You may have opened multiple bank accounts and held multiple credit cards, but if you are not using all of them, then you may decide to close unused accounts.
But in this situation, a simple doubt comes to mind: Does closing unused bank accounts or credit cards impact the CIBIL score?
As it is obvious that a credit score depends on multiple factors such as repayment habits, credit utilization ratio, too many credit inquiries, length of credit history, etc, closing an old credit card or bank account can have an impact too.
Here’s what experts say about whether deleting old bank accounts and unused credit cards can lower your CIBIL score.
Will closing old bank accounts and credit cards affect your CIBIL score?
Closing an old, unused credit card may affect your CIBIL score, but the impact depends on your overall credit profile.
“The biggest reason is that closing a card reduces your total available credit. If your outstanding balance remains the same, your credit utilisation ratio rises, which lenders generally view less favourably,” said Adhil Shetty, CEO, BankBazaar.
According to Shetty, if your total credit limit across credit cards, for example, is Rs 3 lakh and your outstanding balance is Rs 60,000, your credit utilisation is 20%. If you close a card with a Rs 1 lakh limit, your available credit falls to Rs 2 lakh, raising your utilisation to 30%.
“Closing a long-standing card may also reduce the benefit of having a long credit history over time. However, closing a savings or current bank account has no direct impact on your CIBIL score because deposit accounts are not reported to credit bureaus,” Shetty added.
Can a closed bank account affect loan eligibility?
Closing a savings or current account does not directly affect your CIBIL score, as bank accounts are not part of your credit report. However, it can have an indirect impact if the account is linked to loan EMIs or credit card payments through auto-debit instructions.
If you don’t update these mandates before closing the account, credit bureaus may report missed payments, which could harm your credit profile. to credit bureaus and negatively affect your credit profile.
Separately, many lenders also consider the overall banking relationship as part of their internal credit assessment, although this is independent of the CIBIL Score. Before closing an account, ensure all standing instructions and auto-debit mandates have been successfully moved to another active account.
How important is the length of credit history?
Credit history length is one of the key factors that influences your CIBIL score, along with repayment behaviour, credit utilisation, credit mix and recent credit enquiries.
A longer credit history provides lenders a clearer picture of how you’ve managed credit over time, making it easier for them to assess your repayment discipline.
This is why an older, well-managed credit account can strengthen your credit profile.
“Conversely, closing your oldest credit card may shorten your credit history and potentially affect your score. If the card has no annual fee, it often makes sense to keep it active with occasional usage, as it helps preserve your credit history while supporting a stronger credit profile over the long term,” stated Shetty.
How many active credit cards are considered healthy for maintaining a strong credit profile?
No fixed or ideal number of credit cards guarantees a strong credit profile. What matters far more is how responsibly you manage the credit available to you.
Timely repayments, disciplined usage and maintaining older credit accounts have a greater impact on your credit profile than the number of cards you hold.
While having multiple cards can be manageable for some borrowers, each additional card also brings another payment due date and the responsibility to use credit prudently.
Rather than chasing a specific number, it’s better to hold only as many credit cards as you can comfortably manage and repay in full. Responsible credit behaviour consistently matters more than the size of your wallet.
What mistakes do borrowers commonly make while cleaning up their credit profile?
One of the most common mistakes borrowers make is closing their oldest credit card without considering its impact on their credit history.
Older, well-managed accounts help build a longer credit history, which is an important factor in your credit profile, according to Shetty.
In reality, responsible credit behaviour matters far more than the number of cards you hold. Before closing a credit card, clear all outstanding dues and consider whether the account contributes positively to your credit history, especially if it has been active for several years.
Disclaimer: This article is for informational purposes only and should not be construed as investment, financial, tax, or legal advice. Any illustrations, examples, or return projections used in this article are for explanatory purposes only and do not guarantee actual investment outcomes. The views and opinions expressed by experts quoted in this article are their own and should not be considered investment recommendations. Readers should consult a qualified professional before making any financial decisions.
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