Does Getting a Credit Card & Not Using It Build Credit?

Obtaining a credit card is essential to building a credit score, but not if you never use it. If you ignore a credit card account, the credit reporting bureaus omit it from your credit rating. You can use the account to build your credit rating at any time once you start using it. But do not overspend, which can cause much more damage than leaving the account inactive.

Identification

Not using a credit card account usually means the creditor reports the account as inactive after six to 12 months of no activity. This means that you do not add positive data to your payment history, nor do you boost your available credit limit. You want as much credit available to you as possible, because your ratio of credit used to credit limit available, or credit utilization, is a significant part of the "Amounts Owed" category in the FICO credit scoring system and most other risk models too.

Keeping The Card Active

You do not need to carry a balance or make a minimum purchase to keep the card active. You could, for instance, charge a small bill, such as a water bill, to the account each month and pay it off immediately. The creditor just needs to be able to report something to the credit bureaus, because credit scoring depends on your payment history, so lack of account activity means the bureaus cannot rate you as a risk.

Canceling Card

If you let an account sit inactive for a prolonged period of time, the lender might lower the limit on your account or cancel it altogether, because lenders must keep a certain amount of cash reserves on hand based on their outstanding credit limits. You do not want the lender to cancel your card, because you will have apply for a new account if you want credit in the future, and applications for credit do a few points of damage to your credit rating.

Tip

Review your spending habits. If you frequently splurge on big-ticket items like televisions and stereo systems, you might want to keep the account inactive if you can't avoid the temptation to spend. Otherwise, keep the line active but always have a plan to pay off the balance in full. A credit utilization ratio over 50 percent is always damaging, and you should try to keep it below 33 percent, according to the Credit Builders Alliance.