Will My Credit Score Go Down if I Don’t Use My Credit Card?

A credit score, typically a three-digit number between 300 and 850, provides a snapshot of an individual’s credit risk and their likelihood of repaying debts on time. Creditors and lenders utilize these scores as a factor in decisions regarding new account approvals, interest rates, and other loan terms. A higher credit score generally indicates a lower financial risk to lenders, potentially leading to more favorable borrowing conditions. These scores are continuously updated based on information contained within credit reports, which document an individual’s financial behaviors.

Understanding Credit Score Components

Credit scoring models, like FICO and VantageScore, assess various aspects of an individual’s financial behavior to generate a score. Payment history holds the most significant weight, typically accounting for about 35% to 40% of a FICO Score and being “extremely influential” for VantageScore models. This factor evaluates whether bills, especially credit obligations, are paid on time.

Amounts owed, also known as credit utilization, is another substantial component, making up around 30% of a FICO Score and considered “highly influential” by VantageScore. This refers to the percentage of available credit currently being used. Keeping this ratio low, ideally below 30%, is generally beneficial. The length of credit history, which includes the age of the oldest account and the average age of all accounts, contributes approximately 15% to a FICO Score and is “highly influential” for VantageScore.

New credit inquiries and recently opened accounts typically account for about 10% of a FICO Score and are “less influential” for VantageScore. Too many new credit applications in a short period can signal higher risk. Finally, the credit mix, representing the diversity of credit accounts such as revolving credit (credit cards) and installment loans (mortgages, auto loans), makes up about 10% of a FICO Score and is also considered by VantageScore.

How Credit Card Inactivity Affects These Components

Not using a credit card does not directly reduce a credit score. However, prolonged inactivity can indirectly impact credit score components. Credit card issuers may close accounts that have been unused for an extended period, which can range from a few months to a few years, depending on the issuer’s policy. This closure can occur without prior notification.

When an inactive credit card account is closed, it directly affects the credit utilization ratio. The total available credit across all accounts decreases, which can cause the utilization ratio on remaining active cards to increase if balances are carried. Maintaining a low utilization rate, preferably below 30%, is generally favored by scoring models.

Account closure also impacts the length of credit history. If the closed card was an older account, it can shorten the average age of all credit accounts, which positively influences credit scores. An inactive card means no new payment activity is being reported for that specific account. If this inactive card is an individual’s only credit source, or one of few, the absence of consistent, positive payment reporting can hinder ongoing credit improvement.

Strategies for Optimizing Credit Card Impact on Your Score

To ensure credit cards positively contribute to a credit score, it is generally beneficial to keep accounts open, even if rarely used. Making small, occasional purchases and promptly paying them off can keep an account active and reporting positive payment history. This practice demonstrates responsible credit management without incurring significant debt.

Managing overall credit utilization across all active cards is also important. Individuals should aim to keep their total outstanding balances well below their combined credit limits, ideally under 30%. If a credit card has a high limit but is rarely used, it can still contribute positively to a low utilization ratio, provided it remains open. Consistent, on-time payments across all credit obligations are fundamental, as payment history is the most influential factor in credit scoring. Setting up automatic payments can ensure bills are paid on time.

Before considering closing old, inactive credit card accounts, individuals should assess the potential impact on their credit history. Closing an older account can reduce the average age of accounts and decrease total available credit, which may negatively affect the credit score. Keeping older accounts open and occasionally active is a good strategy for maintaining a strong credit profile.