How the US–Israel–Iran Conflict Could Affect Your Credit Card Interest Rates and Inflation in 2026

5. The budget squeeze: how inflation can damage your credit score indirectly

The conflict does not directly change your credit report. There is no line on your credit file that says “war risk.” Credit scores are based on your borrowing behavior.

But inflation can push people into behavior that harms credit scores, and 2026 is a year where that risk is real if energy prices stay elevated.

The biggest credit-score pressure point in an inflation period is credit utilization. That simply means how much of your available credit you are using. If your costs rise and you start spending more on your card, your balance may sit higher compared to your credit limit. High utilization can drag your score down, especially if it remains high month after month.

Next is missed or late payments. When food, fuel, and bills become more expensive, some people pay rent and utilities first, and credit cards may be paid late. Even one late payment can do damage, and repeated late payments can do serious damage.

Then there is the “searching for help” problem. When money is tight, many people apply for more credit, hoping a new card will rescue them. But multiple applications can create multiple checks, and lenders may see that as a sign of stress.

A simple example: imagine your monthly costs rise by £150 because of fuel, groceries, and bills. If your income stays the same, that £150 must come from somewhere. If it goes on a credit card, that is £150 more debt each month unless you can pay it down. After a few months, the balance becomes large. If the APR is high, interest grows. If the balance grows, utilization rises. If utilization rises, your score can fall. If your score falls, you may get worse offers and higher rates in the future. That is the spiral people want to avoid.