In an ironic twist of fate, not having any debt is usually worse for your credit score than carrying some existing balances. Once you gain a line of credit, however, the FICO scoring system will not ding you for failing to utilize credit, except some factors in the equation may hurt if you do not use an account every so often.
Identification
The credit bureaus cannot give you a credit score until you establish a sufficient amount of credit history, according to the Privacy Rights Clearinghouse. Also, the accounts you own must report to a credit agency for them to appear on your profile. Despite popular conception, the credit models employed by the credit bureaus do not lower your score for having too much available credit.
Potential Damage
If you stop using a line of credit, the lender will not send any new data to the credit bureaus and the account will eventually become dormant, which lowers an important part of the FICO score calculation -- credit utilization. Credit utilization equals your outstanding balance over your available credit limit. When a card goes dormant, you lose the limit on the card and thereby raise your credit utilization ratio.
Not Having a Good Mix
Ten percent of your credit score comes from types of credit used, according to the Fair Isaac Corp., the company that developed the FICO scoring model. Only carrying one type of debt, such as a single revolving account, does not display a wide variety of credit accounts.
Tip
Use your credit card every few months, even if you just put a small charge, like your cellphone bill, on it. If you have a good credit score, do not rush out and open up an installment account just to raise it. Adding debt to your profile lowers your credit score and so does applying for new accounts.
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