Not using your credit card doesn’t hurt your score. However, your issuer may eventually close the account due to inactivity, which could affect your score by lowering your overall available credit. For this reason, it’s important to not sign up for accounts you don’t really need.
If used wisely, a credit card can help you build your credit score in a positive way. But as time passes, your credit needs might change, so you might want to apply for another one. So, should you just stop using the old card?
Not using an old credit card shouldn’t affect your credit score per se, although in some cases it might do it indirectly. Keep reading to find out all you need to know about keeping a credit card but not using it.
Can a card be closed due to inactivity?
Yes, a card issuer may close your account if it’s been inactive for a long period of time. If the account is closed due to nonuse, you’ll need to consider the loss of the additional credit you were given when the account was opened. When the account closes, you will lose that available credit and your utilization points may suffer.
Credit utilization — or how much of your available credit you have used — accounts for up to 30 percent of your FICO score, which is second only to payment history at 35 percent. These two factors make up the lion’s share of your score and they are the only two factors that are 100 percent in your control at all times.
The rest of your score is made up of credit history, or how long you have had your oldest account, at 15 percent; credit mix, or the types of accounts you have, at 10 percent; new credit also counts for 10 percent. Your accounts can only be as old as they are, so there’s not much you can do about that. Credit mix can also be difficult to manage because it requires you to have accounts other than credit cards (think installment loans, like mortgages or auto loans).
Will an unused credit card hurt my credit score?
Generally speaking, no, it won’t affect your score if you don’t use a credit card. However, it’s important to check your credit report and score to see what effect opening the account had in the first place.
Hard inquiries can pull a score down a few points until you show that you’re able to handle the additional credit risk (usually a few months). Since you received a credit card, that means a hard inquiry was made. This small loss of points is often negated by the addition of more credit available to you, so it becomes a wash in many cases.
One exception is that if you’re planning to apply for a mortgage soon, a lender can get concerned if you have too much in the way of existing credit lines. The worry is that you might go out and buy everything your credit line allows, thereby jeopardizing your ability to pay back the loan. This is unlikely, but it happens.
How to keep your card active without hurting your score
You can keep a card active by making small purchases or paying some bills, like streaming service subscription plans or phone bills. And those small charges can have a positive impact on your credit score, particularly if you pay your balance in full before the due date. At the same time, it shows responsibility.
Your credit score and your accounts ultimately belong to you, so you have a vested interest in doing the things that will help you the most. Entering into a new credit agreement should always be done thoughtfully, with an eye toward what it may do to your score as well as how you will manage the account.