Does closing a credit card affect your credit score?

Yes, closing a credit card can affect your credit score in several ways:

• Credit Utilization: It reduces your total available credit, which may increase your credit utilization ratio and lower your score.
• Credit History: Closing an older account can eventually reduce the average age of your credit history, potentially impacting your score negatively.
• Credit Mix: If it is your only credit card, closing it might reduce the variety of credit types in your profile.

As per RBI guidelines, maintaining a healthy credit history is essential for future loan eligibility.