Why are people saying that opening a credit card and not using it won't help build your credit history or report?
Because it certainly will. It may only report a $0 balance, but the tradeline will appear on your statement and will add to your overall utilization and AAoA.
I have many cards I never used or stopped using a long time ago. They are all still active and actively reporting every month. Will some banks close inactive accounts - sure. But that doesn't mean that you won't get any benefit from them.
@myjourney wrote:
@phonic wrote:Why are people saying that opening a credit card and not using it won't help build your credit history or report?
Because it certainly will. It may only report a $0 balance, but the tradeline will appear on your statement and will add to your overall utilization and AAoA.
I have many cards I never used or stopped using a long time ago. They are all still active and actively reporting every month. Will some banks close inactive accounts - sure. But that doesn't mean that you won't get any benefit from them.
Because 99% of the time that TL will never grow and stands a good chance of being closed by lender and any other lender seeing it will in most cases think you have credit thats not used ......well you don't need anymore
OP this is not meant towards you but this is why we say why app cards you'll never use ...waste of a HP with no rewards or bonuses... IMHO
Because it appears on your CR's does not mean its helping if not used a history of $0 is just that 0 IMHO
While your points may be true in some cases, I think the overall information is very subjective.
I have five credit cards I never use. One was my oldest, so I keep it for tenure. The other was a gas card for a brand that isn't near where I live now and have only used once in five years when they told me to 'use it or lose it' - I did and haven't touched it in two years. The third is a high limit card I originally got for a very nice BT offer (transfered my car loan to it), but haven't used it in years since the BT was paid off. The fourth is a card I only got for the airline perks that comes with it (only the AF hits it once a year). The last is a card I got with USAA that I used to use but haven't touched in three years - I keep it because I get an insurance discount for multiple types of accounts with them. It's actually a great APR card, but I never keep a balance.
In my case, outside of the gas card mentioned above, I've never had an issue with a bank closing or threatening to close one of my unused cards. I'm not saying it doesn't happen - it certainly does. But I don't think it happens as often as you imply. Granted, numerous other factors will likely contribute to it.
Regarding the downsides you are talking about, I think you are overexagerating. I have a rediculous amount of combined credit limits that amount to close to 20x what I routinely spend in a month (and then PIF). I've never once had a rejection for "too much credit", and certainly not "too much unused credit". Yes, a $0 balance with history of never having a balance will be on your report - but no more so then if you PIF every month before your statement date. And even then, AFAIK no automated system even checks that. Only on a manual review would someone possibly take notice.
Now, with that said, I certainly agree with you that the account will almost never get a boost in CL (except for my USAA which did a year or so ago) or benefit from perks given to high spending customers. And having an unused card with a bank -may- hurt your chances of getting another account from them in the future.
But as I mentioned above, in my case I have benefited from all the cards I never use. My AAoA is higher, my total accounts are higher and my total utilization is lower. I'm not encouraging people to go apply for a ton of cards and sock drawer them, but there may be times when a card comes with some benefits you can use even if you never spend a dime on the card.
@byebadcredit wrote:I know this question has probably been asked many times but I have a very limited credit history and I just got approved for another card. This will be the second card. i plan on paying the first one down and not using the second unless an emergency (I really mean that) is that a bad idea?
No, its not a bad idea per se. What I would do is have one monthly charge used on that credit card per month and then PIF before the statement cuts. This way the card will not be closed by the lender. Obviously if its a card your not going to use or meet initial spend on then avoid AF cards. I would get a card with a lender you want to develop a relationship with.
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FWIW I would consider anyone less than 3 credit cards to "need" any card frankly from a FICO perspective.
I have cards I rarely use: I do put an occasional chocolate shake on them or other meaningless transaction (financially, chocolate shake = tasty treat!) which I effectlvely have as tradeline farms to fatten my file and to accrue payment history more quickly.
Having a card and *never* using it doesn't make much sense to me other than the <3 situation mentioned earlier (and even then I find it massively suspect), might as well close it in that case... but simply charging a pack of bubblegum once every few months is more than sufficient to keep the tradeline active. That falls under my personal definition of non-use: I never "sock-drawer."
@myjourney wrote:
@phonic wrote:
@myjourney wrote:
@phonic wrote:Why are people saying that opening a credit card and not using it won't help build your credit history or report?
