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Their reviews hold us accountable for publishing high-quality and trustworthy content. About our Review BoardWritten by Holly D. Johnson Written by Holly D. JohnsonArrow RightAuthor, Award-Winning Writer Holly Johnson writes expert content on personal finance, credit cards, loyalty and insurance topics. In addition to writing for Bankrate and CreditCards.com, Johnson does ongoing work for clients that include CNN, Forbes Advisor, LendingTree, Time Magazine and more. Holly D. Johnson Edited by Liliana Hall Edited by Liliana HallArrow RightAssociate Editor Liliana is an editor and journalist with a background in feature writing on the Bankrate Credit Cards team. Liliana Hall Reviewed by Mariah Ackary Reviewed by Mariah AckaryArrow RightEditor Mariah Ackary is a personal finance editor who joined the Bankrate team in 2019, excited to help people make good decisions with their money. Send your questions to [email protected] Closing a credit card could change your debt to credit utilization ratio, which may impact credit scores Closing a credit card account you’ve had for a long time may impact the length of your credit history Paid-off credit cards that aren’t used for a certain period of time may be closed by the lender You’ve paid off your credit card, and you’re wondering if you should close the account - and whether that might impact your credit scores, for better or worse. The answer depends on your unique credit situation. Before you close a credit card account, consider the following:
If you do close a credit card account, it’s a good idea to review your credit reports to make sure the information is reported correctly. You’re entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit bureaus by visiting www.annualcreditreport.com. You can also create a myEquifax account to get six free Equifax credit reports each year. In addition, you can click “Get my free credit score” on your myEquifax dashboard to enroll in Equifax Core Credit™ for a free monthly Equifax credit report and a free monthly VantageScore® 3.0 credit score, based on Equifax data. A VantageScore is one of many types of credit scores. There are many reasons you might be considering closing a credit card account. You may be trying to limit your amount of revolving debt. Or you might not be using a particular card any longer. Whatever your goal, one question you might consider: Does closing a credit card hurt your credit score? The answer varies based on your personal circumstances, but there are things to keep in mind before deciding. Key Takeaways
Monitor Your Credit for FreeJoin the millions using CreditWise from Capital One. Sign Up TodayHow Does Closing a Credit Card Affect Your Credit Score?Closing your credit card can affect several factors that go into your credit score. Credit Age Credit Utilization You can get your utilization ratio by dividing the total amount of your credit balances by your total credit limits. Then, multiply that number by 100 to calculate your ratio as a percentage. By closing a credit card, you’re decreasing the total amount of credit available to you. And that increases your credit utilization ratio. Here’s one scenario to help explain. Say you have two credit cards:
In this scenario, your credit utilization ratio is 50%, because your total balance across both cards is half the available credit. But by closing card No. 1, your credit utilization ratio would spike to 100%. That’s because you would be left with a $1,000 total balance and $1,000 credit limit. This could negatively impact your credit. According to the Consumer Financial Protection Bureau, experts recommend keeping your credit utilization below 30% of your available credit to avoid a negative impact on your scores. How Much Does Closing a Credit Card Hurt Your Credit?While closing a credit card can affect your credit scores, it’s hard to say by how much. That’s because there are other factors—such as the length of your credit history and whether you have a record of making payments on time—that also play a role in your scores. The actual change to your scores after closing a card will be unique to your individual circumstances. Generally, though, closing a credit card shouldn’t have a major impact on your credit scores—especially if you demonstrate responsible credit use with the accounts you keep open. Choosing to Keep Your Card OpenThere are some important reasons to consider when deciding to keep accounts open:
Although keeping your card open and paying it off could be the right move, it also depends on your unique circumstances. Therefore, before deciding to close an account, it’s important to look at the pros and cons of your situation and determine whether there may be any negative impact on your credit. If your circumstances determine that closing the account is best, there are ways to help minimize the impact on your credit scores. Ways to Safely Close Your Credit CardClosing a credit card may seem simple enough. But before you break out the scissors to snip your card in two, here are some things to consider:
If you still have questions about closing your account, check your cardholder agreement for more details. Alternatives to Closing Your CardBefore you make the decision to close your credit card account, other options could be worth considering:
Closing a Credit Card In a NutshellThe decision to close your credit card account is a personal one. One way to help make a more informed choice is to routinely monitor your credit scores. CreditWise from Capital One is a free tool that allows you to monitor your VantageScore® 3.0 credit score. Using CreditWise to keep an eye on your credit won’t hurt your scores. And it’s free for everyone, not just Capital One customers. It even has a tool called the CreditWise Simulator. It can help you understand how choices you make could affect your scores. That includes things such as canceling your oldest credit card and paying down your balance. We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional. Capital One does not provide, endorse or guarantee any third-party product, service, information, or recommendation listed above. The third parties listed are solely responsible for their products and services, and all trademarks listed are the property of their respective owners. Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many credit scoring models. It may not be the same model your lender uses, but it can be one accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at (or you do not have a file at) one or more consumer reporting agencies. The CreditWise Simulator provides an estimate of your score change and does not guarantee how your score may change. Is it better to cancel unused credit cards or keep them?In general, it's best to keep unused credit cards open so that you benefit from a longer average credit history and a larger amount of available credit. Credit scoring models reward you for having long-standing credit accounts, and for using only a small portion of your credit limit.
How much will closing a credit card hurt my credit score?Will closing a card damage my credit history? Not really. A closed account will remain on your reports for up to seven years (if negative) or around 10 years (if positive). As long as the account is on your reports, it will be factored into the average age of your credit.
What are the negatives to closing a credit card?Since your credit utilization ratio is the ratio of your current balances to your available credit, reducing the amount of credit available to you by closing a credit card could cause your credit utilization ratio to go up and your credit score to go down.
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