What happens to your credit score when you close accounts?

Closing a credit account can hurt your credit score in a couple of ways. First, it reduces your total available credit, which increases your credit utilization ratio if you carry balances on other cards. For example, if you had $10,000 in total credit and close a card with a $3,000 limit, your available credit drops to $7,000, making any existing balances look proportionally larger. Second, closing an older account can shorten your average account age, which also negatively affects your score since length of credit history matters. The impact is usually more significant if you close an old account or one with a high credit limit. Accounts with no balance and low limits typically cause less damage when closed.