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Will my credit score be affected if I don't use my credit card?

In the UK, not using a credit card doesn’t directly affect your credit score; in fact, it could even help maintain or improve it. This is because keeping a card open increases your credit history length and lowers your credit utilisation rate (how much credit you actually use compared to how much you could use).

However, if you don’t use your credit card for a long time, your card provider can close it – sometimes without even a notice. And this can affect your credit score.

What can happen if I don’t use my credit card?

If you don’t use your credit card, here is what can happen:

  • You might not know if a fraudster stole your credit card details.
  • You might have to pay annual fees for a product you don’t use.
  • Your card issuer can reduce your credit limit or even close your account. A suspended credit card may hurt your credit score.

How does closing a credit card affect my credit score?

Whether it’s you cancelling your credit card or your issuer closing it because you weren't actively using it, closing a credit card can impact your credit score.

This happens because of a few reasons:

  • Shortened credit history: Losing a credit account, especially one you've had for a long time, can reduce the average age of your credit accounts, which is a key factor in calculating your credit score.
  • Increased credit utilisation: With a closed account, your available credit decreases, which means that your credit utilisation goes up. This ratio simply means how much credit you’re using out of the credit limit your lenders gave you. Experian recommends to keep it under 25% if you want it to help your credit score.
  • Impact on credit mix: If you only have a credit card, closing it can also affect your credit mix, which means how many kinds of credit types you have. Having a mix of credit accounts, like personal loan, car finance, mortgage, and credit cards, can show that you’re good at dealing with multiple kinds of debts. A good credit mix can help your credit score as well.

Should I cancel a credit card I don’t use?

Probably not. It may be tempting to cancel a credit card you don't use, but the benefits of keeping it open usually outweigh the costs.

First, it may help your credit score. Instead of letting unused cards gather dust or risking the issuer closing them, consider putting a small recurring charge to each card, like a Netflix subscription or utility bill, and set up Direct Debit so the card balance is paid on time every month. This helps show a history of timely repayments, which is the most important thing for your credit score.

Second, closing a credit card can affect your credit utilisation ratio and the average age of your accounts, which matter for your credit score. Plus, if you want to re-open it or get an entirely new card, you’ll have to go through a credit check again, which might also hurt your score.

The only reason to close a credit card is if you have to pay a high annual fee. However, before you do that, you should call your credit card company and ask about "downgrading" your card instead.

Downgrading means you can switch your current card (the one with the high fee) to a different card from the same company, but this new card won't have an annual fee. This way, you can keep your credit card account open without the extra cost, and still reap all those credit score benefits.

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