Closing an account usually hurts your credit score, but the damage depends on what kind of account it is and how long you've had it

When you close a credit card, the hit to your score is often immediate and measurable. When you close a checking or savings account, there is usually no hit at all—those accounts don't report to credit bureaus. The difference matters because credit bureaus only track credit accounts: credit cards, loans, lines of credit, and similar products where you borrow money. A bank account where you deposit your own money is not a credit account and does not affect your score.

If you close a credit card, your score typically drops by 10 to 50 points or more, depending on your overall credit profile. The damage is usually temporary—most people see recovery within three to six months—but the timing and size of the drop depend on specific factors in your credit history.

Key Takeaways

  • Closing a credit card account reduces your available credit and can raise your credit utilization ratio, which is one of the largest factors in your score.
  • Closing an old credit card account removes years of payment history from your record, which can lower your score even if you paid on time every month.
  • Closing a checking, savings, or money market account does not affect your credit score because banks do not report these accounts to credit bureaus.
  • The damage from closing a credit card is usually temporary and most people recover within three to six months, though the exact timeline varies by person.
  • If you want to close an account without hurting your score, paying down the balance first and keeping older accounts open longer can reduce the damage.

Why closing a credit card lowers your score

Your credit utilization ratio—the percentage of your total available credit that you are currently using—makes up about 30 percent of your credit score. When you close a credit card, your available credit shrinks immediately. If you had a $5,000 limit on that card and $10,000 in total limits across all your cards, closing it drops your total available credit to $5,000. If you still carry a balance on your other cards, your utilization ratio jumps, and your score drops.

Example: You have two credit cards. Card A has a $5,000 limit with a $1,000 balance. Card B has a $5,000 limit with a $500 balance. Your total utilization is $1,500 out of $10,000, or 15 percent. If you close Card A, your available credit is now $5,000, and your utilization becomes $500 out of $5,000, or 10 percent. In this case, closing the card actually improves your ratio. But if you close Card B instead, your utilization becomes $1,000 out of $5,000, or 20 percent—worse than before.

The second reason closing a credit card hurts your score is that it removes payment history from your record. Credit bureaus weight recent payment history more heavily than old history, but they still consider the full length of time you have managed an account. Closing a card you have held for 10 years removes that entire account from your active history, which can lower your score even if you never missed a payment.

How different types of accounts affect your score when closed

Credit cards cause the most noticeable drop when closed because they affect both your utilization ratio and your payment history. The older the card and the lower your overall credit score, the larger the damage tends to be.

Installment loans—car loans, personal loans, mortgages—have less impact when closed because they are not part of your utilization ratio. Once you pay off a car loan or mortgage, closing the account removes payment history but does not change your available credit. The score drop is usually smaller than closing a credit card, and recovery is often faster.

Store credit cards and retail accounts work like regular credit cards: closing them reduces your available credit and removes payment history. The impact is the same as closing any other credit card, though store cards often have lower limits, so the utilization hit may be smaller in dollar terms.

Checking and savings accounts do not report to credit bureaus at all. Closing these accounts has no effect on your credit score. Banks may report to ChexSystems, a different reporting system used to flag fraud and overdrafts, but ChexSystems does not calculate a credit score and does not affect your ability to borrow money.

How long the damage lasts

The initial drop in your score usually happens within one or two billing cycles after you close the account. The account will remain on your credit report for seven to ten years after closing, but its impact on your score fades over time. Most people see their score recover to its pre-closure level within three to six months, assuming they do not close other accounts or miss payments during that period.

Recovery is faster if your score was high before you closed the account. Someone with a 750 score who closes a credit card may see a 20-point drop that recovers in two months. Someone with a 650 score closing the same card might see a 50-point drop that takes six months to recover. The lower your starting score, the more sensitive it is to changes in your credit mix and utilization.

The age of the account also matters. Closing a card you have held for 15 years removes more payment history than closing one you opened last year. The longer the account was open, the longer the recovery period tends to be, though the initial drop may not be larger.

What to do before closing an account to minimize damage

If you are planning to close a credit card, paying down the balance first reduces the utilization hit. If you can pay the balance to zero before closing, your utilization ratio will not change at all when you close the account—only your available credit will shrink, which has a smaller impact on your score than a high utilization ratio does.

Timing matters if you are about to apply for a loan. If you need a mortgage or car loan in the next three to six months, close the account now rather than waiting until after you apply. Lenders pull your credit report at the time of application, and a recent account closure will show up on that report. Closing the account several months before you apply gives your score time to recover.

If you have multiple cards you want to close, space them out over several months rather than closing them all at once. Each closure has its own impact, and closing multiple accounts in a short period signals higher risk to credit bureaus. Closing one card every two or three months spreads out the damage and allows your score to recover between closures.

Keeping older accounts open, even if you do not use them, preserves your payment history and available credit. If you are closing a card because you want to simplify your wallet, consider keeping it open with a small recurring charge (like a streaming service) that you pay off each month. This keeps the account active and reporting positive payment history without requiring you to carry a balance.

Closing an account versus leaving it open but unused

Leaving a credit card open but unused is almost always better for your score than closing it. An open account with a zero balance contributes to your available credit without adding to your utilization ratio. It also preserves your payment history. The only downside is the risk of fraud or identity theft if the account is compromised, but most card issuers offer fraud protection.

Some people worry that leaving old accounts open will hurt their score because it looks like they have too much available credit. This is not how credit scoring works. Having available credit that you do not use is actually a positive signal—it shows you can manage credit responsibly without maxing out your limits. Lenders see this as lower risk.

The one situation where closing an account might be necessary is if the card issuer is charging an annual fee and you cannot get it waived. In that case, the cost of keeping the account open outweighs the benefit to your score. Before you close it, call the issuer and ask if they will waive the fee or downgrade you to a no-fee version of the card. Many issuers will do this to keep your business.

Frequently Asked Questions

Will closing a checking account hurt my credit score?

No. Checking and savings accounts do not report to credit bureaus and do not affect your credit score. You can close these accounts without any impact on your ability to borrow money or your creditworthiness.

How much will my score drop if I close a credit card?

The drop usually ranges from 10 to 50 points, depending on your current score, the age of the card, and your credit utilization ratio. Higher scores tend to drop more in percentage terms but recover faster. Lower scores may drop less but take longer to recover.

Should I close old credit cards to improve my score?

No. Closing old cards removes payment history and reduces available credit, both of which lower your score. Keeping old cards open, even if unused, is better for your score than closing them. The only exception is if the card charges an annual fee you cannot avoid.

Can I reopen a credit card after I close it?

It depends on the issuer. Some will reopen a recently closed account if you ask within a short window, usually 30 to 60 days. Others will treat a reapplication as a new account, which triggers a hard inquiry and resets your account age. Call the issuer before closing if you think you might want to reopen it.

Does closing a loan hurt my credit score?

Closing a paid-off loan has less impact than closing a credit card because loans do not affect your utilization ratio. You will lose the payment history, which can lower your score, but the drop is usually smaller and recovery is faster than closing a credit card.