topic Re: Dormant Cards: Impact/Strategy in Credit Cards

Dormant Cards: Impact/Strategy

Fletcher2 — Sat, 13 Apr 2024 17:21:05 GMT

I am wondering how dormant [credit card] accounts impact credit, if at all—both when allowing to go dormant and when used again, thereby changing them to 'active' or however classified.

I ask, as I have a dozen plus accounts. Currently, I let 2 report each month and have the 2 reporting cards report every 5 months to avoid the 6 month 'dormant' classification I see w/ Experian. Next month, 2 different cards report and they will be scheduled to report again 5 months from the last reporting date, thereby never allowed to go 'dormant'.

I do, however, use each and every card each and every month, so they aren't inactive with the respective issuer and I don't get my CL chopped/account closed.

HOWEVER, I can't help wondering if this micromanagement is for naught. So my questions are:

If a card is allowed to go dormant, does that credit line get removed from the utilization formula (e.g., if I have a card with a $25K credit limit and allow it to go dormant, would my total aggregate credit line used in the UTL calculation drop by $25K)?
Are there any potential downsides to allowing them to go dormant with the credit bureaus (but still continuing to use them each month to appease the CC companies)?

None of these cards have the potential to become daily drivers again, so each is used (and allowed to report) purely to keep everyone happy. However, I would be happier if I could just let 10 out of 12, for example, go dormant and never report a balance whatsoever.

There seems to be a lot of opinions and thoughts from decade old threads, but hoping perhaps there's more of a consensus/understanding now and you can talk me down from micromanaging cards best left dormant.

Re: Dormant Cards: Impact/Strategy

SouthJamaica — Sat, 13 Apr 2024 18:07:56 GMT

@Fletcher2 wrote:
I am wondering how dormant [credit card] accounts impact credit, if at all—both when allowing to go dormant and when used again, thereby changing them to 'active' or however classified.

I ask, as I have a dozen plus accounts. Currently, I let 2 report each month and have the 2 reporting cards report every 5 months to avoid the 6 month 'dormant' classification I see w/ Experian. Next month, 2 different cards report and they will be scheduled to report again 5 months from the last reporting date, thereby never allowed to go 'dormant'.

I do, however, use each and every card each and every month, so they aren't inactive with the respective issuer and I don't get my CL chopped/account closed.

HOWEVER, I can't help wondering if this micromanagement is for naught. So my questions are:

If a card is allowed to go dormant, does that credit line get removed from the utilization formula (e.g., if I have a card with a $25K credit limit and allow it to go dormant, would my total aggregate credit line used in the UTL calculation drop by $25K)?

Are there any potential downsides to allowing them to go dormant with the credit bureaus (but still continuing to use them each month to appease the CC companies)?

None of these cards have the potential to become daily drivers again, so each is used (and allowed to report) purely to keep everyone happy. However, I would be happier if I could just let 10 out of 12, for example, go dormant and never report a balance whatsoever.

There seems to be a lot of opinions and thoughts from decade old threads, but hoping perhaps there's more of a consensus/understanding now and you can talk me down from micromanaging cards best left dormant.

I don't think the absence of a reported balance has anything to do with an account being dormant. Since you are using your cards each month, I don't think you have anything to worry about.

A card which is in use is not dormant.

https://www.creditcards.com/glossary/term-dormant-account/

https://wallethub.com/answers/cs/dormant-account-on-credit-report-2140678258/

https://fastercapital.com/content/Dormant-Credit-Cards--Tips-to-Revive-Your-Inactive-Plastic.html#Understanding-Dormant-Credit-Cards-and-Their-Effects

Re: Dormant Cards: Impact/Strategy

NoHardLimits — Sat, 13 Apr 2024 17:40:02 GMT

I'm a micromanager too. I've been behaving just as you described. Currently 12 open cards, all cards kept alive by some usage with most having activity every month. I also rotate the cards which report a balance so that no card reports zero for more than 4 months in a row.

There is evidence about FICO placing less importance on tradelines that truly go dormant. However, I believe that Experian dormant account message is just a remnant of their specific CMS (Credit Monitoring Service) coding because it can be triggered by zero reported balances even when the accounts are being constantly used.

Is my behavior truly necessary? No, of course not. My profile produces 800+ scores no matter how much or how little I micromanage. But, I happen to enjoy testing the FICO system to see how my actions cause fluctuations in scores. It's just a nerdy hobby.

