Credit Q&A: Will Canceling a Card Hurt My Score?

Q: My credit card was compromised. Will my score be affected if I close the account?

A: It shouldn’t be, as long as you replace the card with another from the same issuer.

According to Barry Paperno, manager of consumer operations for MyFICO.com, closing a credit card account could potentially impact your credit score in several ways.

First, it could skew your credit utilization ratio – how much credit you have used versus how much is available – as closing the account will shut off the funding that particular card provides.

Secondly, FICO rewards consumers for keeping an ideal number of credit cards open. The number varies from profile to profile, so consumers can never be too sure that closing an account won’t make them lose the points that were amassed for having the magic number of cards.

Paperno believes that neither of these potential side effects would cause your score to plummet as much as an unpaid bill would.

“It’s not going to have a large impact,” he says. “In most cases, it would be just a couple of points.”

What consumers typically do in the instance of fraud (or the threat of fraud) is close the account and immediately replace it with a new card that adheres to the same terms and conditions as the original. This means that their credit utilization ratio remains the same as the number of active cards on file and their score remains intact.

Paperno says there is the outside chance that your issuer could do something funny, like generate a credit inquiry for the new card that could potentially cost you a few points, so you might want to ask your financial institution whether it intends to do so. However, he reiterates that the points lost to a potential credit inquiry would be minimal.