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. 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 >>
  2. Does a cash advance hurt my credit score?

    Find out if a cash advance will hurt your credit score and how your credit report and requests for new credit can be affected ... Read Answer >>
  3. 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 >>
  4. 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 >>
  5. What are the biggest factors that can affect my credit score?

    A credit score is a numeric expression that helps lenders estimate the risk of extending credit or loaning money to people. ... 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. 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.
  3. Personal Finance

    Should Your Credit Rating Scare You?

    Take the mystery out of credit scores by learning the most important ways it can impact your life.
  4. 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.
  5. 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.
  6. Personal Finance

    Is Your Credit Score at 850? It Can Be!

    Use these tips to increase your credit score and your ability to get low interest rates on loans.
  7. 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.
  8. Personal Finance

    6 Benefits Of Increasing Your Credit Limit

    If you can resist the urge to overspend, then raising your credit limit could benefit you in various ways.
  9. Personal Finance

    Take the Right Steps to Build Excellent Credit

    There are several things you can do to protect and improve your credit score.
  10. Personal Finance

    How Your Credit Score Compares to the Average American's

    While only a small percentage of Americans have terrible credit scores, a whopping 30% have poor or bad credit, according to the Consumer Financial Protection Bureau.
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. Negative Information

    Data in a consumer’s credit report that lowers his or her credit ...
Trading Center