Re: Dormant Cards: Impact/Strategy

AC20 — Sat, 13 Apr 2024 17:58:08 GMT

I am interested in this general topic as well. I have 13 cards which is too many for my current usage/interest in micromanaging. You are going a lot further than I am in terms of micromanaging with some caveats. I have a disability trust that reimburses some of my expenses, so I try to pick a card or two for those expenses each month. That means I have usually 2 accounts report a decent balance each month and most cards report like that roughly twice a year. Outside of that, I don't worry about whether an account reports a balance or is even used most months. I do try to use each card at least once every 6 months, but I typically pay everything before the statement date unless it is being reimbursed.

That said, I have a VS card that I am keeping open purely for aging factors. I often let that go more than 6 months without any use at all. So far, I have not noticed this having an impact on anything with the exception of possibly slower CL growth than I might get if I used the card more.

I have developed a weird thing I do where I try to hit 10% usage per 6 month period on all the cards where I hope to grow the CL. So if a card has a CL of 10,000, I try to spend 1,000 every 6 months or 2,000 a year. This is a royal pain in the patootie and costs me a lot of time and effort. Which is fine, but I have no idea if I actually gain anything from doing it. What is worse, this combined with the situation with my trust means that it is hard to try to maximize cash back on my expenses (I don't really travel so I am all cash back).

I don't know where you are seeing cards reported as "dormant". If you tell me where you are seeing that, I can look back and see if that has ever happened to me and if so what kind of impact it might have had on my scores and can maybe give you a bit more detailed information as to what happens when I don't use a card for a while.

To be clear, I am careful with my older cards and any other cards where if I would be really upset if the bank closed the card on me. Except VS. That card really helps my aging factors, but I really don't need another VS purse I will never use.

Re: Dormant Cards: Impact/Strategy

mgood — Sat, 13 Apr 2024 17:56:14 GMT

@Fletcher2 wrote:

If a card is allowed to go dormant, does that credit line get removed from the utilization formula (e.g., if I have a card with a $25K credit limit and allow it to go dormant, would my total aggregate credit line used in the UTL calculation drop by $25K)?

No.

@Fletcher2 wrote:

Are there any potential downsides to allowing them to go dormant with the credit bureaus (but still continuing to use them each month to appease the CC companies)?

I don't think so. Pretty sure the answer here is no also.

Re: Dormant Cards: Impact/Strategy

Gunnerboy — Sat, 13 Apr 2024 18:00:15 GMT

@Fletcher2 ,

Can't say for sure if dormant cards have their CL excluded from utilization. I would guess no.

I know that my dormant accounts still get reported to EQ/EX with timely payments, including a BECU line of credit unused for 13yrs.

Re: Dormant Cards: Impact/Strategy

NoHardLimits — Sat, 13 Apr 2024 18:02:33 GMT

@AC20 wrote:
I don't know where you are seeing cards reported as "dormant". If you tell me where you are seeing that, I can look back and see if that has ever happened to me and if so what kind of impact it might have had on my scores and can maybe give you a bit more detailed information as to what happens when I don't use a card for a while.

I see that message when viewing my Experian Credit Works service. It's not a FICO message.

Re: Dormant Cards: Impact/Strategy

Gunnerboy — Sat, 13 Apr 2024 18:04:09 GMT

@AC20 wrote:

I don't know where you are seeing cards reported as "dormant". If you tell me where you are seeing that, I can look back and see if that has ever happened to me and if so what kind of impact it might have had on my scores and can maybe give you a bit more detailed information as to what happens when I don't use a card for a while.

Credit Karma sends an alert when a "dormant" account shows new activity, reported by lender.

Re: Dormant Cards: Impact/Strategy

SouthJamaica — Sat, 13 Apr 2024 18:08:49 GMT

@NoHardLimits wrote:
@AC20 wrote:
I don't know where you are seeing cards reported as "dormant". If you tell me where you are seeing that, I can look back and see if that has ever happened to me and if so what kind of impact it might have had on my scores and can maybe give you a bit more detailed information as to what happens when I don't use a card for a while.

I see that message when viewing my Experian Credit Works service. It's not a FICO message.

Exactly. It's a user-initiated message, with no FICO implications.

Re: Dormant Cards: Impact/Strategy

Fletcher2 — Sat, 13 Apr 2024 18:20:55 GMT

@NoHardLimits wrote:
I'm a micromanager too. I've been behaving just as you described. Currently 12 open cards, all cards kept alive by some usage with most having activity every month. I also rotate the cards which report a balance so that no card reports zero for more than 4 months in a row.

There is evidence about FICO placing less importance on tradelines that truly go dormant. However, I believe that Experian dormant account message is just a remnant of their specific CMS (Credit Monitoring Service) coding because it can be triggered by zero reported balances even when the accounts are being constantly used.

Is my behavior truly necessary? No, of course not. My profile produces 800+ scores no matter how much or how little I micromanage. But, I happen to enjoy testing the FICO system to see how my actions cause fluctuations in scores. It's just a nerdy hobby.

