Q: I applied and was approved for a credit card, but never activated it once it arrived at my house. Is it possible that I’m building credit from that card?

A: It is in fact possible for an inactive credit card to help you build credit, because it’s highly probable your issuer has reported you as a cardholder to the three major credit bureaus even if you haven’t taken that final step and activated it.  

“You just need to activate the card to access the account,” a spokesperson for Experian tells MainStreet. “The activation process is to help the credit card provider ensure the correct person has received the card before it can be used.”

In other words, skipping out on activating a card won’t negate the fact that you applied, were approved and subsequently issued a new piece of plastic. The account is considered open, even if it’s not active, and will show up on your credit report if the issuer chooses to relay the information.

As such it is possible for the card to improve your score, either by  lowering  your utilization ratio, a major contributor to high scores, or by lengthening the age of your credit history, should it, say, pre-date any other credit card you’ve been using.

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On the other hand, it can negatively impact your credit score if the inactive account is relatively new. 

“It can hurt your credit scores because you've just added a brand new account to your credit report which will lower the average age of the accounts on your credit report,” says John Ulzheimer, president of consumer education for SmartCredit.com.

It will also show up as a hard credit inquiry, which might drop your score another five to 30 points, depending on how good (or bad) it was to begin with.

Want to know what can and can't affect your credit score? Email your questions to editors@mainstreet.com.

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