When was the last time you pulled out your credit cards, had a good long look at all of them, and asked, "What have you done for me lately?" I recently decided to cancel one of my credit card accounts, and it was special because it was in fact my oldest active card. I got that credit card back in 2010, when I was just two years out of graduate school and in the early years of my old career.
A lot has changed since then, and the credit card was no longer serving me. It had a very low credit limit, and the issuer refused my requests for an increase. It didn't offer very good benefits. And to add insult to injury, it had an annual fee. I hadn't even used the card in a few years, but continued to pay that fee, just to keep the account active. But after paying off all my credit cards last year and whipping my finances into shape, I was done being annoyed about this card. I closed the account, and waited for the fallout.
A very inconsequential dip
I have spent the last few weeks since canceling the card on the edge of my proverbial seat, anxious to see the hit to my credit score. This morning, I signed into one of my bank accounts, as one of the benefits given to me as a customer is the ability to see my FICO® Score every month, both on the website and in the bank's app. It's finally been updated, and I have my answer. *drumroll*
Featured offer: save money while you pay off debt with one of these top-rated balance transfer credit cards
Two points. My FICO® Score went down a measly TWO POINTS.
And I know the account closure was likely to blame, as there were no other significant changes to my credit during that month. Plus, my bank offered the following note to explain the change:
"FICO® Scores consider the age of a person's oldest revolving account and/or the average age of revolving accounts. Your score was impacted by the relatively low age of your oldest revolving account and/or the average age of your revolving accounts."
In fact, credit history represents 15% of a FICO® Score, which is why I took my time deciding whether I wanted to close this account.
I expected this outcome
Truth be told, I wasn't worried too much about the effect on my score. My credit score was already in the "exceptional" range for FICO (800-850), thanks to my efforts last year. And I knew that if I lost a handful of points, it wouldn't have a real impact on my finances at this time. I don't have any current need to borrow money, as I've just opened two new (and excellent) credit cards since last fall, and while I am hoping to apply for a mortgage loan next year, that's a long way off. And besides, this score dip isn't forever. I can keep making the right moves to keep my credit score in good shape.
Care and feeding of your credit score
Your credit score is pretty darn important if you're hoping to borrow money at any point. For you, that could be getting a mortgage loan, buying a car, or getting that awesome travel credit card to earn points toward future travel. So how can you ensure your credit score is in good shape? Try these tips:
- Keep old accounts open: YES, I know you just read about me closing my oldest credit card. However, this was not a choice I made lightly, and in fact, through all my years of revolving debt and a lower credit score, I kept that card open to give my score the best shot possible. I waited until I had a score in the "exceptional" range to close it.
- Pay your bills on time: This move kept my credit score above 700, even with a lot of debt. So don't discount its significance. Payment history represents a whopping 35% of your FICO® Score.
- Give your credit report a read-through: If it's been a while since you looked at your credit report, now's a good time. You can get it free every week for the rest of the year! Look for old delinquent accounts that should've fallen off your report by now, and ones that you aren't yours -- credit report errors are common. If you can show the credit bureaus that there's been a mistake, you can have it removed, bumping your score.
I have no plans to cancel any other credit cards at this point. But I am glad I managed to close this one with minimal drama (other than impatiently waiting for an updated credit score). If you're considering closing a credit card account, especially an old one, approach with caution, and be aware of the risk of a minor drop to your credit score as a result.
Alert: our top-rated cash back card now has 0% intro APR until 2025
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes.
FAQs
“While your scores may decrease initially after closing a credit card, they typically rebound in a few months if you continue to make your payments on time,” Griffin says. The primary reason your score may decrease is through losing a credit limit and increasing your utilization rate.
What happens to my credit score if I cancel my oldest credit card? ›
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.
How much does your credit score go down after Cancelling a credit card? ›
While there's truth to the idea that closing a credit account can lower your score, the magnitude of the effect depends on various factors, such as how many other credit accounts you have and how old those accounts are. Sometimes the impact is minimal and your score drops just a few points.
Will closing old credit card accounts definitely decrease your cibil score answer? ›
Yes. Closing a credit card will negatively impact your credit score. You will see a decrease in your score as bureaus don't have access to your credit information or behavior anymore. Closing a credit card will remove the associated credit history and lowers the average length of your credit history.
Should I cancel an old credit card I never use? ›
Is it better to cancel unused credit cards or keep them? In most situations, it's better to keep unused credit card accounts open, as closing credit accounts can have a negative impact on your credit score.
How do I get rid of a credit card without hurting my credit? ›
Consider downgrading the card to a no-annual-fee version if possible. Pay off any remaining balance before closing the card. If you can't do this, consider transferring the balance to a low interest rate credit card, or talking with your card issuer about a payment plan. Redeem your rewards.
Does removing old accounts affect credit score? ›
"Removing a closed account could cause a score increase, decrease or have no impact," he says. If you paid as agreed, McClary says, "It doesn't make much sense to request removal of an account." Removing an account in good standing from your credit report can backfire in other ways, Quinn adds.
Is it bad to close a credit card with zero balance? ›
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.
Does it hurt your credit score to cancel? ›
It may seem counterintuitive, but closing a credit card can hurt your credit score in the short term. You may be less likely to spend if the card is gone, but without that information on your credit report, the lender has also lost insight that could help them gauge your reliability as a borrower.
What is the average credit score in the US? ›
What is the average credit score? The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024. Credit scores, which are like a grade for your borrowing history, fall in the range of 300 to 850.
Cancelling a credit card could cause your credit score to drop by shortening your credit history and increasing your credit utilization ratio. Your credit score will typically recover within a few months if you use credit responsibly after closing a credit card.
Why did my credit score drop when an old account was removed? ›
Closing a credit card account can affect your credit score in a couple ways. If you close one account, maybe one you haven't used in a while, but still have a balance on other cards, it can increase your utilization.
Are old credit cards worth anything? ›
According to the group rules, older cards are generally worth more money, as are cards in excellent condition that have never been signed. Rare credit cards are also worth more in general, especially if they feature a celebrity or have something special about them.
What happens if I get rid of my oldest credit card? ›
When you close your oldest credit card, it remains on your credit file for up to 10 years. During that time, it can continue to positively impact your credit score. You will lose the card's credit limit when you close it, so make sure to check how that would affect your credit utilization.
How many points will my credit score drop if I close a credit card? ›
The impact of opening or closing a credit card
| What opening or closing a credit card does to your VantageScore (credit scores) |
|---|
| Average score change, increased credit score | Average score change, decreased credit score |
|---|
| Card openers | Up 24 points | Down 25 points |
| Card closers | Up 24 points | Down 18 points |
Sep 21, 2021
Make sure to cut through the magnetic stripe, chip and any embossed information on the card (such as your name and credit card number). Dispose of the pieces in different trash bags or containers to add an extra layer of security.
Do I lose my credit history if I cancel my credit card? ›
Cancelling a credit card could cause your credit score to drop by shortening your credit history and increasing your credit utilization ratio. Your credit score will typically recover within a few months if you use credit responsibly after closing a credit card.
Is cancelling a credit card after 1 year bad? ›
The age of your accounts counts toward 15% of your credit score, with longer payment histories bolstering your credit score. Closing a credit card, especially an old one, may also affect your score later because it can lower the average age of accounts.
How long does it take for an old credit card to come off your credit report? ›
An account that was in good standing with a history of on-time payments when you closed it will stay on your credit report for up to 10 years. This generally helps your credit score. Accounts with adverse information may stay on your credit report for up to seven years.
