Why Your Credit Score Can Drop When You Close a Credit Card

Episode 58 of The Credit Score Podcast explores a frustrating but common credit score surprise: why closing a credit card often lowers your score, even if you're trying to simplify your finances. Lucas and Luna break down the mechanics behind the drop—focusing on utilization ratio, average age of accounts, and credit mix. They use a concrete example: a listener who closed a store card with a $5,000 limit and saw their FICO fall 35 points. They explain how closing a card reduces your total available credit, potentially spiking utilization, and can shorten your credit history if the card was one of your oldest. They also discuss exceptions—like closing a card with an annual fee or a high interest rate—and offer strategies for minimizing the damage, such as paying down balances first or keeping a card open with a small recurring charge. By the end, listeners understand exactly when closing a card makes sense and when it's better to leave it open, even if unused. #CreditScore #FICO #CreditCard #UtilizationRatio #AverageAgeOfAccounts #CreditMix #CreditReport #StoreCard #AnnualFee #ClosedAccount #CreditHistory #Finance #PersonalFinance #CreditTips #FexingoBusiness #BusinessPodcast #TheCreditScorePodcast #LucasAndLuna Keep every episode free: buymeacoffee.com/fexingo