Does Not Using Your Credit Card Affect Your Credit?

Many assume an unused credit card has no bearing on their financial standing. While it might seem harmless to simply not use a credit card, prolonged inactivity can indeed have indirect effects on an individual’s credit health. Understanding these subtle impacts is important for maintaining a robust credit profile.

How Credit Score Factors Are Affected by Inactivity

Merely not using a credit card can subtly influence several components of a credit score, even before any account closure might occur. Credit utilization, a significant factor, measures the amount of credit used against the total available credit. While an unused card maintains a 0% utilization on its own, if it represents a substantial portion of an individual’s overall available credit, its lack of active contribution to the credit profile might not be as beneficial as responsible, active use.

The length of credit history is another important element, with the average age of accounts being a positive contributing factor. An older, open, and unused credit card contributes positively to this average, demonstrating a long-standing financial relationship. While not using a card means no payments to miss, it also means no new positive payment history is being actively built for that specific account. A consistent history of active, on-time payments across multiple accounts is generally more beneficial for demonstrating responsible credit management.

The Risk of Account Closure

Credit card issuers may close accounts due to prolonged inactivity because these accounts do not generate revenue from transaction fees or interest for them. The closure of an inactive account carries direct implications for an individual’s credit score. A primary impact is the reduction in total available credit across all accounts, which can lead to an immediate increase in the credit utilization ratio on remaining active cards, even if spending habits have not changed. For example, if an individual had $10,000 in total credit across two cards and one $5,000 limit card is closed, their total available credit instantly drops to $5,000.

Furthermore, a closed account will eventually be removed from credit reports, typically after seven to ten years from the date of closure. This can significantly reduce the average age of accounts and the overall length of credit history reported, especially if the closed card was an older account. Such a reduction can negatively affect the credit score, as a longer credit history often signals greater financial stability to lenders. In some cases, if the closed card was a unique type of credit or one of only a few accounts, its closure could subtly affect the diversity of credit types reported, although this is often considered a minor factor in most credit scoring models.

Practices for Maintaining Credit Health

Individuals can maintain their credit cards as open and active accounts without incurring debt or overspending through several practices. One effective strategy involves using the card for a very small, recurring expense, such as a streaming service subscription or a minor monthly donation. After making such a purchase, it is advisable to set up an immediate, full payment from a checking account to ensure the balance is paid off and to avoid accruing interest. This method ensures regular activity is reported without carrying a balance.

Another approach is to set up a small, regular bill, like a utility or phone bill, to be paid automatically by the credit card each month. It is crucial to ensure that the full balance is paid off automatically from a linked bank account on the statement due date to maintain activity and build positive payment history. This automation helps prevent missed payments while keeping the account active. Regularly logging into the online account or reviewing monthly statements is also recommended to confirm the card remains open, monitor for any unauthorized activity, and verify that small payments are being processed correctly. Policies regarding account inactivity and potential closure can vary among credit card issuers, so individuals with concerns may consider checking directly with their specific card provider.