Closing a credit card will impact everyone in different ways. Here’s why.

Credit Score Insights After Closing a Credit Card

One reader shared that after closing a credit card they had since 1981, their credit score only decreased by 4 points. Interestingly, I had a similar experience three years ago when I closed a card I’d used for more than 30 years. My score dropped between 20 to 35 points, depending on the credit bureau. Since then, my score hasn’t improved, despite having good credit and no missed payments.

When it comes to closing a credit card, it’s important to remember that various factors contribute to your credit score.

As I noted in my previous column, the effect of closing a card really depends on the overall details in your credit report. If you have a solid credit score and several other cards in good standing, the impact may be minimal. However, if your score isn’t great or if you don’t have many accounts, closing a card—especially one with a high limit—could hurt more.

Additionally, there are many credit score formulas in play today. It’s not just one single score but rather numerous versions. FICO and VantageScore are the primary providers, yet lenders might use different variations, which can lead to varying results across credit bureaus.

Your credit score fluctuates regularly because of changes in the underlying information. For instance, your account balance may shift each month, even if you aren’t actively adding or removing accounts. A high credit card balance can negatively affect your score, while a low balance might do the same in certain situations. Each month, your account ages a bit more, which is generally positive, and it’s been a while since you last opened a new account, which is also good.

You can mitigate the effects of closing cards by managing your accounts responsibly. If the drop in points is significant and impacts your financial wellbeing, you might think about opening a new account. However, if your score falls from the 800s to the low 700s, it might not be worth the hassle to “fix” it, since that score typically secures you competitive rates and terms.