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.

RELATED FAQS
  1. Will having several credit cards hurt my credit score?

    The manner in which you use your credit cards may affect your credit score more than the number of credit cards you own will. Read Answer >>
  2. What are the best ways to rebuild my credit score quickly?

    Repair your credit score more quickly by talking to your lender, increasing the credit limit on your existing credit cards ... Read Answer >>
  3. Why don't I have a credit score?

    Learn about some of the reasons why you might not have a credit score, and find out how you can build a good credit score ... Read Answer >>
  4. Can a Best Buy credit card help you build credit?

    Learn about how using a Best Buy credit card responsibly can lead to a higher credit score and lower interest rates on mortgages ... Read Answer >>
  5. Does a free credit report show your credit score?

    Find out how you can obtain your credit score, and find out whether your score is included in your free annual credit reports. Read Answer >>
  6. How do balance transfers affect my credit score?

    Learn the ways a balance transfer can negatively and positively affect your credit so you can pay off debt while maintaining ... Read Answer >>
Related Articles
  1. Retirement

    6 Methods to Maintain a Healthy Credit Score During Retirement

    Learn how to improve your credit score during retirement. Your credit score still matters in retirement, and these tips can give it a boost.
  2. Managing Wealth

    How to Raise Your Credit Score Quickly

    Here are the best tips for raising your credit score quickly.
  3. Investing

    Millennials: Prevent a Bad Credit Score

    Here are five ways to help prevent getting a bad credit score that could affect future loan, credit card or mortgage approvals.
  4. Personal Finance

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  5. Personal Finance

    How Bad Is My Credit Score?

    You've seen the number, but what does it mean? Here's how to assess your credit score and get to a better place if needed.
  6. Investing

    10 Ways To Improve Your Credit Report

    A good credit rating can make your life simpler in almost every way. Here's how to build up yours – and repair it if times get tough.
  7. Managing Wealth

    5 Common Misconceptions About Your Credit Report

    Your credit report is one of the most important factors in determining your ability to get loans and new credit and has a major influence on your rates.
  8. Retirement

    7 Ways to Use a Strong Credit Score During Retirement

    Find out why it is important to maintain a good credit in retirement. Learn seven reasons not to leave your credit score behind when you retire.
  9. Personal Finance

    9 Ways To Improve Your Credit Score Today

    When it comes to finances, there are a number of goals that you might have established, such as saving money, paying down debt or new investments.
  10. Personal Finance

    Why Too Many Credit Cards Can Hurt Your Credit Score

    Find out why having too many credit card accounts can adversely impact your credit score if the cards are not managed properly.
RELATED TERMS
  1. Credit Utilization Ratio

    An input used in determining a person's credit score. It is the ...
  2. Credit Mix

    The types of accounts that make up a consumer’s credit report. ...
  3. Balance Chasing

    The gradual lowering of a consumer’s credit limit by a credit ...
  4. Good Credit

    A qualification of an individual's credit history that indicates ...
  5. Bad Credit

    A qualification of an individual's credit history that indicates ...
  6. Credit Scoring

    A statistical analysis performed by lenders and financial institutions ...
Trading Center