How much does cancelling a credit card lower your score?

The score impact depends on two factors: how much available credit the card represents (affecting utilization), and how old the card is (affecting average account age). Cancelling your oldest card with a high limit can drop scores by 15–30 points. Cancelling a newer, low-limit card you recently got may drop scores only 5–10 points.

Should I cancel a credit card I never use?

If the card has no annual fee, keeping it open is usually the best choice. A dormant card with zero balance improves your utilization ratio and maintains account history. If the card has an annual fee you cannot justify, cancel it — but consider asking the issuer to downgrade to a no-fee version first to preserve the account history.

Does a cancelled credit card still affect my credit score?

Yes, for years after closing. Closed accounts with positive history (on-time payments) remain on your credit report for up to 10 years in Canada. During that period, the account continues to contribute to your average account age positively. The utilization impact, however, is immediate — the credit limit is removed from your available credit the moment the account is closed.

What happens to my available credit when I cancel a credit card?

Your available credit decreases by the closed card''s credit limit. This increases your utilization ratio on your remaining cards. Example: You have $15,000 in total credit across three cards and a $3,000 balance. Utilization = 20%. You cancel a card with a $5,000 limit. Now you have $10,000 available with a $3,000 balance. Utilization = 30%. Your score may drop because utilization increased.

Is it better to cut up a credit card or cancel it?

Cutting up the card (but keeping the account open) is better for your credit score than cancelling it. The account history and available credit limit remain. You eliminate the spending risk without the score impact. If the card has an annual fee, contact the issuer to keep the account open with a fee waiver or product downgrade.

Will my credit score recover after cancelling a credit card?

Usually yes, within 3–12 months. Your utilization ratio recovers as you pay down balances or your score adjusts to the new credit profile. The average account age takes longer to recover — it improves gradually each month as all remaining accounts age. The closed account also continues to contribute positively to account age for years while it remains on your report.

Does Closing a Credit Card Hurt Your Credit Score in Canada?

Q: Does closing a credit card hurt your credit score in Canada?

Yes, usually temporarily. Closing a credit card can lower your score in two ways: it reduces your total available credit (increasing your utilization ratio), and if it was an older card, it can reduce your average account age. The impact ranges from 5–30 points depending on which card you close and your overall credit profile.

Closing a credit card is one of the most misunderstood credit topics in Canada. Many people assume cancelling a card is responsible — but from a credit score perspective, an unused open card is usually better than a closed one. The key is understanding which cards are safe to close and which ones protect your score. This article is part of the Canadian credit scores hub.

How closing a card affects your score: two mechanisms

Mechanism 1: Utilization ratio increases

When you close a card, that card’s credit limit disappears from your “available credit.” Your balances on other cards haven’t changed, but the denominator of your utilization ratio has shrunk.

Scenario	Total Credit	Balance	Utilization	Score Effect
Before closing: 3 cards ($5K, $5K, $5K)	$15,000	$3,000	20%	Healthy
After closing $5K card	$10,000	$3,000	30%	Moderate concern
After closing $5K card (if balance was $5K)	$10,000	$5,000	50%	Significant hit

Mechanism 2: Average account age decreases (if closing an older card)

Credit scoring models reward long account histories. Closing your oldest card removes a significant anchor from your average account age — for a full picture of how account age builds over time, see How Long to Build Good Credit in Canada.

Scenario	Card Ages	Average Account Age
4 cards: 12, 8, 5, 2 years old	All open	6.75 years
Close the 12-year-old card	8, 5, 2 years	5.0 years
Close the 2-year-old card	12, 8, 5 years	8.33 years

Closing an older card has more score impact on account age than closing a new one.

Which cards are safe to close

Card Type	Safe to Close?	Why
New card (under 2 years old), low limit, no annual fee	✅ Relatively safe	Little account age contribution; low limit impact
Newer card with high annual fee you can’t justify	✅ Consider closing	Downgrade to no-fee version first if possible
Old card (5+ years), no annual fee, low or no balance	❌ Keep open	Strong account age contribution; free to hold
Old card with high limit, no annual fee	❌ Keep open	Major utilization benefit; free to hold
Store card with high interest, no annual fee	❌ Keep open if low limit	Even store cards contribute to history
Duplicate card (you have 3 Mastercards)	⚠️ Depends	Close the newest one with the smallest limit

The annual fee question: when it is worth cancelling

If a card costs $120+/year and the rewards don’t justify the fee, the math may favour cancelling — even with a modest score impact:

Option	Score Impact	Financial Impact
Cancel the card	−5 to −25 points (temporary)	Save $120+/year
Keep it open	No change	Lose $120+/year
Downgrade to no-fee version	✅ No score impact	Save $120/year; keep account history

Best approach: Before cancelling any annual fee card, call the issuer and ask:

Can you waive the fee this year?
Can I be downgraded to the no-fee version of this card?

Many Canadian issuers (TD, RBC, Scotiabank, etc.) offer product transfers that preserve your account history while eliminating the fee.

How to cancel a credit card with minimal score impact

If you decide to cancel:

Pay the balance to zero — never close a card with a balance outstanding
Redeem any outstanding rewards — points are forfeited on cancellation
Ask about a product downgrade first — may preserve account history
Cancel lower-limit or newer cards first — minimizes utilization and account age impact
Wait 3–6 months after opening any new credit — stacking a cancellation on a recently opened account amplifies the score drop
Call to cancel officially — do not just stop using the card; inactivity may lead to involuntary closure on the issuer’s terms, plus outstanding annual fee charges

Will a cancelled card still affect my credit report?

Yes — positively, for a long time:

Status	Impact on Credit Report
Closed account (good standing)	Stays on report up to 10 years; positive payment history continues to count during this period
Closed account (missed payments before closing)	Negative history stays 6–7 years from date of last activity
Closed account — average account age	The account continues to count in average age calculations while it remains on the report

The score damage from closing a card is primarily the immediate utilization increase — which is real but typically recovers within a few months as balances are paid down or the scoring model adjusts.

Credit score factors and how closing a card affects each

Factor	Weight	How cancellation affects it
Payment history	35%	No impact (past payments remain on file)
Credit utilization	30%	Increases (less available credit)
Length of credit history	15%	May decrease average age of accounts
Credit mix	10%	Small impact if this was your only credit card
New credit inquiries	10%	No impact from cancellation itself

Timeline of credit score recovery after cancellation

After cancelling a card, the score impact typically follows this pattern:

Immediately: Score drops due to higher utilization ratio
1–3 months: Utilization settles; score may partially recover as other accounts update
6–12 months: Score typically stabilizes if no other negative factors
6–10 years: Cancelled account with positive history remains on credit report, continuing to contribute to credit age

The recovery timeline depends heavily on whether the cancelled card was your oldest account and whether the cancellation significantly changed your utilization ratio.