Inactive card reporting question

[dynamicvb]

I’ve seen several threads about how an inactive card reporting can drop your scores. I’m not sure how long a card would have to not report in order to qualify. The reason I’m asking is I have a capital one with no rewards and I have not had it report any balance in 4-5 months. I haven’t even used the card. I did decide I should at least make a small charge on it today just to show some use to cap one, but I got to thinking should I not pay this one off before the report date to show the CRAs some usage or does it matter? If it does matter how often should I make sure to let a card report something to avoid the inactive account penalty?

[Anonymous]

I don't really have an answer to your exact question, but I think a factor that may matter is how many total revolvers you have.  If someone has just one revolver for example, having that become "inactive" I would think would be a bigger deal than someone with many.  I've allowed revolvers to go without use for that long or longer and have never seen anything adverse come of it, but I've got 8 total revolvers.

[Anonymous]

I have never heard of inactive account penalty, the only risk of inactive accounts is being closed down by the lender, a token charge every 6ish month should take care of that risk with most lenders, whether that token charge reports on the statement matters not.

[Anonymous]

Then there are the people that report a score DROP when "an inactive card becomes active."  I've never been able to figure that one out.  Probably just the classic confusing/correlating an alert with a score change that had nothing to do with it, I suppose.

[Glen_M]

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@Anonymous wrote:
I have never heard of inactive account penalty, the only risk of inactive accounts is being closed down by the lender ... whether that token charge reports on the statement matters not.

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I have.  Several times.

After letting a card go dormant for a few months, I let it report a balance before paying it off, and saw what would look like I had been secretly penalized for not letting it report.  It has been 2-8 points each time I've seen this message.

eta: point range increased

[Anonymous]

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@Glen_M wrote:

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@Anonymous wrote:
I have never heard of inactive account penalty, the only risk of inactive accounts is being closed down by the lender ... whether that token charge reports on the statement matters not.

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I have.  Several times.

After letting a card go dormant for a few months, I let it report a balance before paying it off, and saw that I had been secretly penalized for not letting it report.  It has been 2-3 points each time I've seen this message.

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How weird. Usually it’s the drop from an inactive card becoming active that I hear about, not the other way around. 

[Glen_M]

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@Anonymous wrote:

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How weird. Usually it’s the drop from an inactive card becoming active that I hear about, not the other way around. 

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I've seen the same thing 4 times now, under slightly different circumstances.  Each time I have let a card report a balance that was either not in use at all or had not been allowed to report but had been used, after 3-4 months of inactivity in the eyes of the CRA.

And a correction to the earlier number, after reviewing the alerts, I see one that is tied to an 8 point bump.  They are all from Equifax.

[Anonymous]

If you revisit the comment BBS made earlier, you'll see him reminding folks that the text explanation that accompanies the "alert" is not an explanation of why the score changed.

Alerts and their explanations refer to some programming that the designers of a particular credit monitoring service (CMS) have created to detect changes in your report -- not your score.  Only a small portion of the possible changes are alertable.  When the alertable event happens, the CMS will usually recalculate your score and also give a text message explaining what alertable event happened on your report.  If the score changes (it doesn't always) it's easy to mistakenly think that the alertable event caused the score change.

But it is quite possible (likely even) that the score changed a number of days before for some other reason, but the change to the report that caused the score change was not an alertable event.  (Remember: most of the ways a report can change are not alertable.)

This explains why, for example, some people are convinced that an "inactive" account becoming "active" results in a score increase.  Others think it does nothing.  And all of them have screenshots with that alert proving they are right. 

Last year we had a discussion about this and very quickly all three views (with screenshot proof) materialized. 

Hope this makes sense.  There's no question that the CMS at myFICO has an alert for this, but that in itself doesn't imply that it affects scores -- all it shows is that the developers of the CMS thought people would want to know if a card of their suddenly became active again (a change to the report).  That's very reasonable, since many people use a CMS in part for fraud prevention.

[HeavenOhio]

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@Anonymous wrote:

Then there are the people that report a score DROP when "an inactive card becomes active."  I've never been able to figure that one out.  Probably just the classic confusing/correlating an alert with a score change that had nothing to do with it, I suppose.

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I haven't either. I don't know how pulling one report can determine what a card has done in previous months outside of looking at spotty trended data info that FICO doesn't currently count.

The one time I saw the alert was for my AMEX card. That one doesn't report the date of last activity. The alert was accompanied by a score drop, but it was exactly the same drop that I routinely get when two cards instead of one report positive balances. All of my other cards report the date of last activity. None of them have generated inactive/active alerts, even when they've gone 20 months without reporting positive balances.

I think this particular alert has nothing to do with FICO and everything to do with myFICO's fraud protection. A credit monitoring service can do this because it has access to multiple reports, and one of its jobs is to detect changes from report to report. It just happens that all alerts generate updated scores. And as we always remind people, score changes aren't necessarily tied to the accompanying alert.

[Anonymous]

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@Glen_M wrote:

 After letting a card go dormant for a few months, I let it report a balance before paying it off, and saw that I had been secretly penalized for not letting it report.  It has been 2-8 points each time I've seen this message.

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My guess is that the score change had nothing to do with the alert, a common point I mentioned earlier in this thread.

EDIT:  Looks like CGID already responded to this with a great explanation above.