Closing a credit card without careful consideration can carry unexpected credit score consequences. While eliminating unused accounts may feel like a tidy financial move, you risk increasing your credit utilization ratio and lowering the average age of your accounts—both critical factors in your FICO score.

Before you swipe “close account” on your banking app, it’s essential to understand how these mechanisms work together, and under what circumstances it actually makes sense to let go of an unused line of credit.

How closing accounts impacts your credit score

Your credit score is built on multiple pillars, but two stand out when it comes to account closures: credit utilization ratio impacts and average account age.

The credit utilization ratio measures how much available credit you’re using, and it accounts for approximately 30% of your FICO score. If you carry $2,000 in balances across all cards and have $10,000 in total limits, you’re using 20% of your available credit.

Imagine you close a card with a $3,000 limit. Suddenly your total available credit drops to $7,000, and that same $2,000 balance now represents a 29% utilization ratio. At that level, many scoring models will view your usage as risky and may lower your score as a result.

Another factor is the average age of your accounts. Long-held credit cards act as proof of a solid borrowing history. When you close an older card, you shorten the weighted average of your account history, potentially cutting into your creditworthiness.

When you should keep unused accounts open

• No annual fee, free to keep: A zero-cost card contributes to your available credit and historical depth.
• Planning a major loan application: Whether for a mortgage, auto loan, or personal financing, a higher score matters when lenders review your profile.
• Desire to maximize credit limits: More available credit keeps utilization ratios low, an essential practice for top FICO performance.
• Protecting account age: Older accounts bolster the longevity component of your credit history.

Situations where closing makes sense

• High annual fees without value: If the card’s cost outweighs its rewards and you can’t downgrade, closing may be warranted.
• Recently opened accounts: Newer cards have minimal impact on average age, so they’re safer to close if needed.
• Overspending concerns: When temptation overrides discipline, cutting ties might protect you from mounting debt.
• Simplifying complex finances: If managing multiple accounts causes missed payments, consolidation may be healthier.

Practical checklist before closing an account

• Review your entire credit history and note each card’s age and limit.
• Calculate your projected utilization ratio after closure; keep it below 30%.
• Assess upcoming borrowing needs—mortgages or major loans should come first.
• Consider downgrading to a no-fee card rather than full closure.
• Keep cards active through small automatic payments to prevent issuer-initiated closures.

Best practices for managing unused credit cards

Even if you decide to retain an unused card, you still need a management strategy to prevent inactivity penalties. Set up a small recurring payment—such as a streaming subscription or utility bill—and pay it off automatically each month. This keeps your account alive without adding risk to your budget.

Monitor annual and hidden fees carefully. Annual notices can slip into fine print, and an unexpected fee can turn a free card into a costly one. Mark renewal dates on your calendar to re-evaluate card benefits at least once a year.

Finally, perform frequent reviews of your credit reports—ideally through free annual reports from the major bureaus. Tracking changes ensures you catch any unexpected closures, errors, or unauthorized accounts before they harm your score.

Conclusion: balancing convenience with credit health

Closing unused credit accounts can be a smart move when fees, overspending risk, or simplification outweigh the benefits of available credit and account age. However, closing cards without a clear strategy often leads to higher utilization ratios and shorter credit histories—both of which can erode your credit score.

By following a methodical checklist, using selective downgrades, and keeping low-cost accounts active, you can maintain a strong credit profile while eliminating unnecessary complexity. In the end, the decision to close should be driven by both your financial goals and the impact on your overall credit health.