Does not using a credit card hurt your credit score?
While not using a credit card doesn’t actively harm your score on its own, there are knock-on effects that may make you want to keep using it regularly and paying it off in full every month. These include not being able to show you’re a reliable borrower (especially if it’s your only credit account), opening yourself up to the possibility of fraud, and losing access to any benefits or rewards that come with the card.
Should I close my card if I don’t use it?
This is a tricky one, as it depends entirely on your circ*mstances, the account in question, and what’s best for you personally. Here are the factors to consider before you make a decision.
1. Reasons to keep an account open
- To help build your credit score.If this is your only credit card, you might want to keep it open tohelp boost your credit score- but to maximise this, you’ll need to use the card. You’ll also need to make sure you pay at least the minimum payment each month and stay within your limit. Using a credit card to rebuild your score is done through re-writing your credit ‘history’ so that it demonstrates you’re a responsible borrower. Even just small regular transactions on the card, then paid off in full, and staying within your credit limit, could help keep your credit score tip-top over time.
- To keep your credit utilisation ratio down.Having the credit in question available to you, butnotusing it might be helping boost your overallcredit utilisation ratio. In short, your credit utilisation ratio is the amount of credit you use compared to the credit available to you. Closing the account could mean a drastic increase in how much of your ‘available credit’ you’re using.
- It’s got a long history of responsible borrowing.Credit reference agencies like to see accounts that have been open a long time with a good record, if this is true of the account in question, it could be worth keeping it open.
- Emergency funds.It may be worth keeping a credit card open so you have access to emergency funds when you need them. This could be anything where you need to pay out a large sum at once - such as your car breaking down or an issue with your boiler.
2. Reasons to close an account
- Reduce the risk of fraud.Having an account open that you don’t use (or check regularly) could make you susceptible to identity fraud, with someone spending in your name.
- Reduce the temptation to spend.The more credit you have available, the more temptation there can be to overspend. If you’ve struggled in the past with spending beyond your means, it could be worth closing down some accounts that you don’t need.
Would a credit card company cancel my account?
There’s little evidence to show that a credit card company would cancel your account if left unused, but it could be marked as ‘dormant’.
It’s worth weighing up whether you should close the account yourself, or keep it and use regularly with small transactions. Read the reasons above and consider the age of the account, how many other credit cards you have and your personal borrowing habits before making a decision.
Does closing an account affect my credit score?
The short answer is yes, it’s likely to impact your score but exactly how and by how much depends on your circ*mstances. Here’s a list of ways it could impact your score for better or worse:
- It can reduce your available credit, therefore increasing yourcredit utilisation ratiooverall
- If you have multiple credit cards and you close some newer, unused accounts, this could make you look more attractive to lenders as you’ll seem less reliant and have less access to credit
- It could knock your credit score if it’s a longstanding account with a good history - credit reference agencies look at the average age of your credit accounts
- If it’s your only credit account, cancelling it may make it hard to prove you’re a reliable borrower, as you’ll have no way of showing it - this could decrease your score over time
Should I still check my statement if I don’t use my card much?
Yes, it’s important to still check your statement regularly. You’ll need to look out for any irregular activity on your account, as it could be a sign ofidentity fraud. If you keep a close eye on your statements, you’ll be able to notify the lender straight away if you spot anything.
It’s also worth remembering that if you move house, you should update the billing address on all your credit accounts, whether you use them regularly or not, as mismatched identity information can be seen as a negative on your credit report.
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Disclaimer: All information and links are correct at the time of publishing.
Fiona Peake
Personal Finance Writer
Fiona is a personal finance writer with over 7 years’ experience writing for a broad range of industries before joining Ocean in 2021. She uses her wealth of experience to turn the overwhelming aspects of finance into articles that are easy to understand.
FAQs
The bottom line
Is it bad to barely use your credit card? ›
It can be important to keep your credit utilization ratio under 30% — this is a healthy balance of using your credit to a reasonable degree. However, never using your credit card could result in a lack of financial data for lenders/bureaus to collect to determine your credit score.
Is it bad to have a lot of credit cards I don t use? ›
A crowded wallet and the temptation to spend might have you thinking about canceling unused credit card accounts. In most cases, however, it's best to keep unused credit cards open so you benefit from longer credit history and lower credit utilization (as a result of more available credit).
