Closing an unused credit card or loan account can feel like a sensible, tidy financial decision — but it isn't always a straightforward win for your credit score. Understanding the trade-offs first can help you avoid an unintended dip right before an important application.
Two factors closing an account can affect
Closing a revolving credit account (mainly credit cards) can influence your score in two main ways: it reduces your total available credit, which can raise your overall credit utilisation percentage even if your spending hasn't changed; and, if it's one of your oldest accounts, it can eventually shorten your average and longest credit history length once it drops off your file.
Worked example: the utilisation effect
| Before closing card B | After closing card B | |
|---|---|---|
| Card A: £500 balance / £2,000 limit | Included | Included |
| Card B: £0 balance / £3,000 limit | Included | Closed — removed |
| Total balance | £500 | £500 |
| Total limit | £5,000 | £2,000 |
| Overall utilisation | 10% | 25% |
Even though spending didn't change at all, closing the unused card with the larger limit more than doubled the overall utilisation percentage in this example — a clear illustration of why "tidying up" isn't always neutral.
When closing an account probably makes sense anyway
- The account has an ongoing annual fee you no longer get value from, and the utilisation impact would be small relative to your other available credit
- You're at genuine risk of overspending if the account stays open, and the behavioural benefit of closing it outweighs a modest, temporary score effect
- It's a joint account linked to someone you're no longer financially connected to, and you specifically want to end that financial association — see our guide on joint accounts and financial associations
- The card has been replaced by a clearly better product from the same or another provider, and you don't need the extra available credit
When it's usually worth keeping an account open
A better alternative for unused cards
Rather than closing an old, unused card outright, consider keeping it open with occasional very light use — a small recurring purchase paid off in full each month — which maintains both your available credit and an active positive payment history, without the risks of an idle, unused account (such as the provider closing it unilaterally for inactivity, which has the same effect anyway).
Timing matters
If you do decide to close an account, avoid doing so in the months immediately before a mortgage or other major credit application, since any utilisation increase needs time to settle and be reflected accurately once your next statement cycle passes.
For related reading, see our guides on How Credit Utilisation Is Calculated and Why It Matters and The Pros and Cons of Credit-Builder Cards.
The bottom line
Closing an old credit account isn't automatically good financial housekeeping from a credit score perspective — it can raise your utilisation and shorten your credit history. If the account has no ongoing cost and you're not at risk of misusing it, it's often better left open with occasional light use, particularly in the run-up to a major application.