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If you didn’t know by now, keeping your credit cards open and active is very important. You want to make sure all of your credit cards are reporting to the 3 of the major credit card bureaus.
Transunion, Equifax and Experian.
If you want to build a good credit score, you need good credit usage, make sure you’re making payments on time and your keep a low balance on your credit cards.
If for any reason your credit becomes “inactive,” your credit card issuer may stop sending your credit report. If that happens, you could see your credit scores take a big dip and you don’t want that to happen.
What’s The Rule For Using Your Credit?
Truth be told, there’s no set rule to follow as it pertains to using your credit. Every person is different, every card is different and that’s something you’ll have to determine yourself.
If you monitor your credit (and you should), you’ll notice your credit scores can move a lot, especially when you’re building your credit.
You can pay $500 on one of your credit cards, which lowers your credit card utilization, which usually would increase your credit score. However, in some cases, it may lower your score a little.
The only way to know exactly how much you should be using your credit cards is by monitoring your scores on a regular basis. You can use FICO, Credit Karma or Credit Sesame to monitor your credit.
These tools will report nearly everything on your credit report, including credit cards, mortgages, auto loans and personal loans.
Most credit cards also have reporting tools that you can take advantage of for free.
Discover, Credit One, Merrick, Chase and many others have free credit score reporting. Discover has more options than many of these, if you have a Discover card, be sure to check it out.
What If A Card Goes Inactive?
Fair question. If you’re not using your credit cards, it’s possible that the credit card company may close your account. If this happens, your credit score can suffer from it.
While we always recommend using your credit card at least 1 time every 3 months, store credit cards usually allow for a longer inactivity.
With a store credit card, some of them may allow up to 12-24 months. We wouldn’t recommend testing that theory, so be sure you’re using your store credit cards once every 3 months too.
How Often Should I Use My Credit Card To Keep It Active?
Again, we always recommend using your credit card at least once every 3 months at a minimum. If you only have a few cards, this is not difficult.
If you have 10 or more cards, it can be a little difficult.
It can be tempted to apply this rule and go on a shopping spree, but you don’t need too. As long as you’re spending a few dollars on your credit card every 3 months, it should continue to report as normal.
If you have a brand new card, you may want to use it more often than just once every 3 months. In such a scenario, the first few months, try using it at least once a month.
You can also set up monthly payments, so this will make sure you’re using your credit card every month.
You can also set up your credit card payments automatically too, a good option for those of you that tend to forget due dates.
Don’t Expect A Warning
Most credit card companies will not give you a warning if they plan on deactivating your account. Some of them may but the majority of them will not.
Now, if the card company closes your credit card account, it’s likely you would receive a letter in that case.
The best thing you can do to avoid all of this is to keep using your credit cards on a regular basis, at least once every 3 months.
If a credit card goes inactive, it won’t report. If the account is closed, it may affect your credit scores in a negative way.
Just always be mindful of how often you’re using your credit cards and you should be just fine.
Increasing Your Credit Score
While getting new credit card accounts can help you increase your credit scores and credit card utilization percentages, you don’t want to go applying for every credit card you can.
If you’re building your credit right now, your options will be limited versus someone with great credit.
If you’re applying for new credit cards, you want to make sure you’re being mindful of the benefits, rewards and fees. For those of you that have lower credit scores, you’ll likely see a lot of credit card options that have fees.
This is normal in a sense, but every credit card is different. Again, we want you to be mindful of this and be sure to pay close attention.
Getting more credit cards doesn’t guarantee your credit score will go up. Every scenario is different, so use your best judgement.
Rather than applying for new credit cards, you can request a credit line increase instead. If you’ve been using your credit cards responsibly and you have good credit, it shouldn’t be a problem.
A higher credit limit will lower your credit card utilization percentage and in most cases, that can help boost your credit scores a little.
The biggest thing to remember, make sure you’re using your credit cards once every 3 months, store credit cards included.
If you have trouble remembering due dates, you can always set up automatic payments.
At the very least, just get a pen and paper, write down all your credit cards and the due dates beside each credit card.
You don’t have to write down any account numbers, we wouldn’t recommend that anyway. Lastly, put this paper near you so you can remember to make your payments on time.
Keeping your credit cards active and reporting will ensure there’s no immediate drops in your credit scores due to inactivity.