Does Closing a Credit Card Affect Your Credit Score? (UK)
Closing a credit card can affect your credit score, but not always in the way people expect. It might lower your score a little, make no real difference or even help, depending on your balances, how many cards you have and what you're planning next.
Key takeaways
- Closing a card reduces your total available credit, which can raise your credit utilisation if you carry balances on other cards.
- A closed account stays on your credit report for six years from when it's closed, so its payment history doesn't vanish overnight.
- Having lots of unused credit can also make some lenders cautious, so closing cards you don't need can make sense.
- Clear the balance first and cancel any recurring payments on the card.
- If you're about to apply for a mortgage, it's often best to avoid big changes just before.
This is general information, not financial advice.
How closing a card can lower your score
Your credit utilisation can go up
Credit utilisation is the share of your available credit that you're using. If you have two cards with £2,000 limits and owe £1,000 in total, you're using 25%. Close one of them, and that same £1,000 is now 50% of your remaining £2,000 limit.
Experian suggests keeping utilisation below about 25% to help protect your score. So if you carry balances, closing a card can push the percentage up. If you pay your cards off in full every month, this matters much less. See Credit Utilisation Explained: How Much of Your Limit Should You Use?
You lose an active, well-run account
An older card that you've managed well for years shows lenders a long record of on-time payments. Once closed, it stops adding new monthly payment history. Its past record remains for a while, but it no longer shows ongoing good management.
How long does a closed card stay on your credit report?
In the UK, closed or settled accounts usually stay on your credit report for six years from the date they're closed. Experian's credit report guide explains that settled accounts remain on file for six years. Your record of on-time payments is still visible to lenders during that time. Missed payments or defaults on the account also stay for six years from when they were recorded.
So closing a card with problems on it won't remove those problems any faster.
When closing a card can help
- You have more credit than you need. Experian notes that if the amount of credit available to you is too high, some lenders may worry you could take on more than you can manage.
- The card has an annual fee you no longer get value from.
- You're tempted to overspend. Removing temptation is a perfectly good reason.
- You're separating from a partner and the card has additional cardholders. See Additional Cardholders Explained: Who Pays and How It Affects Credit.
- You've finished a balance transfer and the old card has a high rate and no balance.
When it may be better to keep a card open
- It's your oldest account and it's free to keep.
- You carry balances elsewhere and closing it would push your utilisation up sharply.
- You're about to apply for important credit such as a mortgage in the next few months.
- It's your only card with no foreign transaction fee or another useful feature.
If you keep a card you rarely use, the provider may close it after a long period of inactivity or reduce the limit. A small purchase every few months, paid off in full, keeps it active.
How to close a credit card safely
- Clear the balance in full, including any interest that's built up since your last statement. Ask your provider for a settlement figure.
- Move recurring payments such as subscriptions and insurance to another card or account.
- Redeem any rewards first. Points and cashback are often lost when you close.
- Contact your provider to close the account by phone, in the app or in writing. Cancelling your Direct Debit alone doesn't close the card.
- Ask for written confirmation that the account is closed with a nil balance.
- Check your credit report after a month or two to make sure it shows as settled or closed.
- Destroy the card securely.
Closing a card after a balance transfer
When you move a balance to a new balance transfer card, the old card is left with a zero balance. Whether to close it depends on the points above. Don't close it until the transfer has fully gone through and you've confirmed a zero balance, as payments can take a few days to clear. See How Do Balance Transfers Work? A Plain-English UK Guide.
What about lowering the limit instead?
If you want to keep an account but are worried about temptation, ask your provider to reduce the limit. You keep the account open and its history continues, while limiting how much you could spend. It still reduces your total available credit, so the utilisation effect is similar.
Frequently asked questions
Will closing a credit card with no balance hurt my score?
It might lower it slightly if you carry balances on other cards, because your utilisation rises. If you have no other balances, the effect is usually small.
Is it better to close an old card or a new one?
Usually it's better to keep older, well-managed, fee-free accounts and close newer or more expensive ones. Every situation is different.
Should I close credit cards before applying for a mortgage?
Avoid big changes in the months before a mortgage application. Some mortgage lenders look at total available credit, so ask a mortgage adviser what's best for your situation.
Does closing a card remove missed payments from my credit report?
No. Missed payments and defaults stay on your credit report for six years from when they were recorded, whether the account is open or closed.
How do I check that my card is closed?
Ask your provider for written confirmation, then check your credit reports with Experian, Equifax and TransUnion. The account should show as closed or settled.
This is general information, not financial advice. Credit scoring works differently at each credit reference agency and lender.