Difference b/t an Inactive Account and an Open Account

[Anonymous]

Just wondering.....I have one credit card reporting with a $5,800 credit line as Inactive. The credit card was added with my banking company as an added overdraft protection.

Would I benefit from reactivating and making a purchase or should I leave it alone?

I don't want to mess up my scores because I want to buy a house within the next 6 months!!! But am worried if I don't do something with the card that they could close the credit line....

[CreditBob]

With an inactive account the fico scoring system does not have information that it can be used to calculate a fico score for you. Here is what you can do. Use the account and then leave a small balance on your account. For example, charge $ 100.00 on the account and make sure you leave the balance when the creditor reports it to the credit bureaus. For example if the creditor closes out the month on the 25th of each month then by the 20th leave a $ 100.00 balance. Then at the end of the month payn off the balance. keep doing this every month. Not only will the creditor report a small utilization of yopur credit line but the account will still get paid off each month. make sure you ask the lender whne they close out the account each month.

Do not apply for any more credit. Keep ypur inquiires per credit bureau to three or less. If you have high balnces on anything else the six months will help give you time to pay them down. SDom apy down high balances now.

All three fico scores are each at 760 or higher. Having a very small balance that is reported will earn you a few more fico score points. You could possibly be at at elast 800. High fico achievers have a revolving balance of around 3-7%. Even a 1-2% balance would work. For you that is a balance of $ 58-100. I have tried this methos myself and have gained 10-15 fico score points. Please keep in mind that it also depends on what else is reporting.

[Anonymous]

CreditBob is right. The key is that inactive accounts do not count toward your utilization, whereas active accounts do. You also get props from FICO for paying bills on time...an inactive account generates no bills, therefore there's nothing to pay on time.

[Anonymous]

Since it already isn't counting towards my utility I won't touch it. It was really only opened 4 years ago for overdraft protection on my checking.

Right now with that card as inactive my credit reports only show 1% utility. I only let one card report a small balance each month and once I started doing that my scores increased by 10 to 30 points.

I had gone 2 years without using a credit card while I paid everything off....

THANK YOU EVERYONE!

[RobertEG]

111, I suggest you listen to the sound advice offered, and use the account to make it active. Not using it may be a personal triumph, but it is not a FICO triumph.

[Anonymous]

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111, I suggest you listen to the sound advice offered, and use the account to make it active. Not using it may be a personal triumph, but it is not a FICO triumph.
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Okay, so what will it do for me to activate it? And more importantly what could it possibly do to hurt my score? I know that using an account you haven't for some time affects your score because FICO thinks you are needing credit...So my concern is that if I activate it FICO might see this and mess with my score negatively.

My biggest concern is my plan to purchase a home early next year....My scores are all just above 780 and I read one poster suggesting that 780 is the new 720...I don't want to screw anything up.

[RobertEG]

It will re-activate your CL on the account, and thus reduce your overall % util. 

It will not hurt any other FICO scoring categories.

Just buy a big mac on the card, pay it off after it reports, and have a beer!

Message Edited by RobertEG on 06-23-2008 02:40 AM

[haulingthescoreup]

You'll get a one-time score ding for using an account that hasn't had any activity in 3 months (might be 6 months.) As I said, it's one-time, and your scores will be back up the next month, but you do need to know it's coming.

My main concern would be that the account gets closed for inactivity. Not the end of the world if you have high average and overall history, so that it won't affect you in 10 years, but another thing to keep in mind.