A zero balance doesn’t protect your credit score when you close a credit card and carry balances on your other cards. Its limit stops counting toward your available credit, so those balances take up a bigger share of it. Pay them down first, and if you’re applying for a big loan soon, wait until it’s final.
The number that moves is your credit utilization, your total card balances divided by your total card limits. A paid-off card adds limit without adding debt, which is why it keeps that number low while it stays open.
Say you owe $2,000 across cards with $10,000 in combined limits. That’s 20% utilization. Close a paid-off card with a $5,000 limit, and the same $2,000 is now 40% of the $5,000 you have left. Your utilization doubles, from 20% to 40%, without a dollar of new debt. FICO says closing a card can lower your score when it raises utilization like this.
The hit to your account age comes later. A card closed with no late payments can stay on your credit reports for as long as 10 years, and FICO keeps counting its age while it’s there. Once it drops off, your average account age can fall, and if it was your oldest card, your credit history will look shorter too.
If you carry no balance on any card, closing one won’t change your utilization, which stays at 0%. With balances elsewhere, two moves limit the damage.
- Pay down your other balances first. In the example above, cutting the $2,000 to $1,000 before you close keeps utilization at 20%, right where it started.
- Hold off if you’ll apply for a mortgage or car loan in the next few months. Keep the card open until that loan is final, so the score your lender pulls still counts its limit.
Before you call the issuer, figure your utilization with the card and again without it. Pay your balances down until the second number falls to the first, then make the call.
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