Closing a credit card that is no longer used feels like tidying up. In scoring terms it removes two things the file was benefiting from, and the effects arrive at different times.
The limit disappears from the utilization ratio
Utilization measures reported balances against total available credit. Closing a card removes its limit from the denominator immediately.
If the household carries balances elsewhere, the same debt now sits against a smaller pool of credit and the ratio rises without anyone borrowing more.
The effect is largest when the closed card had a high limit relative to the rest of the file, which is often true of the oldest accounts.
Account age is lost slowly rather than at once
Closed accounts in good standing generally remain on the report for a long period and keep contributing to average account age while they are there.
The loss therefore happens years later, when the account finally drops off and the average age recalculates without it.
By then the connection to the decision is invisible, which is why this effect is routinely attributed to something else.
The oldest account anchors the length of history
Scoring models look at the age of the oldest account as well as the average across all accounts.
Closing the first card ever opened puts that anchor on a countdown, and no future account can replace it because age cannot be manufactured.
This is the main reason a long-held card is worth keeping even when a better product exists elsewhere.
There are cases where closing is the right call
An annual fee on a card that provides no value is a real cost, and paying it indefinitely to protect a score is rarely a good trade.
A card that presents a genuine fraud or overspending risk is also worth closing, since the scoring consequence is small next to the exposure.
Asking the issuer to convert the account to a no-fee product often preserves the age and the limit while removing the cost, since the account number carries over.
Inactivity carries its own risk
Issuers close dormant accounts on their own initiative, which produces the same effects as a voluntary closure without the cardholder choosing the timing.
A small recurring charge with autopay attached is usually enough to keep an account active and to prevent an involuntary closure.
That approach keeps the limit and the history in place, which is what the file is actually benefiting from rather than the card being used.