Because it certainly will. It may only report a $0 balance, but the tradeline will appear on your statement and will add to your overall utilization and AAoA.
I have many cards I never used or stopped using a long time ago. They are all still active and actively reporting every month. Will some banks close inactive accounts - sure. But that doesn't mean that you won't get any benefit from them.
Because 99% of the time that TL will never grow and stands a good chance of being closed by lender and any other lender seeing it will in most cases think you have credit thats not used ......well you don't need anymore
OP this is not meant towards you but this is why we say why app cards you'll never use ...waste of a HP with no rewards or bonuses... IMHO
Because it appears on your CR's does not mean its helping if not used a history of $0 is just that 0 IMHO
While your points may be true in some cases, I think the overall information is very subjective.
I have five credit cards I never use. One was my oldest, so I keep it for tenure. The other was a gas card for a brand that isn't near where I live now and have only used once in five years when they told me to 'use it or lose it' - I did and haven't touched it in two years. The third is a high limit card I originally got for a very nice BT offer (transfered my car loan to it), but haven't used it in years since the BT was paid off. The fourth is a card I only got for the airline perks that comes with it (only the AF hits it once a year). The last is a card I got with USAA that I used to use but haven't touched in three years - I keep it because I get an insurance discount for multiple types of accounts with them. It's actually a great APR card, but I never keep a balance.
In my case, outside of the gas card mentioned above, I've never had an issue with a bank closing or threatening to close one of my unused cards. I'm not saying it doesn't happen - it certainly does. But I don't think it happens as often as you imply. Granted, numerous other factors will likely contribute to it.
Regarding the downsides you are talking about, I think you are overexagerating. I have a rediculous amount of combined credit limits that amount to close to 20x what I routinely spend in a month (and then PIF). I've never once had a rejection for "too much credit", and certainly not "too much unused credit". Yes, a $0 balance with history of never having a balance will be on your report - but no more so then if you PIF every month before your statement date. And even then, AFAIK no automated system even checks that. Only on a manual review would someone possibly take notice.
Now, with that said, I certainly agree with you that the account will almost never get a boost in CL (except for my USAA which did a year or so ago) or benefit from perks given to high spending customers. And having an unused card with a bank -may- hurt your chances of getting another account from them in the future.
But as I mentioned above, in my case I have benefited from all the cards I never use. My AAoA is higher, my total accounts are higher and my total utilization is lower. I'm not encouraging people to go apply for a ton of cards and sock drawer them, but there may be times when a card comes with some benefits you can use even if you never spend a dime on the card.
SO we're clear your profile has nothing to do with OP's profile of 2 cards would you agree?
Also the cards you mention you don't use did you use them at one time? now be honest?
The info your applying may work in your case but this is the case of OP and building not the case of your 20x which has no bearing on OP's case again would you agree?
Yes AAoA will grow but lenders years ago didn't close cards now a days they will....
Just an honest an objective view of OP's case IMHO
Edit also forgot to add showing $0's does not mean the card was not used look closer at your CR's and you'll find the history of high balance and the payment for that month so PIF will reflect $0 but there's still much more history shown when other lenders look
Yes we are in agreement that my profile is unlike the OPs. Never claimed it was. In fact, I was the one who said that the advice given seemed to be very subjective and NOT objective or universal.
Out of the list of cards I mentioned earlier, the only one I ever used as a revolver was the USAA card. And, as I mentioned, I put one large BT on one and pay the AF on another (for the perks).
We seem to be going off on a tangeant here. The OP asked a question about getting a new card and sock drawering it. The first post said, and I quote, "It won't build history!". The next two people +1'd it. To someone casually reading this thread, who may also not be in the OP's position, they might come away with the thought that there would be zero benefit, which is certainly not the case - even by your own admission. While I haven't been on this board very long, my understanding of the term 'sock drawer' still indicates occasional use to keep the account active.
In my opinion, in the OP's case, they would certainly benefit from a second tradeline. Should they never use it? Probably not. I would recommend using it occasionally to ensure that the lender keeps it open. Because in their case a cancelled account would have a much greater impact then someone with established credit. But having a second account, more available credit, etc. etc. would only help. The AAoA would drop at first, but get better and more beneficial as time went on.
My two cents.
