topic Re: Not using cards or auto closing? in Credit Cards

Not using cards or auto closing?

Skye12329 — Sun, 14 Jul 2013 07:09:15 GMT

Can someone elaborate a little, because im trying to get the correct answer. If i understand correctly if you dont use your card at least once a month less than 30% it hurts you. Would it be more logical just to close it? Because i know some store cards after a year of not using will automatically close.

Re: Not using cards or auto closing?

Sabrian31487 — Sun, 14 Jul 2013 07:36:54 GMT

Let one of your credit cards report between 1-10% and all your other cards report zero. Swap the cards every month to show usage so accounts dont get closed.. You dont have to use all your cards every month, just one..

Re: Not using cards or auto closing?

SnackTrader — Sun, 14 Jul 2013 14:12:47 GMT

Skye,

You are referring to two different things in your post.

One is utilization, which is the balance of your cards as a percent of your credit limits that reports to the credit bureaus. The higher this number is, the bigger the hit to your credit score. Feel free to search around the forums for more on utilization, or read some posts in this labyrinth of links:

http://ficoforums.myfico.com/t5/Credit-Cards/Help-understanding-credit-cards-amp-the-best-way-to-use-them/m-p/2008699#M556488

The second thing you allude to is inactivity. A card becomes inactive after it is not used at all for a certain period of time. For my capital one card, CSRs told me it takes 90 days. When a card becomes inactive, most companies will close the tradeline, which has the ability to hurt your utilization. If you want to keep a card, most of us suggest that you use it once a month or so, and pay off the balance.

You don't need to allow a balance to report ever. In fact, you could pay all your credit cards to zero whenever you want, and all your card issuers would probably be happy they got their money back. But for better scores, it is recommended that you pay all cards to $0 before the statement date, except one, where you leave a balance of 1-9% of the credit limit. You only need to do this in months where you are applying for new credit.

Re: Not using cards or auto closing?

nvrgvupnvrsrndr — Sun, 14 Jul 2013 14:24:19 GMT

I guess I'm a little confused here as well. I often seen comments/responses here where individuals use the term "sock drawer card" when referring to credit cards they don't use very often and only keep around for the tradeline and to help with utilization. If memory serves correct, I thought the standard was to use a card at least once every 6 months. My personal experience...I have accounts that only see activity once every 4-6 months.

Re: Not using cards or auto closing?

SnackTrader — Sun, 14 Jul 2013 14:50:20 GMT

For Many people, when they sock drawer a card, they put a recurring charge like Netflix on it, then schedule automatic payments so they can just ignore it. Others pull out the cards from time to time and use them for something small.

My Capital One is being used by an AU, so that helps me keep it active.

Re: Not using cards or auto closing?

nvrgvupnvrsrndr — Sun, 14 Jul 2013 15:01:15 GMT

Understandably, a generalized term like "sock drawer card" is going to have a different meaning to most. I guess my point is from personal experience I have not had any cards closed after not using them for 90 days. I have 14 revolving tradelines(credit cards/store cards) and regularly go without using some of them for 4-5 months. However, I've never allowed any account to go 6 months without use. As always, YMMV.

Re: Not using cards or auto closing?

Anonymous — Sun, 14 Jul 2013 15:09:29 GMT

Yes, very much YMMV. I didn't use an Amex for 3 years without issue, and another card I use less than once a year. I also have a card I haven't used for 4 years, two years ago they told me they weren't sending me a renewal card, but left the account open.

Re: Not using cards or auto closing?

GatorGuy — Sun, 14 Jul 2013 15:41:02 GMT

If you aren't using them then they won't report either so they aren't helping your credit.

Re: Not using cards or auto closing?

Dubious — Sun, 14 Jul 2013 15:44:59 GMT

@GatorGuy wrote:
If you aren't using them then they won't report either so they aren't helping your credit.

This isn't true. Cards from major banks will still report.

Re: Not using cards or auto closing?

SnackTrader — Mon, 15 Jul 2013 03:52:36 GMT

+1 a $0 balance reports just the same as any other balance in my experience. I know some cards are different in this respect, but all those in my signatures have reported $0 balances in the past for me.

Re: Not using cards or auto closing?

chnceit — Mon, 15 Jul 2013 08:25:36 GMT

Either way you SD your card or close them they will still report the TL for 7 years.

Like some say rotate your cards to keep them open. Just pay it off before your statement closes so it will not be counted towards your total utilization

Re: Not using cards or auto closing?

Open123 — Mon, 15 Jul 2013 15:04:03 GMT

For my original Cap One, I never use it, but they won't close. However, when there's no activity, it reports as "ND" instead of "OK."

Re: Not using cards or auto closing?

takeshi74 — Mon, 15 Jul 2013 15:27:46 GMT

@Skye12329 wrote:
Would it be more logical just to close it?

Logic really doesn't matter. What works for you does. Verify what criteria the issuer uses to close accounts (not all do and not all use the same critieria). Are you unable to use the cards to meet their requirements? If you're never going to use a card and run into the risk of closure frequently then it may make sense just to close it.

@SnackTrader wrote:
You are referring to two different things in your post.

One is utilization, which is the balance of your cards as a percent of your credit limits that reports to the credit bureaus.

@SnackTrader wrote:
The second thing you allude to is inactivity.

^ This. Utilization and activity are two different things. Activity does not have a utilization attached to it. The general recommendation is to keep utilization under 30% but the lower the better as long as you don't hit 0.

@nvrgvupnvrsrndr wrote:
If memory serves correct, I thought the standard was to use a card at least once every 6 months.

"Standard" doesn't matter either. One has to meet the particular issuer's usage requirements to avoid closure. Again, they're not all identical.