Does closing a credit card affect your credit score?


We often talk about how to build credit by getting a credit card and managing it sensibly. But what about when you need to close a credit card account?



Our guide will explain how to go about it in the right way and what to look out for if you decide to close your credit card account. Closing down a credit card might seem like a good move but it could have consequences including an impact on your credit score.


A closed credit card can be quite noticeable to lenders when they are looking at your credit file so before you go ahead, you should be aware of the impact it can have. In some circumstances it can be a good idea and we’ll explain how.

How does closing a credit card impact your credit score?

Before moving ahead and closing a credit card, you should consider all your credit agreements. Most lenders when deciding whether or not to lend to you, will look at your overall credit file and any different agreements, like cards or loans, that you have. Next they will look at how much of this credit you have used.


So for example, if you have £1,000 of credit available across different accounts but you have used £250, you have used 25% of your available credit. Lenders will use this figure to decide whether or not you can manage the credit available to you.


Using this example, if you decide to cancel an unused card that has an available balance this could then affect the overall figure for how much credit you have used.

Some reasons not to close your credit card

Closing a card that you’re not using might seem like a good idea. But before you go ahead, check out our list of things to consider. You might decide on balance that it’s best not to cancel:

  • As mentioned above, think about your total available credit and how much you have used.
  • If you’ve had the card for a while, cancelling it might affect your credit history.
  • You might be considering applying for other credit or a mortgage and any sudden changes on your credit file could have an impact on this.
  • You might have rewards or incentives with your card which you would lose.

Ways to close your credit card safely

Ok so after careful consideration, you’ve decided to close your credit card account. There are a number of ways to do this so you should make sure you close down your account in the right way.


Our tips on closing your credit card:

Contact your credit card company


A good first step is to call your card provider. There may be factors to consider when closing an account, such as fees to pay or unused rewards you may want to use before cancelling.

Pay off any remaining balance


It sounds like an obvious point but making sure you pay down your card is key. You won’t be able to close an account with a remaining balance so make you sure you pay it off or transfer it to another card.

Cancel your Direct Debit


Once your balance is clear and you have informed your provider you wish to cancel, you can cancel any Direct Debits for your card. Keeping these going may cause issues with payments taken in error so shut them down when you can.


In addition to the above, we also recommend that:

  • Check if there are any rewards which you would lose if you were to close your card. You may be able to redeem these benefits before you cancel or there be a window of time they need to be used by.
  • You can confirm your account closure in writing or by sending an email to the card provider. This way, you have a copy of the fact you have advised the company of your wish to close your account.
  • As well as Direct Debits you may have recurring payments that are using your card details. These can be things like gym memberships or streaming subscriptions and will need to be cancelled before your card account is closed.

Once you’ve followed the above steps, it’s a good idea to cut up your card and dispose of it securely. This will reduce any temptation to start using it (and also prevent anyone from using fraudulently. It’s also good practice to check on your credit file once your account has been cancelled to make sure this has been accurately reported and there are no mistakes.

Some alternatives to closing your card

If you decide not to close your card but you still don’t want to use it for whatever reason, there are some good alternatives to cancelling.

  • Put the card away
    If you want to keep the card but you’re not using it, put it in a drawer or other safe place. You won’t be tempted to use it but it will remain part of your credit file.
  • Set up a regular payment
    Alternatively, if you want the card to remain active but you don’t want to spend a lot with it, consider using it for a small regular payment. Using it for a regular subscription like a streaming service or food and drink delivery will allow you to keep it active but it will be easier to make sure the card is paid off each month with a regular payment set up also.
  • Ask for a new card
    If your card has a high interest rate or you want to see if you can get a card with better rewards, ask your provider. You may be eligible for a card with a lower rate and incentives that works out better for you.