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New Member
pkarshens
Posts: 4
Registered: ‎12-04-2012

To use a card or not to use...?

On 1-9 my credit score was 693.  Today it is down to 688 because I put 173.00 on a zero balance credit card with a limit of 2500.00.  I have not used the card for a couple of months but do pay a 6.00 monthly service charge.  I thought some use of a card is a good thing but should it be done every single month?  Thanks for any help.

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Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007

Re: To use a card or not to use...?

It's quite OK to use a card each month, just keep an eye on your statement balance. Most all CCs will report the balance you had on the statement date and you can avoid the reported balance by paying off the CC before the statement date.

New Contributor
cleansheet
Posts: 61
Registered: ‎12-20-2012

Re: To use a card or not to use...?

You should use your cards from time to time otherwise after a while it becomes classified as dormant.  You do not need ot use it monthly, but as mentioned you can do so and pay off the balance before the statement date (or reporting date in some cases).  The small shift in score is (as far as I can tell) due to a quirk in the calculation which decides that your credit use has gone up, even though the util is small.



Starting Score: 2012-10-06 EX: SSN has not been allocated! (funny I pay my taxes)
Current Score: 2013-10 Average 718
Goal Score: 760+


Moderator
Revelate
Posts: 8,411
Registered: ‎12-30-2011

Re: To use a card or not to use...?


cleansheet wrote:

You should use your cards from time to time otherwise after a while it becomes classified as dormant.  You do not need ot use it monthly, but as mentioned you can do so and pay off the balance before the statement date (or reporting date in some cases).  The small shift in score is (as far as I can tell) due to a quirk in the calculation which decides that your credit use has gone up, even though the util is small.


One of the scoring factors in FICO as we understand it is number of cards which report a balance.

 

The general rule of thumb is to have less than half of your cards reporting a balance: in my case with 7 cards I can theoretically have 3 report a balance and be "OK".  Taken to extremes this is actually having one card report a balance which is what I and many other folks do just to be on the safe side as it appears to work for pretty much everyone; however, for whatever reason if you have zero cards that report a balance that's considered a negative.

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 679, EQ 8 708, TU 711, EX 702* (07/14/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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Valued Contributor
my-own-fico
Posts: 1,141
Registered: ‎01-05-2010

Re: To use a card or not to use...?


cleansheet wrote:

You should use your cards from time to time otherwise after a while it becomes classified as dormant.


 

llecs recently expressed (more than once) that "FICO will ignore a CC due to inactivity after several months and the part that is ignored is the balance and CL from my understanding." Yet I don't recall getting a dormant alert until such a card has been charged on (and reported). So I'm pondering the meaning of "classified as dormant".

 

When it comes to wishful thinking vs reality, wishful thinking wins.
Moderator
Revelate
Posts: 8,411
Registered: ‎12-30-2011

Re: To use a card or not to use...?


my-own-fico wrote:

cleansheet wrote:

You should use your cards from time to time otherwise after a while it becomes classified as dormant.


 

llecs recently expressed (more than once) that "FICO will ignore a CC due to inactivity after several months and the part that is ignored is the balance and CL from my understanding." Yet I don't recall getting a dormant alert until such a card has been charged on (and reported). So I'm pondering the meaning of "classified as dormant".

 


I haven't seen it personally but there's something in the reports (this may be provided by the lender) which classifies the credit card as inactive.

 

That flag basically excludes the CL from the revolving utilization calculation is my understanding of it; I'm not so certain you can carry a balance on a card and be flagged as inactive if still making payments, but sock-drawered credit cards with no activity or any sort can be, though I think it's more likely that the lender simply closes the account.

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 679, EQ 8 708, TU 711, EX 702* (07/14/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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New Contributor
cleansheet
Posts: 61
Registered: ‎12-20-2012

Re: To use a card or not to use...?

To clarify my comment.  When I stated dormant I meant action at the CCC's end.  Depending on the particular card this could be any number of actions including closing the account.  The FICO score does look for credit lines which show no activity but I have not investigated this enough to comment accurately.



Starting Score: 2012-10-06 EX: SSN has not been allocated! (funny I pay my taxes)
Current Score: 2013-10 Average 718
Goal Score: 760+



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