Does Credit Score Go Down If Not Used?

Many individuals wonder if their credit score is negatively affected by not actively using credit cards. This article explains the components of a credit score and how account activity, or lack thereof, can influence your credit standing.

Key Factors in Credit Scoring

Credit scores, such as FICO and VantageScore, assess an individual’s creditworthiness. These scores generally range from 300 to 850, with higher scores indicating lower risk to lenders. Several factors contribute to these scores, each carrying a different weight.

Payment history is the most impactful factor in both FICO and VantageScore models. It accounts for approximately 35% of a FICO Score and around 40% to 41% of a VantageScore, emphasizing on-time payments. Credit utilization, or the amount of credit used compared to the total available credit, is another significant component. This factor makes up about 30% of a FICO Score and 20% to 34% of a VantageScore, with a lower utilization ratio being more favorable. Lenders prefer a utilization ratio below 30%, though those with excellent credit often maintain it below 10%.

The length of credit history plays a role, accounting for roughly 15% of a FICO Score and being highly influential in VantageScore models. This factor considers the age of your oldest account and the average age of all your accounts. Credit mix, which refers to the diversity of credit accounts like credit cards and installment loans, contributes about 10% to a FICO Score and is influential for VantageScore. Finally, new credit, including recent applications and newly opened accounts, makes up about 10% of a FICO Score. Each new credit application results in a hard inquiry, which can temporarily lower a score by a few points.

How Account Activity Affects Your Score

Simply not using an open credit account does not directly cause a credit score to drop. The absence of activity does not create late payments, nor does it increase credit utilization if the balance remains at zero. An open, inactive account continues to contribute to the length of your credit history.

However, while inactivity itself is not a direct negative, credit card issuers may close accounts due to prolonged non-use. Issuers are not always required to notify cardholders before closing an account due to inactivity.

If an account is closed, especially an older one, it can impact a credit score in two main ways. First, it reduces the total available credit, which can increase the credit utilization ratio on other active cards, potentially lowering the score. Second, closing an old account might reduce the average age of your credit accounts, which can negatively affect the length of credit history. Even after an account is closed, it can remain on credit reports for up to 10 years.

Maintaining Credit Health with Account Management

To maintain a strong credit profile, it is advisable to keep old, unused credit accounts open. These accounts contribute positively to the length of your credit history and provide a larger pool of available credit, which helps keep your credit utilization ratio low. Closing such accounts can inadvertently raise your utilization and shorten your average credit age, potentially leading to a score decrease.

To prevent credit card issuers from closing accounts due to inactivity, consider making small, occasional purchases. A single small transaction every few months, or setting up a minor recurring payment like a streaming service, can keep the account active. These small balances should be paid off in full and on time to avoid interest charges and to demonstrate responsible credit behavior. Consistent on-time payments across all accounts remain the most influential factor in credit scoring, regardless of how frequently other accounts are used.