Friends, if you have a credit card that you’re no longer using, or you’re fed up with the annual fee, you might be tempted to close it, right? But wait! Closing a credit card can have a negative impact on your CIBIL score – such as increasing credit utilization or shortening your credit history.
I’ve done the research, and here are some simple steps on how to close a card without harming your score. These tips are based on the latest 2025 rules, and if followed correctly, your score will remain stable. Let’s explain step by step!
What impact does closing a credit card have on CIBIL?
Problems that occur when you close a card:
- Credit Utilization Increases: Suppose you have two cards, with a total limit of 2 lakhs. Closing one card reduces the limit to 1 lakh. If the balance is 50,000, the utilization becomes 50% (if it exceeds 30%, the score drops).
- Credit History Shortens: Closing old cards reduces the average age, which carries a 15% weight in CIBIL.
- Mix Can Be Depleted: If only one card remains, the credit mix (secured/unsecured) is affected.
But don’t worry; if you do it correctly, your score won’t drop more than 10-20 points and will recover over time.
Step-by-Step Guide: The Right Way to Close a Card
Here are easy steps that will work for banks like HDFC, SBI, or Axis:
- Clear the entire balance: Clear the entire due amount, minimum payment, and interest before closing. Request a zero balance – this will prevent a negative mark.
- Check auto-payments and rewards: Cancel all auto-debits (like bills), otherwise a missed payment could cause a score drop. Redeem rewards and points, otherwise they will be wasted.
- Close new cards first: Don’t discard old cards (those that are 5+ years old) – they increase your credit age. Close new cards, they will have less impact on your score.
- Transfer balance: If you have another card, transfer the balance to that (at lower interest). This does not reduce the limit, and utilization remains under control. It is easy in banks like ICICI.
- Request the bank: Request through the app, net banking, or customer care (1800 number). You can send a written letter on email. Wait 45 days for confirmation – CIBIL updates take time.
- Monitor the score: After closure, check the score through the CIBIL app or Paisabazaar. If it falls, request an increase in the limit on the other card.
Following these steps will have a minimal impact on your score – experts say a difference of 5-10 points is normal.
Common Mistakes to Avoid
- Don’t close too quickly: If you have a lot of debt, clear it first, otherwise you’ll face a hard inquiry.
- Don’t keep just one card: Keep a mix – one card, one loan is better for your score.
- Don’t ignore the annual fee: Get the fee waived first, otherwise you may incur extra charges before closing.
| Step | Description |
|---|---|
| Clear balance | Pay all dues and interest, maintain a zero balance |
| Old card | Close new cards first, keep the old one for credit history |
| Transfer balance to another card | Request to save limit |
| Submit a written request | Through the bank app/call |
| Check CIBIL after 45 days | Monitor balance |
| Try to increase the limit | Cancel all auto-debits, redeem rewards |
Pros and Cons
Pros:
- You can stop overspending without extra fees.
- Score will remain stable if you follow these steps.
- Credit mix may improve if done wisely.
- You will build a better profile for future loans.
Cons:
- Score may drop slightly (10-20 points), recovery will take time.
- Reducing the limit will temporarily increase utilization.
- Closing old cards will shorten your history.
Conclusion
Closing a credit card is easy, but to avoid incurring losses with CIBIL, plan accordingly – clear the balance, transfer it, and monitor it. If you have multiple cards, close one or two and keep the rest.
Follow these tips to maintain a score of 750+, and if in doubt, ask your bank. How many cards do you have? Let us know in the comments, and if you find this helpful, please share!
