In general, you should be able to close your account by calling the credit card company and following up with a written notice. If you still have a balance when you close your account, you are required to pay off any balance on schedule. The card company is allowed to charge interest on the amount you still owe.
It's better to leave it open and let the company close it. If it is one of your oldest credit card it might be beneficial to keep it open since that helps your credit age.
Closing the card will not decrease your score at all, unless you are carrying large balances on your cards and the additional credit limit with the new card may be helping you.
Typically, leaving your credit card accounts open is the best option, even if you're not using them. However, there are a few valid reasons for deciding to close an account.
Canceling a credit card is usually a bad idea, but there are a few exceptions. You don't want to close an account if it makes your credit utilization ratio go up, especially to more than 30%. Alternatives to closing a credit card include upgrading or downgrading the credit card in question to better suit your needs.
Closing one credit card account likely won't make a big enough dent to hurt your chances of approval with future lenders, especially if you'll still have another form of revolving credit open, but it's worth being mindful of this if you want the highest credit score possible.
Your credit utilization ratio goes up
By closing a credit card account with zero balance, you're removing all of that card's available balance from the ratio, in turn, increasing your utilization percentage. The higher your balance-to-limit ratio, the more it can 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.
Yes, you can – and if you have an outstanding balance you absolutely should. You're required to pay off the balance on a closed credit card just like you are with an open account. If you don't make the payments (or make them late), the account may be marked as delinquent.
Keeping a low credit utilization ratio is good, but having too many credit cards with zero balance may negatively impact your credit score. If your credit cards have zero balance for several years due to inactivity, your credit card issuer might stop sending account updates to credit bureaus.
Here's what can happen when you close an inactive card. It may lower your total available credit. This might seem obvious, but closing an account takes away some of your total available credit. And that can have the unintended consequences of lowering your credit score.
Key takeaways
If you don't use your card, your credit card issuer may lower your credit limit or close your account due to inactivity. Closing a credit card account can affect your credit scores by decreasing your available credit and increasing your credit utilization ratio.
Pay off your credit card debt
No jump in CUR or late payments means no credit score penalty. If you can't pay off your cards entirely, McClary still recommends lowering your debt as much as possible before closing a card. That will help reduce your utilization percentage.
How long do closed accounts stay on your credit report? Negative information typically falls off your credit report 7 years after the original date of delinquency, whereas closed accounts in good standing usually fall off your account after 10 years.
Your credit score may drop after you pay off debt because the credit scoring system factors in things like your average account age and credit mix. If you applied for a loan to consolidate debt, the lender's hard credit inquiry can also ding your score.
Owning more than two or three credit cards can become unmanageable for many people. However, your credit needs and financial situation are unique, so there's no hard and fast rule about how many credit cards are too many. The important thing is to make sure that you use your credit cards responsibly.
If you close a credit card with a balance, you'll still be responsible for that debt. Card issuers will continue to send statements in the mail, and interest will still be applied to that balance.
If you close your oldest accounts, you risk lowering the length of your credit history, which accounts for 15% of your FICO Score. Pay off all your credit card balances. It's important to pay off all your credit card balances before closing a credit card — not just the one you're closing.
Some people, however, have concerns that a zero balance can harm their credit scores. It's not true – a zero balance won't bring down your credit score, unless however, you have a zero balance because you haven't been using your credit card.
In general, keep unused credit cards open so you benefit from longer average credit history and lower credit utilization. Consider putting one small regular purchase on the card and paying it off automatically to keep the card active. At Experian, one of our priorities is consumer credit and finance education.
Closing a personal line of credit can harm your credit score, primarily by affecting your credit utilization ratio. When you close a line of credit, you reduce your overall available credit, which can also impact the length of your credit history.
It may be possible to reopen a closed credit card. In general, it's more likely to be an option if the card was closed for a minor reason, such as an inactivity, or if you closed it yourself. If your card was closed due to missed payments, on the other hand, your lender may not be willing to reinstate it.