increases the risk

In theory, credit cards are best closed after balances are paid off and utilization is already low. In practice, many households are paying down debt while managing rising living costs and unexpected expenses, which makes utilization more volatile.

According to the Federal Reserve Bank of New York, total U.S. credit card balances reached $1.23 trillion in the third quarter of 2025. This figure reflects aggregate balances, not individual behavior, but it highlights how common revolving debt remains. In that context, closing a card while balances still exist elsewhere is one of the most common ways consumers unintentionally trigger a credit score drop. (Source: Federal Reserve Bank of New York)

How to reduce risk without damaging your score

If a card is a spending trigger, the goal is often to reduce access rather than eliminate the account entirely. Many people choose to keep the account open while removing it from digital wallets, no longer carrying it, and setting transaction alerts for security. If an annual fee is the concern, requesting a downgrade to a no-fee version can preserve both the credit line and account history.

There are situations where closing a card carries less risk. Newer accounts with no balance and limited history generally have a smaller impact when closed. If you plan to close a card, the lowest-risk timing is when your remaining balances are already low enough that overall utilization stays healthy afterward.

If you anticipate applying for credit-related products such as an apartment lease or loan, it can help to treat your credit score as a “do not disturb” zone. As of April 2025, the average U.S. FICO Score was approximately 715, and relatively small score changes can matter near common approval thresholds. Credit score usage varies by lender and by state, but avoiding unnecessary dips is often worth the caution. (Source: FICO)

If you want a second set of eyes on your situation before closing any accounts, My Debt Navigator can help you plan a payoff strategy that protects your credit while you work toward becoming debt-free.

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