The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: curlycue on January 31, 2015, 08:17:05 AM
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Does anyone know if NOT using your open credit cards can harm your credit rating? I know you should only use about 30% of credit available to you, but what if you don't use it at all?
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It does not but I use mine every once in awhile just to make sure the account stays active. Length of good credit is important.
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It does not but I use mine every once in awhile just to make sure the account stays active. Length of good credit is important.
Thanks!
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Looking at my own credit report, they have a record of all satisfactorily closed accounts. So is it really true that you need to leave the account open to show length of good credit?
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It helps to leave accounts open just to establish length of credit and also helps with your utility rate if you have say an extra $1000 line of credit completely unused don't be masochistic about it if it's got high annual fees or it's a debt emergency it's not worth it at all.
I'm trying to allocate one $30 want to my card this month just to say I used it...
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One of my oldest credit cards was closed a few years back (totally paid off, I just hadn't used it in about 2 years), and I did take a temporary hit to my credit. It wasn't much though. As always, the most important factor is whether you pay on time.
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You really should use your credit cards. They generally have better fraud and payment protection than debit cards, plus they usually offer much better rewards programs. As others have mentioned, you need to use them to keep the accounts active and prevent the issuers from cutting your credit limit.
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If you go a long time without using a card, it becomes inactive and the card issuer may cancel it without warning. That happened to me before, and it an account is closed, it may negatively impact your credit rating by reducing the amount of credit you have available and the length of credit history.
I try to keep all of my cards active and pay them off in full every month.