This guide explains how closing a credit card interacts with the UK credit reference system. It covers what happens to the account on your credit file, how long the data is retained, and which scoring factors may be affected.
The UK credit reference system is maintained by three independent Credit Reference Agencies (CRAs): Experian, Equifax, and TransUnion. There is no single, universal credit score in the UK, and closing a credit card does not produce a predictable, fixed-point change.
Quick Answer (Read This First)
- Does it delete the history? No. The closed account remains on your file for 6 years, showing "Closed" or "Settled".
- Does it hurt my score? potentially. Closing a card reduces your Total Available Credit, which can spike your Credit Utilisation.
- Example: You have 2 cards with £1k limits (£2k total). You owe £500. Utilisation is 25%. You close one card. Total limit drops to £1k. Utilisation jumps to 50%.
- Average Age: Closing old accounts can shorten your "Average Age of Accounts", a minor but real scoring factor.
IMPORTANT
Don't Close Before a Mortgage: Because closing a card triggers a change in your utilisation ratio, it's safer to avoid closing accounts 3-6 months before a major application like a mortgage.
How the System Works
The Mechanics of Closure
When you (or the lender) close a card:
- Reporting: The lender updates the CRA in the next monthly cycle.
- Status Update: The account status changes to "Settled" (if paid off) or "Closed".
- Retention: The entire history (payments, missed payments, limits) stays visible for 6 years from the closure date.
Scoring Models
There is no fixed penalty (e.g., "-50 points") for closing a card. However, CRAs evaluate:
- Utilisation: Low utilisation (<30%) is good. Closing cards makes this harder to maintain.
- Stability: Long-held accounts show stability.
Key Rules, Thresholds, and Timelines
6-Year Retention
- Live Data: The account stays on your "Live" credit report for 6 years.
- Profiling: Experian/TransUnion may retain data for longer (up to 10-11 years total) for statistical profiling, but lenders won't see it.
Inactivity Closures
Lenders can (and do) close accounts if you don't use them for 12-24 months.
- This has the exact same impact as if you closed it yourself.
- Tip: Use an old card once every 6 months to keep it active if you want to preserve the credit limit.
Common Points of Confusion
"Closing it wipes the bad history"
False. If you missed payments on that card, closing it does not remove the missed payment markers. They stay for 6 years from the event.
"I need to close it to get a mortgage"
Not necessarily. Lenders look at Affordability.
- High Limits: Having £50,000 in unused credit limits might worry some lenders (who fear you could spend it all). In this specific case, closing unused cards might help.
- Standard Case: Usually, keeping the history and low utilisation is better.
"My score will drop immediately"
It might fluctuate. If your utilisation spikes (as explained above), your score will dip. If you have zero balances elsewhere, the impact may be negligible. (Read more: Why Score Didn't Improve).
Important Exceptions
- Defaulted Accounts: If the account was defaulted, the 6-year clock started at the Default Date, not the closure date. Closing it doesn't reset the clock. (See: How Long Defaults Stay on Your File).
- Cooling Off Period: If you close a card within 14 days of opening it, it might still show the "Hard Search", hurting your score slightly, even if the account never really "existed" for long.
What This Means in Practice
- Check Utilisation First: Before closing a card, calculate your new utilisation ratio. If it pushes you above 30%, consider keeping it open. (Read more: Credit Utilisation Explained).
- Keep Your Oldest Card: Try to keep your longest-standing account open. It anchors your "Average Age of Accounts".
- Empty Accounts: Ensure the balance is £0.00 before closing. Residual interest (even pennies) can cause missed payments after you thought it was closed.
FAQ
Does closing a card remove late payments?
No. The history remains for 6 years.
Can a lender close my card?
Yes, usually after 12-24 months of inactivity. They usually warn you first.
Is it better to have 0 cards?
Generally no. "Thin Files" are hard to score. Having open, well-managed accounts is better than having none. (See: Thin Credit Files).
New to UK credit? Learn how to Build Credit From Scratch.