Nice. Cut from the same cloth...but do you do this when the statement closes to ensure activity on each card? I need help.

$5 dolla make you holla

Re: Dormant Cards: Impact/Strategy

NoHardLimits — Sat, 13 Apr 2024 18:30:27 GMT

@Fletcher2 wrote:
@NoHardLimits wrote:
I'm a micromanager too. I've been behaving just as you described. Currently 12 open cards, all cards kept alive by some usage with most having activity every month. I also rotate the cards which report a balance so that no card reports zero for more than 4 months in a row.

There is evidence about FICO placing less importance on tradelines that truly go dormant. However, I believe that Experian dormant account message is just a remnant of their specific CMS (Credit Monitoring Service) coding because it can be triggered by zero reported balances even when the accounts are being constantly used.

Is my behavior truly necessary? No, of course not. My profile produces 800+ scores no matter how much or how little I micromanage. But, I happen to enjoy testing the FICO system to see how my actions cause fluctuations in scores. It's just a nerdy hobby.
Nice. Cut from the same cloth...but do you do this when the statement closes to ensure activity on each card? I need help.

$5 dolla make you holla

No, I haven't resorted to Amazon reloads... yet. I mostly keep sockdrawered card active through some recurring monthly charges. I have newspaper subscriptions, charitable donations, some odd ball streaming services (that don't code correctly as streaming), and other miscellaneous charges like a fitbit premium membership and electronic toll pass reloads.

Re: Dormant Cards: Impact/Strategy

AC20 — Sat, 13 Apr 2024 18:47:16 GMT

@Fletcher2 wrote:
Nice. Cut from the same cloth...but do you do this when the statement closes to ensure activity on each card? I need help.

$5 dolla make you holla

So while everyone has been here giving us the correct answers (thanks everyone who replied!) I just scanned back through my info. I don't think I have anything set up to give dormant messages, but my VS card has not reported a balance since at least 2019 and I have gone for periods of at least 10 months without using it at all. This has never impacted my scores or utilization numbers at all as others have said. My fear is always that it will be closed by synch, but so far so good. However, it is a store card.

With non-store cards, I do use the Amazon reload trick pretty often - sometimes for only a dollar. I only do this if the card has not been used in the past 5 months for anything. I do a little reload and then pay it right off just to keep some activity. This thread is inspiring me to go close an account or two.

Re: Dormant Cards: Impact/Strategy

FlaDude — Sat, 13 Apr 2024 20:39:10 GMT

I just checked and two cards that have not been used at all since September still factor into UTI calcs. This is based on the reported utilization percentage from Experian free and Extra Credit (credit.com). I have a card that has not been used since 2021 but the CL is so small on that one that removing from the calculation barely changes the usage % so I can't tell for sure that one is included but the card is still being reported so I suspect it is.

I don't recall ever reading any posts here that suggests that not using cards has any bearing on FICO. The links provided by @SouthJamaica all just say that the issuer could close the card, none of them suggest any FICO bearing either.

Some lenders are pretty quick to pull the plug on inactive accounts, but the fastest I have seen or recall seeing reported is after a year of activity. I make sure to use any card I don't want to lose at least once a year, it's worked for me so far. Sync is a good example of a lender that will close cards if they are not used. OTOH, I tried to close my Amex ED card a few years ago and they threw a retention bonus my way to keep it (no AF so I left it open). Since then it has not been used since at least Jan 2022 and it is still open.

If anyone wants to use every card every month that's great, but wildly far from necessary as far as I'm aware.

Re: Dormant Cards: Impact/Strategy

AndySoCal — Sat, 13 Apr 2024 21:29:54 GMT

@Fletcher2

The basic criteria for the FICO is score is simple

https://www.myfico.com/credit-education/faq/scores/fico-score-requirementshttps://www.myfico.com/credit-education/faq/scores/fico-score-requirements

This criteria can satisfied by one or more accounts. Each time the FICO score is calculated FICO is using this criteria. You are welcome to disagree.

If an account(s) do not meet that criteria how much impact on your credit score if any can be be debated. You can see that to some extent when you put an account(s) into dispute and the change on the score either up or down will give you an idea of the impact. Keep in mind that when the account(s) come out of dispute those accounts will be fully included in the FICO score where they were not during the dispute. This does not mean you will gain or lose those same points back. The credit profile hss changed during the time the accounts are in dispute ie the length of time activity and age of the accounts has changed and what was updated by the dispute.

If you use credit card and pay it off before the statment period ends that is considered activity on the account. The balance being reported or not only affects your credit utilization.

