Closing a credit card can affect your credit score by raising your utilisation ratio, shortening your credit history, and reducing your credit mix. The size of the impact depends on your full credit profile, not just the card you are closing.
This article is information only. It explains how credit scoring works in this context. It is not personalised financial advice. Your situation will differ from the general principles described here.
What is the direct answer?
Closing a credit card will not automatically cause a large or permanent drop in your score. The effect depends on three things: how much of your available credit you are already using, how old the account is relative to your other accounts, and whether it is the only card on your file.
For some people, the impact is negligible. For others, particularly those with a limited credit history or high utilisation elsewhere, it can be more noticeable.
How does closing a card affect your credit utilisation?
Credit utilisation is the proportion of your total available credit limit that you are currently using. It is calculated across all your revolving credit accounts, which includes credit cards and some overdrafts.
When you close a card, its credit limit is removed from your total available credit. If you have balances elsewhere, your utilisation ratio rises.
An example: if your total available credit across two cards is £4,000 and you are using £800, your utilisation is 20%. Close one card with a £2,000 limit (and a zero balance) and your total available credit drops to £2,000. Now you are using £800 out of £2,000, which puts utilisation at 40%.
UK credit reference agencies, including Experian and TransUnion, generally consider lower utilisation more favourably. Experian notes that staying below 25% to 30% of available credit tends to support a stronger score, though exact thresholds vary by agency and lender.
If you are planning to close a card, it may help to check what your utilisation would look like across your remaining accounts before doing so.
How does it affect the age of your credit accounts?
UK credit reference agencies consider the length of your credit history as part of their scoring models. Lenders generally like to see a track record.
The good news here: a closed account in the UK stays on your credit file for six years from the date it is closed. Any positive payment history attached to it continues to count in your favour during that window.
The effect on account age only becomes relevant after those six years, when the account drops off your file entirely. If the card you are closing is your oldest account, that could reduce the average age of your credit history further down the line.
If you are thinking about closing a card that has been open for ten or more years and has a strong payment record, this is worth factoring into your decision, particularly if your other accounts are relatively new.
What about credit mix?
Credit mix refers to the variety of credit types on your file. Having a mix of revolving credit (such as credit cards) and instalment credit (such as personal loans) can be a minor positive factor.
Closing a card only affects credit mix if it removes the last of a particular type. If you have two credit cards and close one, your mix is unchanged. If you close your only card and have no other revolving credit, that one category disappears from your profile.
For most people with any existing borrowing history, this factor tends to have a smaller effect than utilisation.
When does it make sense to keep a card open?
There are situations where keeping an unused card open is worth considering:
- You are planning to apply for a mortgage, car finance or a significant loan in the next six to twelve months. Lenders assess affordability partly based on your credit profile at the point of application. A stable, lower utilisation rate can support that picture.
- The card is your oldest account and closing it would meaningfully shorten your visible credit history.
- You have high utilisation on other cards and the open (unused) card is helping keep your overall ratio down.
- The card carries no annual fee, so there is no ongoing cost to keeping it dormant.
If the card is kept open but unused for a long period, some lenders may close it themselves. Occasional small purchases, paid off in full, can help keep an account active.
When does closing a card make more sense?
There are also good reasons to close a card even if it causes a short-term score change:
- The card has an annual fee you are no longer getting value from.
- You find having the available credit a temptation that affects your spending habits.
- The account is linked to someone you are financially separating from. A financial association with another person can affect how lenders view your application.
- The card is from a lender whose terms, rates or practices you are no longer comfortable with.
A short-term dip in your credit score is not always a reason to avoid a decision that improves your overall financial position.
What to check before you close a card
Before closing a credit card, a few practical steps are worth taking:
- Check your current utilisation. Use your credit file to see what your utilisation would look like with the card removed. Free access to your credit report is available via the main credit reference agencies in the UK.
- Clear any remaining balance. Closing a card with a balance still on it can complicate things. Interest may continue to accrue and the account may be reported differently to credit reference agencies.
- Redeem any rewards. Points, cashback or air miles are typically forfeited when you close the account.
- Cancel any recurring payments linked to the card. Subscriptions or direct debits set up against that card number will fail after closure.
- Get written confirmation of closure. Ask the lender to confirm in writing that the account is closed and the balance is nil. This creates a record you can use if any error appears on your file later.
- Check your credit file a month or two later. Confirm the account shows as closed with a nil balance on your Experian, Equifax and TransUnion reports.
Frequently asked questions
Will closing a credit card definitely lower my score?
Not necessarily. It depends on your overall credit profile. If the card you close carries no balance and is not your oldest account, the effect may be small. If closing it significantly raises your utilisation ratio or removes your only account of a particular type, the impact could be more noticeable.
How much does credit utilisation affect my score?
Utilisation is one of the more influential factors in UK credit scoring. Keeping it below 25% to 30% of your total limit is generally considered favourable, though exact thresholds vary between Experian, Equifax and TransUnion.
Does a closed account stay on my credit file?
Yes. In the UK, a closed account typically stays on your credit file for six years from the date it was closed. Positive payment history on that account continues to count in your favour during that period.
When might it be worth closing a card despite the score impact?
If the card carries a high annual fee you no longer use, tempts you into spending you cannot afford, or is linked to a joint account you want to separate from, closing it may be the right choice even if it causes a short-term score dip.
Should I pay off the balance before closing a card?
Clearing the balance before closure is generally a sensible step. A remaining balance on a closed card can still accrue interest and affect your utilisation calculation, depending on how the lender reports it to credit reference agencies.
How long does any score impact last?
A score change from closing a card is not permanent. As you continue using other credit responsibly, utilisation adjusts and your overall profile is reassessed each month. The closed account's history remains on your file for six years and continues to support your record.
Where to learn more
For a broader look at credit cards, how they work and what to consider when choosing one, see the credit cards guide.
For more detail on how credit scores are calculated in the UK, the credit reports and scores guide covers the main credit reference agencies and what each one weighs.
MoneyHelper (0800 138 7777) offers free, impartial guidance on credit and borrowing decisions.
Sources
- Experian, credit utilisation guidance and credit file information (experian.co.uk)
- MoneyHelper, guidance on credit scores and managing credit cards (moneyhelper.org.uk)
- Will closing a credit card definitely lower my score?
Not necessarily. It depends on your overall credit profile. If the card you close carries no balance and is not your oldest account, the effect may be small. If closing it significantly raises your utilisation ratio or removes your only account of a particular type, the impact could be more noticeable.
- How much does credit utilisation affect my score?
Utilisation — the proportion of available credit you are using — is one of the more influential factors in UK credit scoring. Keeping it below 25% to 30% of your total limit is generally considered favourable, though exact thresholds vary between Experian, Equifax and TransUnion.
- Does a closed account stay on my credit file?
Yes. In the UK, a closed account typically stays on your credit file for six years from the date it was closed. Positive payment history on that account continues to count in your favour during that period.
- When might it be worth closing a card despite the score impact?
If the card carries a high annual fee you no longer use, tempts you into spending you cannot afford, or is linked to a joint account you want to separate from, closing it may be the right choice for your financial situation even if it causes a short-term score dip.
- Should I pay off the balance before closing a card?
Clearing the balance before closure is generally a sensible step. A remaining balance on a closed card can still accrue interest and affect your utilisation calculation, depending on how the lender reports it to credit reference agencies.
- How long does any score impact last?
A score change from closing a card is not permanent. As you continue using other credit responsibly, utilisation adjusts and your overall profile is reassessed each month. The closed account's history remains on your file for six years and continues to support your record.