Is it bad for your credit to have a card you don't use?

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Unused credit cards can be a problem. Inactive accounts risk closure, hurting credit scores by lowering utilization and shortening credit history. Proactively using, even minimally, your credit cards maintains a healthy credit profile.
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The Impact of Unused Credit Cards on Credit Scores

Credit cards are a convenient financial tool, but they can also have a significant impact on your credit score. While it may seem counterintuitive, having a credit card that you don’t use can actually damage your credit profile.

Inactive Accounts and Closure

Credit cards that are not used for a prolonged period may become inactive. Inactive accounts can eventually be closed by the issuer due to inactivity, which can have negative consequences for your credit score.

Lower Credit Utilization

One of the key factors that affect your credit score is your credit utilization ratio, which measures the amount of credit you’re using compared to your total available credit. When you have an inactive credit card, the total amount of credit available to you is reduced, which can increase your credit utilization ratio. A high credit utilization ratio can lower your credit score.

Shorter Credit History

The length of your credit history is also an important factor that affects your credit score. When a credit card is closed, the account is removed from your credit report. This can shorten your credit history, which can lower your credit score.

Proactively Using Credit Cards

To maintain a healthy credit profile, it’s important to use your credit cards proactively, even if you don’t have a substantial need for them. Here are some ways to use credit cards responsibly:

  • Make small purchases: Even purchasing a small item every month can keep your account active and prevent it from becoming inactive.
  • Set up automatic payments: Automated payments can ensure that you make your payments on time, which is crucial for your credit score.
  • Use a balance transfer card: If you have high-interest debt on other accounts, you can transfer the balance to a credit card with a lower interest rate. This can save you money and improve your credit score.

Conclusion

While having unused credit cards may seem like a harmless practice, it can actually have a detrimental impact on your credit score. By proactively using your credit cards responsibly, you can maintain a healthy credit profile and avoid the consequences of inactive accounts and a shortened credit history.