The scenario where a credit card in not used for more than 6 months. Some creditors after a certain period of time will close an account or reduce the credit limit on the account or both. How long the time frame is varies for creditor to creditor depending on their policy. Keep in mind with credit cards there is zero fraud liability. A creditor sees an account not being used for a prolong period of time that account has the potential fraud liabilty on the account. Due the consumers lack of attention because the consumer is not using it. The creditor can potentially take action to curb that liability on the account. There are number of variations in this scenario. My own policy is if I am not using the card for several months I may close the account. Hope this helps.

Re: Dormant Cards: Impact/Strategy

CorpCrMgr1 — Sun, 14 Apr 2024 01:22:10 GMT

I'm a buy and pay CC user. There are some cards I suspect will be gone by mid Summer. They haven't been used in a long time. They still count toward my CL though they are definitely dormant. One has had CLD. I have a couple of other cards that have a minimal monthly charge. Others I take out for a walk every couple of months. Others are used weekly.

Re: Dormant Cards: Impact/Strategy

TrapLine — Sun, 14 Apr 2024 07:52:21 GMT

@NoHardLimits wrote:
I'm a micromanager too. I've been behaving just as you described. Currently 12 open cards, all cards kept alive by some usage with most having activity every month. I also rotate the cards which report a balance so that no card reports zero for more than 4 months in a row.

There is evidence about FICO placing less importance on tradelines that truly go dormant. However, I believe that Experian dormant account message is just a remnant of their specific CMS (Credit Monitoring Service) coding because it can be triggered by zero reported balances even when the accounts are being constantly used.

Is my behavior truly necessary? No, of course not. My profile produces 800+ scores no matter how much or how little I micromanage. But, I happen to enjoy testing the FICO system to see how my actions cause fluctuations in scores. It's just a nerdy hobby.

A Credit Guru/Scientist at heart!

Re: Dormant Cards: Impact/Strategy

NoHardLimits — Sun, 14 Apr 2024 17:37:28 GMT

@TrapLine wrote:
@NoHardLimits wrote:
I'm a micromanager too. I've been behaving just as you described. Currently 12 open cards, all cards kept alive by some usage with most having activity every month. I also rotate the cards which report a balance so that no card reports zero for more than 4 months in a row.

There is evidence about FICO placing less importance on tradelines that truly go dormant. However, I believe that Experian dormant account message is just a remnant of their specific CMS (Credit Monitoring Service) coding because it can be triggered by zero reported balances even when the accounts are being constantly used.

Is my behavior truly necessary? No, of course not. My profile produces 800+ scores no matter how much or how little I micromanage. But, I happen to enjoy testing the FICO system to see how my actions cause fluctuations in scores. It's just a nerdy hobby.
A Credit Guru/Scientist at heart!

Guru and Scientist sound so much better than nerdy!

Re: Dormant Cards: Impact/Strategy

Guyatthebeach — Sun, 14 Apr 2024 19:20:24 GMT

I have a spreadsheet that I use all my cards once every quarter that are not my daily drivers. I have never had a problem yet with cards going dormant.

Guyatthebeach

Re: Dormant Cards: Impact/Strategy

RedKhaos — Sun, 14 Apr 2024 19:41:07 GMT

Good info! I've been wondering this as a couple of my cards are now dormant. So it sounds like:

1) Inactive cards (no purchase) go dormant after 6 months

2) Active usage but reporting 0 balance at statement date do not count as inactive

2a) Is there a spend minimum by chance? Like 1 dollar, will likely use Amazon refill for this later.

3) Dormant status vs. active status mostly likely has no effect on FICO

4) CC lenders usually allow at least 1 year of inactivity before closing

Above sound right? I know outliers are always possible but I can live with it. I've been using spreadsheets and decided to add a "last use" column for my credit cards and calculate days I have before 1 year's up. I figure that should be good enough.

Re: Dormant Cards: Impact/Strategy

Gunnerboy — Sun, 14 Apr 2024 19:49:08 GMT

@RedKhaos wrote:
Good info! I've been wondering this as a couple of my cards are now dormant. So it sounds like:

1) Inactive cards (no purchase) go dormant after 6 months
2) Active usage but reporting 0 balance at statement date do not count as inactive
2a) Is there a spend minimum by chance? Like 1 dollar, will likely use Amazon refill for this later.
3) Dormant status vs. active status mostly likely has no effect on FICO
4) CC lenders usually allow at least 1 year of inactivity before closing

Above sound right? I know outliers are always possible but I can live with it. I've been using spreadsheets and decided to add a "last use" column for my credit cards and calculate days I have before 1 year's up. I figure that should be good enough.

Perhaps banks will close them, but not credit unions, in my experience.