Something that you might not have known is that it is really important to keep your credit card active in order to build up good credit and avoid getting into bad credit.
Even though you might think that it is a good idea to have a credit card simply lying around in case of emergency, not using your card could actually cause more harm than good.
More and more people are opening credit card accounts each year, and it is really important for you to keep your credit score healthy, and to do this, you will need to keep your credit cards active and open. This will ensure that your credit card issuer keeps reporting your activity to the right sources.
In this article, we are going to tell you everything that you need to know about keeping your credit card active, including how often you will need to use it in order to do so. This will help you to understand more about your credit and how it can affect your overall score.
There is no specific rule as to how often you will need to use your credit card in order to build credit. Some issuers will lose your account if it has not been used for a certain amount of months, and others could be less than this.
The exact amount of time will depend on the credit card issuer in question, but this will usually happen between 12 and 24 months of inactivity.
It can also be helpful to be aware of the fact that some retailer-branded credit cards may allow for a longer period of activity than bank-branded cards, as retailers will recognise the fact that people may only shop every now and then.
You should try to use your credit card at least once every three months to ensure that your account remains open and active. This will also ensure that your card issuer is sending regular updates to the credit bureaus. We will share some things that you should be aware of below.
Creditors like banks, credit-card issuers, or auto loan companies will report information about their accounts and customers to the credit bureaus.
A credit bureau is able to buy data and use the information they have obtained when they are generating your credit report. Some examples of things that they could buy are government tax liens or bankruptcy records.
On other occasions, credit bureaus are required to share information. An example of this could be when an initial fraud alert is placed with one of the bureaus. If this happens, it is required to forward the alert to the other bureaus.
If you have more than one credit card, you should try to alternate small purchases between these accounts in order to keep all of them active.
However, you will also need to keep on top of these purchases and ensure that any payments are being made on time. All of this information will be reported and it will either positively or negatively impact your credit score.
One of the best ways to manage each card is by setting up monthly reminders or automatic payments, as this will help you to remember multiple billing deadlines.
Anything that you can do to remind you of or simplify the payment process will help to lower your chances of missing a deadline of failing to pay your balance.
Some people may choose to try and raise their credit score by carrying multiple, balance-free credit cards.
If this is something that you are trying to do, you should consider a strategy where you divide the credit cards into three groups and rotate them on a quarterly basis.
Just because you need to use your credit card on a regular basis to keep it active, this doesn’t mean that you have to spend lots of money on each card.
It is important to keep your spending within an amount that you will be able to afford to pay off in full each month. Smaller purchases will be enough to keep your card active.
If you are someone that pays for streaming services, it might be a good idea to set up one of these subscriptions to come out of your credit card each month.
This will ensure that it is being used every month, so you can’t accidentally forget about spending on your card. However, you will need to make sure that you remember to pay it off at the end of the month.
If your lender decided to close your account, you might receive a letter from them to explain that your account has been closed due to inactivity. However, you might not always receive a warning that this is going to happen.
You also might not get any notifications to say that an inactive credit card is no longer being reported to the credit bureaus. If you are unsure if your card has been cancelled, you should contact your credit card issuer to find out.
If you are not using your credit card, your card issuer could close your account without warning.
This can lead to you no longer having access to your credit card if you need it, and your credit score being impacted negatively. Lots of things can impact your credit score, and credit utilization is one of these things.
It is really important for you to keep your credit cards active, even if they are only being used for small and insignificant purchases.
Credit bureaus like to see that you can use your credit card, hold a balance for a short time, and then pay it off on time. Utilizing credit will ensure that you are able to maintain your credit score and increase it.