Closing an account usually lowers your score, but the damage depends on what kind of account it is
When you close a bank account, your credit score does not move. Banks do not report deposit accounts to credit bureaus. When you close a credit account—a credit card, line of credit, or loan—your score typically drops, sometimes by 10 to 50 points, depending on how old the account is and how much available credit you lose. The drop is temporary. Your score recovers over time as the closed account ages and other activity on your report accumulates.
The damage is worst when you close an old account or one with a high credit limit. Both of these affect the two factors that matter most to your score: the age of your credit history and your credit utilization ratio—the percentage of available credit you are actually using. Close an old card and you shorten your average account age. Close a card with a high limit and you shrink your total available credit, which makes your other balances look larger by comparison.
Key Takeaways
- Closing a bank account does not affect your credit score at all; only credit accounts (cards, loans, lines of credit) show up on your credit report.
- Closing a credit account usually lowers your score because it reduces your available credit and may shorten the average age of your accounts.
- The damage is temporary and typically recovers within three to six months as other activity on your report accumulates.
- Closing an old account causes more damage than closing a new one, and closing a high-limit card causes more damage than closing a low-limit card.
- If you want to close an account without hurting your score, pay down the balance first, then close it after the payment posts to your report.
Why closing a credit card hurts your score more than closing a loan
Credit cards and lines of credit are revolving accounts—you can borrow, repay, and borrow again. Loans are installment accounts—you borrow a fixed amount and pay it back in fixed payments. Closing a revolving account hurts your score more because it when ready reduces your available credit, which raises your utilization ratio. If you have three credit cards with $5,000 limits each and you carry a $3,000 balance across them, your utilization is 20 percent. Close one card and your available credit drops to $10,000, so your utilization jumps to 30 percent—even though you owe the same amount.
Closing an installment loan does not have the same effect because installment accounts do not have a utilization ratio. Your score takes a hit from losing the account itself and from the change in your account mix, but the damage is smaller and recovers faster. Paying off a loan and closing it is actually neutral or slightly positive for your score, because you are removing debt from your report.
How account age affects the damage when you close
The older the account, the more your score drops when you close it. Credit bureaus calculate your average account age by dividing your total account age by the number of accounts you have. An old account pulls that average up. Close it and the average drops, which signals to lenders that your credit history is shorter than it actually is.
A closed account stays on your credit report for seven years, so it still counts toward your average age during that time—but only if you have other accounts open. If you close your oldest card and it is your only old account, the damage is when ready and visible. If you have five cards and close the oldest one, the damage is smaller because the other four still anchor your average age.
This is why closing a new account hurts less than closing an old one. A card you opened last year is not pulling your average age up much, so removing it does not pull it down much either.
The timing of the score drop and recovery
Your score drops within one or two billing cycles after you close an account. The credit card company reports the closure to the bureaus, and the bureaus update your report. Most people see the full impact within 30 to 60 days. The recovery is slower. Your score typically bounces back within three to six months, as long as you keep your other accounts in good standing and do not open new accounts or miss payments. The longer you wait after closing an account without opening new ones, the faster the recovery.
The drop is not permanent because credit scoring models weight recent activity heavily. As months pass, the closed account becomes older history, and recent positive activity—on-time payments, low balances on your remaining cards—pushes it down in importance. After seven years, the closed account falls off your report entirely.
Closing a paid-off account versus closing one with a balance
Closing an account with a balance still on it causes more damage than closing a paid-off account, because you are removing available credit while still carrying debt. If you owe $2,000 on a card with a $5,000 limit and you close it, your utilization jumps when ready. If you pay off the $2,000 first, then close the card, your utilization stays the same or improves before the account closes.
The best sequence is: pay the balance down to zero, wait for the payment to post to your credit report (usually one to two billing cycles), then close the account. This way, the bureaus see you with a lower balance before they see the account closed. The damage to your score is smaller because your utilization improves before it shrinks.
When closing an account might actually help your score
Closing an account can help your score in specific situations. If you have a card with an annual fee that you are not using, closing it removes a source of future debt and simplifies your credit profile. If you have many accounts open and you are trying to reduce the number of inquiries or accounts a lender sees, closing unused accounts can make your report look cleaner. If you are carrying high balances on multiple cards and closing one frees up mental space to pay down the others faster, the long-term benefit of lower utilization outweighs the short-term score drop.
The key is whether the account is helping or hurting you. An old card with no annual fee and no balance is helping you—it is raising your average age and lowering your utilization. Close it and you lose both benefits. A new card with a $95 annual fee and a $500 balance is hurting you—it is adding to your utilization and costing you money. Close it and you improve your position, even if your score dips first.
How to minimize score damage if you need to close an account
If you have decided to close an account, timing and order matter. Pay down the balance as much as possible before you close it. Wait for the payment to post to your credit report. Then close the account. This spreads the impact across two reporting cycles instead of concentrating it into one.
Do not close multiple accounts at once. Each closure lowers your score, and closing several in quick succession signals to lenders that you are in financial distress. Space closures out by at least a few months. Do not open new accounts right after closing one—new accounts lower your score further and reset your average account age. If you need to close an account, do it when you are not planning to borrow money in the next three to six months.
Frequently Asked Questions
Does closing a savings account hurt my credit?
No. Savings accounts, checking accounts, and money market accounts are not reported to credit bureaus. Closing them does not affect your credit score at all. Only credit products—credit cards, loans, lines of credit—show up on your report.
How much does my score drop when I close a credit card?
The drop varies based on the card's age, limit, and your current balances. Closing a new card with a low limit might drop your score 5 to 15 points. Closing an old card with a high limit might drop it 30 to 50 points. The impact is temporary and usually recovers within three to six months.
Should I close old credit cards I am not using?
Usually no. Old cards help your score by raising your average account age and keeping your utilization low. If the card has no annual fee, leaving it open costs you nothing and helps your score. If it has an annual fee, the benefit of keeping it open depends on whether the fee is worth the score benefit.
Can I close an account without my credit score dropping?
Not completely, but you can minimize the drop. Pay off the balance first, wait for the payment to post, then close the account. This reduces the damage compared to closing an account with a balance. The score still drops, but less than it would otherwise.
Does closing a paid-off loan hurt my credit?
Yes, but usually less than closing a credit card. Paying off a loan is positive for your score, but closing the account removes it from your report, which lowers your score slightly. The damage is temporary and typically recovers within a few months.