Is it bad to spend too little on credit card? ›
In general, using as little of your credit card limits as possible is better for your scores. So logic would suggest that paying off your credit cards early so that a zero balance is reported to the credit bureaus would produce the highest scores.
Is it bad to leave a credit card unused? ›
No, unused credit cards do not hurt your credit score. However, if the card has an outstanding balance, it's critical to keep making payments on time, as late or missed payments can negatively impact your score.
Is 0 credit card utilization bad? ›
While a 0% utilization is certainly better than having a high CUR, it's not as good as something in the single digits. Depending on the scoring model used, some experts recommend aiming to keep your credit utilization rate at 10% (or below) as a healthy goal to get the best credit score.
Is using 50% of your credit card bad? ›
Lower utilization rates are better for your credit scores, and 30% could be better than 50%, 70% or 90%. However, a lower utilization rate might be even better for your credit scores. People in the highest credit score range tend to have utilization rates in the single digits.
Does it hurt to have a credit card and not use it? ›
Credit card inactivity will eventually result in your account being closed. A closed account can have a negative impact on your credit score, so consider keeping your cards open and active whenever possible.
Is it bad to take out a credit card and not use it? ›
While not using a credit card doesn't actively harm your score on its own, there are knock-on effects that may make you want to keep using it regularly and paying it off in full every month.
Is 7 credit cards too many? ›
So, while there is no absolute number that is considered too many, it's best to only apply for and carry the cards that you need and can justify using based on your credit score, ability to pay balances, and rewards aspirations.
$200 — If your credit limit is $200, then your balance needs to stay at $60 or less. $500 — When you have a credit limit of $500, ideally your balance is $150 or less. $1,000 —If your credit line is $1,000, this means you should aim for a balance of $300 or less to maintain your credit utilization.
Is it bad to have a little credit card debt? ›
A lower credit utilization ratio is always better. In fact, it's a myth that you need to carry credit card balances to maintain a high credit score. If you pay off your debt in full every month, it's the best thing you can do for your credit. By contrast, it hurts your score when your balances are too high.
Is it bad to immediately pay off a credit card? ›
Rule #1: Pay in Full, on Time
Contrary to an enduring myth, carrying credit card debt past the end of the billing period isn't good for your credit score—in fact, it's usually the opposite. Paying what you owe and being consistent about it are two of the most important factors in a favorable credit report.
Is it OK to keep a credit card and not use it? ›
If you haven't used a card for a long period, it generally will not hurt your credit score. However, if a lender notices your inactivity and decides to close the account, it can cause your score to slip.
What happens if I never use my credit card? ›
If you don't use your card, your credit card issuer may lower your credit limit or close your account due to inactivity. Closing a credit card account can affect your credit scores by decreasing your available credit and increasing your credit utilization ratio.
What is a 5 24 rule? ›
What is the 5/24 rule? Many card issuers have criteria for who can qualify for new accounts, but Chase is perhaps the most strict. Chase's 5/24 rule means that you can't be approved for most Chase cards if you've opened five or more personal credit cards (from any card issuer) within the past 24 months.
What happens if I hardly use my credit card? ›
If you don't use your card, your credit card issuer may lower your credit limit or close your account due to inactivity. Closing a credit card account can affect your credit scores by decreasing your available credit and increasing your credit utilization ratio.
Is it bad to not use a credit card for a month? ›
Nothing much happens if you don't use your credit card for a month. You'll just need to keep up to date with your monthly payment if you have an existing balance. However, your credit card issuer isn't going to close your account for less than three months of inactivity.
Is paying minimum on credit card bad? ›
Interest charges add up: Typically, credit companies will charge you high interest rates on unpaid balances. If you only pay the minimum each month, the interest charges can snowball. The additional interest and any other fees are added on to your balance and can increase a lot over time.
Does less usage of credit card affect credit score? ›
“A lower utilisation of the available credit limit of your credit card reflects responsible spending and allows for buffers in case of any contingency,” says Sanjeet Dawar, Managing Director, CRIF High Mark. Therefore, a lower limit utilisation is considered favourable while computing your credit scores.
