09/07/2026
Great explanation of why it might work against you to close an account.
Why Closing a Credit Card Can Lower Your Credit Score
โI paid it offโฆ so why did my score drop?โ
Because paying off a card and closing a card are two different things.
Hereโs why your score may decrease:
๐ 1. Your credit utilization can increase.
Example:
Before:
* Card A: $5,000 limit
* Card B: $5,000 limit
Total available credit = $10,000
You owe $1,000
Utilization = 10%
Now you close Card Bโฆ
Available credit drops to $5,000
You still owe $1,000
Now your utilization is 20%
Same debtโฆ
Different score.
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๐ 2. You lose available credit.
Lenders generally like to see that you have access to credit and use it responsibly.
Closing an account reduces your total available credit.
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๐ 3. It may affect your credit history over time.
A closed account in good standing can remain on your credit reports for years, but eventually it may fall off. When it does, your average age of accounts could decrease, which can affect your score.
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When does it make sense to close a card?
Sometimes it absolutely does.
โ
High annual fees
โ
Security concerns
โ
Fraud
โ
You know youโll overspend if you keep it open
Itโs not always a bad decision.
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Bottom Line
Donโt close a credit card just because itโs paid off.
Sometimes keeping it openโand using it responsibly, can be better for your credit profile.
