What happens to your credit score when you close an account?

Closing a credit account can lower 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 a higher percentage of your limit. Second, if the closed account was your oldest account, it can shorten your average credit history length over time, which also negatively affects your score. The impact varies depending on your overall credit profile, but closing accounts generally does more harm than good to your score.