A:

Whether your credit score will be affected by inactivity depends on how you define "inactivity". Your credit report does not include information on frequency of credit card use in any given month. However, your credit report does include current balance, credit limit and whether you've made payments to your credit card company on time; 80% of your credit score is derived from these three factors.

If you maintain a low balance relative to your limit and you make payments on time, either because you're slowly paying down an existing balance or you're paying off your charges monthly, your credit score will remain intact. In fact, people with the best credit scores have done little more than repeat this pattern over a long period of time.

It's important to note that loan approval and interest rates on loans, the reason why we care about credit scores in the first place, depend more on income than other factors. Borrowers with low credit scores and high income levels are just as likely to obtain the loans they desire as borrowers with great credit scores and low incomes. But don't fall into the trap of overusing your credit card to try and build credit. Chances are, you'll end up in more debt than you can handle with no real positive effect on your credit score.

For more on this topic, read Five Keys to Unlocking a Better Credit Score, The Importance of Your Credit Rating and Should You Close Your Credit Card?

This question was answered by Ken Clark.

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