Closing credit cards after a consolidation loan pays them off usually hurts your credit score by 20 to 60 points. Keep them open at $0, especially the oldest ones. The exception: if a card has an annual fee you don't want to pay, or if you can't trust yourself not to use it. In those cases, the trade-off is worth it; in most others, closing destroys the credit benefit consolidation just produced.

Why closing hurts. Two reasons:

1. Credit utilization rises on remaining accounts. Utilization is the ratio of credit card balances to credit card limits, calculated both per-card and aggregated. Closing a card removes its credit limit from the aggregated pool. If you carry any balance on remaining cards, the percentage rises. Utilization is 30% of FICO; this is the primary mechanism for the score drop.

2. Average account age drops. Closed accounts continue to report for 10 years (FICO and VantageScore) or until the bureaus age them off. But when the closed account ages off in 10 years, your average account age drops. Even before that, some scoring models treat closed accounts differently than open accounts in age calculations.

The math example. A borrower with three credit cards: 12 years old ($10,000 limit), 5 years old ($8,000 limit), and 2 years old ($5,000 limit). Total credit: $23,000. After consolidation pays them all to $0, the borrower closes the 12-year-old card because it has a $95 annual fee. Total credit drops to $13,000. If the borrower charges $1,000 on one of the remaining cards, utilization is now 7.7% versus 4.3% before closing. Average account age drops from 6.3 years to 3.5 years. Score impact: 30 to 50 points lower.

Exceptions where closing makes sense.

1. Card has an annual fee you don't want to pay. If the card charges $95 to $695/year and you don't use it enough to justify the cost, closing makes sense. Before closing, ask the issuer to convert ("product change") it to a no-annual-fee card from the same issuer; you usually keep the account history intact while eliminating the fee. Most major issuers (Chase, Amex, Citi, Capital One) allow product changes.

2. You'll re-use the card. If you've struggled with credit card debt and the card sitting open is a temptation, closing or freezing it can be the right behavioral choice. The score cost is real but worth it if the alternative is racking the balance back up. Some borrowers freeze cards (cut up, lock in safe, or put in a block of ice in the freezer) instead of closing; this preserves the credit limit while eliminating physical access.

3. The card is a low-limit, high-fee starter card. If the card is from a subprime issuer (Credit One, First Premier, Indigo) that you opened to rebuild credit, and you now have better cards, closing is fine. The starter card's small limit doesn't help utilization much, and the high fees aren't worth it.

What to do instead of closing.

Keep the oldest 2-3 cards open with $0 balances. Use one for a small recurring charge ($10-20/month for a streaming subscription) on autopay so the card doesn't get closed for inactivity. Most issuers close cards after 12-24 months of inactivity, which is the same outcome as closing them yourself.

Set up auto-pay in full. One small recurring charge plus auto-pay in full means the card runs itself. You don't have to think about it monthly.

Lower the credit limits if you don't trust the available credit. Some issuers will reduce a credit limit on request. This eliminates the temptation of $10,000 sitting available while keeping the account open. The score effect is partial closing, partial preservation.

The annual fee math. Compare the annual fee against the credit-score impact. If a $95 annual fee card is contributing $5,000 to your aggregated credit limit and represents 30% of your average account age, closing it might cost you 30+ points. If you're applying for a mortgage in the next 12-24 months, the score cost is worth more than $95. If you're not, the calculation is different.

What about cards with sub-zero balances or credit balances? Some borrowers consolidate and end up with credit balances on a few cards (paid more than they owed, or refunds posted after consolidation). Don't close these until the credit balance is zeroed out. Most issuers will mail a check for the credit balance after 30-60 days; close after the check arrives if you're going to.

The mortgage application timeline matters. If you're going to apply for a mortgage within 24 months, do not close any cards. Mortgage underwriting weights credit utilization and account age heavily. The 24-month window before mortgage application is the worst time to drop your score by closing accounts.

If you've already closed cards. The damage is done; closing them doesn't reverse. The fix: keep remaining cards at very low utilization (under 10%) to compensate. Pay down any balances that exist. Don't open new cards in the next 6 months; let the closed-card impact age. Score will recover within 12-24 months as utilization stabilizes.

Keep them open. The whole point of consolidating was to lower utilization; closing the cards reverses that benefit. The annual-fee exception is real, but most consolidation cards aren't fee-charging premium cards.