When used properly and paid down regularly, credit cards can help you to build credit. But what happens if you decide you no longer want a particular card or if you simply forget about it and don’t make a purchase? Here’s what you need to know about how inactive cards can impact your credit score.
Factors that Contribute to Your Credit Score
Before discussing the potential impacts of an inactive card, it’s critical to understand the five components that make up your credit score.
- Payment history (35%): A history of all of your credit and loan payments, including those that are late or missed.
- Credit utilization (30%): The percentage of how much credit you’re using vs. what you have available. Optimal credit utilization is below 30%, and paying down debt can help to lower this number.
- New credit (15%): How many recent hard credit inquiries have been made in your name.
- Length of credit history (10%): The amount of time your credit lines and loan accounts have been open.
- Credit mix (10%): The mix of installment loans and revolving credit you have to your name.
Can an Inactive Card Hurt Your Credit Score?
The sheer fact that you have an inactive card to your name has no bearing on your credit score. But where an inactive card can hurt your score is when you fail to use it to the point that your lender cancels the card completely. Closure of a card has the potential to ding you in multiple ways, including.
- Length of credit history: Especially if you’ve had your credit card open for years, closure of the account could mean you lose a long-running record on your credit history.
- Credit utilization: If you have a line of credit that’s closed, that amount will be removed from your available credit. And that means other amounts owed will represent a more significant portion of available credit. For example, let’s say you have two credit cards with a limit of $1,000 each and a $500 balance on your active card. If your inactive card is closed, your credit utilization will go from $500/$2,000 = 25% to $500/$1,000 = 50%, which would likely result in a lower credit score.
- Credit mix: If the inactive card that’s closed is the only revolving credit line to your name, you could be dinged a few points for having a less diverse credit mix.
How to Avoid Credit Card Inactivity
If you’re truly not a fan of the credit card you have and never plan to use it again, it may be worth taking the minor hit to your score to close it. But assuming you want the card to remain on your record and positively impact your credit score, there are steps you can take to avoid inactivity.
- Use the card for small purchases and pay it off quickly.
- Set up a recurring monthly bill on your card and use auto-pay to pay it off monthly.
It’s worth noting that the length of inactivity before a card is closed may vary based on your credit card company. So it’s best to talk to your creditor to confirm how long you have before a specific card is closed for inactivity.
The Bottom Line
Simply holding onto a credit card without using it may not negatively impact your credit score.
But if the card is inactive for an extended period, it could result in damage to your score by lowering credit utilization, shortening credit history, and not giving you credit for steady payments. With proper planning and communication with your credit card company, you can ensure your card stays active and works in your favor instead of hurting your credit score.
Brooke Joly
Brooke is a freelancer who focuses on the financial wellness and technology sectors. She has a passion for all things wellness and spends her days cooking up healthy recipes, running, and snuggling up with a good book and her fur babies.
