Yes — closing credit card accounts impacts your credit score, and it’s important to have a plan before doing so. Whether you’re simplifying your finances or stepping into a debt-free lifestyle, closing credit cards can be both empowering andtricky if you’re not careful.
My readers often ask about this during debt payoff planning — and for good reason. While getting rid of cards can feel like a fresh start, the timing and strategy behind it matter more than most people realize.
How Your Credit Score Is Calculated
To understand the impact of closing accounts, it helps to know what goes into your credit score. Here’s a quick breakdown:
- 35% Payment History – Have you paid on time?
- 30% Credit Utilization – How much of your available credit are you using?
- 15% Length of Credit History – How long have you had your accounts?
- 10% Credit Mix – Do you have a variety of credit types (cards, loans)?
- 10% New Credit – Have you opened or applied for new credit recently?
Credit Karma highlights similar factors, with heavy weight on payment history and credit card utilization.
What Happens When You Close a Credit Card?
Closing a credit card account affects a few major areas of your credit score. However, it doesn’t mean you’re making a bad move — you just need to do it wisely.
Let’s break it down:
Utilization Might Spike
When you close a card, your available credit goes down. If you still have balances, this increases your credit utilization ratio — and that can lower your score. For example, if you have $1,000 in debt and $5,000 in total credit, your utilization is 20%. But close a $2,000 card, and it jumps to 33%.
Pro tip: Before closing a card, pay off other balances or request a credit limit increase on a remaining account.
Your Credit History May Shrink
Closing your oldest card can shorten your average credit age, especially if you don’t have many accounts. Although closed accounts stay on your report for several years, eventually, they fall off — and that could impact your score long-term.
Credit Mix Becomes Less Diverse
If you’re down to one credit card and no other credit types, your score might drop slightly. But in reality, this only makes up 10% of your score — so it’s not a dealbreaker.
When Should You Be Cautious?
If you plan to apply for a loan or rent a home in the next 6–12 months, be cautious. Closing credit card accounts could lower your score just enough to affect your approval or interest rate. It’s better to wait or close the account with the least impact.
However, too many open cards can be just as risky. They can tempt you to spend more or lead to missed payments. The key is finding balance.
What Worked for Us
While Dave Ramsey encourages going card-free and using manual underwriting for loans, that’s not always easy depending on your situation and where you live. So for us, keeping some cards open felt like the smart move. Note, we use one card for our primary spending, follow a household budget and pay it off each month.
Tips Before Closing a Card
Here are a few final things to consider:
- Pay off the balance first — avoid closing a card with a balance.
- Keep your oldest card open, if possible.
- Avoid closing multiple cards at once.
- Make sure your credit utilization stays low.
- Be patient — your score might dip temporarily but can recover.
So…Should You Close Your Credit Card?
Closing credit card accounts impacts your credit score, but that doesn’t mean you should never do it. Just be strategic. Think about your financial goals, your upcoming plans, and how this decision fits into your bigger picture.
What’s your game plan when it comes to managing your credit cards — and is your credit score something you want to protect or release?