Should I cancel my unused credit cards?

Dear James,

I have five credit cards, two of which I never use. What would be most advantageous to my credit score? 1) Cancel the unused cards. 2) Use the cards for small purchases each month. 3) Leave them unused.

Michael, Birmingham

Dear Michael,

This is not an easy question to answer, partly because you don’t have a single credit score and partly because the impact on credit scoring of individual items of data will always depend on what other information is available and who is doing the scoring. But I can offer some advice to help guide you. Firstly, keeping cards you don’t use open is generally frowned upon as it’s a bit of a fraud risk. The credit you have available on these cards may also affect lenders’ affordability calculations, but having higher limits will provide favourable evidence of previous assessments of creditworthiness. The three other cards should provide ample evidence of your ongoing creditworthiness though, particularly if you take account of the following rules. 1) Never miss a payment. 2) Pay more than the minimum each month. 3) Keep your balance/limit rates as low as possible and definitely below 50% and 4) don’t chop and change all of your cards on a regular basis – many scoring systems reward mature lender/borrower relationships. While credit scoring systems can be incredibly complex, these are some of the general rules that often feature in the scoring systems we build for lenders and, as a result, in how we calculate your Experian Credit Score.  Hope that helps! (November 2012)

James
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