Does Your Credit Score Go Down If You Don’t Use It?

Many people wonder if not using credit can negatively impact their credit score, often believing an inactive credit card automatically lowers it. While inactivity itself does not directly penalize your score, unused credit accounts can indirectly influence your financial standing. This article clarifies these misconceptions and explains how credit scores are impacted by credit card usage, or lack thereof.

Understanding Credit Scores and Inactivity’s Direct Role

Credit scoring models, such as FICO and VantageScore, do not directly penalize individuals for having unused credit accounts. These models primarily assess how responsibly you manage debt, not how frequently you use every available credit line. The core components of a credit score include payment history, amounts owed, length of credit history, new credit, and credit type mix.

Inactivity is not a negative factor within these calculation methodologies. Credit scores reflect your ability to handle financial commitments; simply having an open account with a zero balance does not inherently demonstrate irresponsibility. Therefore, you will not see a direct score reduction solely because a credit card sits unused.

How Unused Credit Can Indirectly Affect Your Score

While direct penalties for inactivity are absent, unused credit can indirectly impact your score through other factors. One significant way is through the length of your credit history. Lenders may close inactive accounts after a certain period. If an old, well-established account is closed, it can reduce the average age of all your open accounts, potentially lowering your score. Accounts closed in good standing can remain on your credit report for up to ten years, but their positive influence on average age may diminish over time.

Another indirect impact relates to your credit utilization ratio, the amount of revolving credit you are using compared to your total available credit. When an unused credit card with a high limit is closed, your total available credit decreases. If you carry balances on other cards, this reduction in available credit can cause your utilization ratio to increase, which can negatively affect your score. Lenders generally prefer a utilization ratio below 30%.

The mix of credit types you manage can play a minor role. While less influential than payment history or utilization, having a diverse portfolio of credit, such as both revolving accounts and installment loans, can be seen favorably. Closing an account, especially if it represents a unique type of credit in your profile, could slightly alter this mix, though its overall effect on your score is minimal.

Strategies for Managing Unused Credit

To mitigate potential negative indirect impacts, avoid closing old, unused credit accounts. Keeping these accounts open helps preserve your length of credit history and maintains a higher total available credit, which can keep your credit utilization ratio low. This is particularly beneficial for cards with long histories.

For accounts you wish to keep open but do not regularly use, consider making small, infrequent purchases on them. Paying these small balances off immediately can keep the account active and demonstrate responsible usage without incurring interest. Setting up a small recurring charge, like a streaming service subscription, and automating its payment can also serve this purpose.

Regularly monitoring your credit reports is a proactive step. This allows you to identify any unexpected account closures by lenders due to inactivity or other changes that could affect your score. You can obtain a free copy of your credit report annually from each of the three major credit bureaus. Reviewing these reports helps ensure accuracy and allows you to address potential issues promptly.