Will my credit score drop if I don’t use my cards regularly?

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

No, your credit shouldn’t take a hit if you don’t use your credit cards regularly.

You’ve stopped using your credit cards and begun to wonder if that will impact your credit. You may be at the point of considering closing your card. Fortunately, not using a credit card is actually good for your credit health, while closing a card that you don’t use can have a negative impact on your credit. We’ll cover the possible consequences of both card inactivity and card closure here for you.

When is a credit card considered inactive?

The criteria for when a credit card is marked inactive varies from lender to lender. Generally speaking, not using your credit card for just a few weeks won’t make it inactive. For most card lenders, inactivity of over 6 months to a year is considered inactive.

Possible consequences of inactivity to know

There are benefits to not using your credit card. If you aren’t using a card, you’re not acquiring debt (or you’re acquiring less of it). Which is a positive for those seeking home ownership in the near future because your debt to income ratio is low. Unfortunately, there are some possible negative consequences of inactivity you should be aware of.

You could lose rewards

Many major banks offer comparable interest rates, but what makes one card stand out from another is its benefits. After all, if used responsibly, you can make your credit card work for you with travel rewards, cashback incentives or even perks like airport lounge access. 

But if your card is marked inactive, there’s a high probability you’ll lose any rewards you were collecting. This can especially sting if you have a significant amount saved up. You can avoid this problem by using up all the rewards before stopping all activity on the card.

Possible cancellation of your card by the lender

Cancellation due to inactivity has potential adverse consequences.. The five credit factors that make up your FICO® score are:

• Payment history
• Credit utilization
• Length of credit history
• Credit mix
• New credit

Credit utilization is a big factor impacting your credit health. Your credit utilization ratio is the balance of credit available to you versus the amount of credit you’ve used in any given month. Ideally, you want to keep your credit utilization ratio at or below 30percent.

So, let’s say you have three credit cards: Credit Card A has a limit of $5,000, Credit Card B has a limit of $5,000 and Credit Card C has a limit of $10,000.

In an average month, you spend $4,000 out of the $20,000 you have available to you. So, your credit utilization is sitting at 20 percent, which is good (because it’s below 30 percent).

You decide you don’t need to use all three credit cards and stop activity on Credit Card C. Maybe your card is canceled due to your inactivity after a year, or maybe you choose to close the card yourself because you don’t think you need it anymore.

Now, your available credit has dropped from $20,000 to $10,000. However, your spending has remained constant. So, you’re carrying a balance of $4,000 a month when you have access to $10,000. This leaves you with a credit utilization of 40 percent, which is above the recommended amount. As a result, your credit could be negatively affected.

That’s why it’s vital to understand the importance of maintaining your credit cards—your credit doesn’t have to be impacted if you’re smart about how to effectively utilize it. Consider your card’s total credit limit versus all the credit available to you before choosing to close your card or effectuating closure due to inactivity. .

4 tips to follow if you have an unused credit card

1. Pay off the remaining balance

Pay off, in full, all cards before moving to inactive status. Even the smallest forgotten expense can start to accrue interest, become an unpaid debt and significantly hurt your credit.

2. Keep checking your account

After you pay off and stop using your card, it’s still important to check in on it regularly, maybe even monthly. This is to ensure you’re not missing any identity fraud that could be happening on the card. Imagine if someone gained access to it and you only checked it once a year. That’s an entire year’s worth of purchases they could make in your name, damaging your credit.

The card is under your name, so even if you’re not using it, it’s your responsibility to check the account often for suspicious activity.

3. Decide if you want the account to stay open

Consider keeping the account open without using it often. Remember that access to more credit will help you have a lower credit utilization ratio. However, if you genuinely aren’t benefiting from a card and can’t justify keeping it because the yearly fees are too expensive, then consider closing the card.

4. Use the card every few months

If you want to avoid the possibility of inactivity affecting your credit, then use the card every few months.  Set a reminder in your calendar to use the card occasionally and pay it off immediately. You get the benefit of keeping the card for your credit profile and credit utilization ratio without adding significant debt to your ratio.

Is it bad to close a credit card?

What if you decide it’s time to shut down your credit card after all? Is it bad to close a credit card? Closing a credit card can be a good thing for many reasons:

• If your card has an annual fee, you can save money by eliminating this cost if you close it.
• Removing access to credit can help you spend less.
• You can avoid paying interest and fees by paying for everything with cash or debit.

However, closing a credit card can hurt your credit. When you close a credit card, the following areas may be impacted:

• Credit utilization ratio: As we’ve mentioned, by closing a credit card, you decrease your total available credit.
• Credit mix: If you close your sole credit card, your credit mix may be less versatile, which can damage your credit.
• Credit history: Your credit history is based on your longest-standing account. So, if the closed credit cardis the oldest account, it can shorten your credit history and negatively impact your credit.

It’s essential to be aware of these potential side effects of canceling a credit card, but that doesn’t mean canceling a card is a bad idea. Even if shutting down a credit card lowers your credit, this decrease will likely be temporary. If you continue with smart financial habits, your credit health can climb back to what it was. 

Whether you keep the card open with limited activity or shut it down entirely, you should check your credit reports often. Your credit can impact many areas of your life, so you must monitor and maintain it. If you’re unhappy with your credit and see inaccurate negative items weighing it down, you can work with a credit repair service like Lexington Law. Our team can analyze what’s impacting your credit and help you take the necessary steps to improve your credit profile.

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