Keeping Your Credit Score Healthy:
It’s important to remember that in order to keep your credit score healthy (in the range of 660 – 750) you need to keep your credit cards open and active. This ensures that your credit card issuer will continue to report your activity to the three major credit bureaus. Maintaining a low credit card balance and paying your bill on time each month will also contribute to a healthy credit score.
When Credit Cards Go Inactive:
There is no definitive rule for how often you need to use your credit card in order to build credit. Some credit card issuers will close your credit card if it goes unused for a certain period of months. The specifics period of months depends on the credit card issuer, but the range is generally between 12 and 24 months.
Retailer branded credit cards may allow for a longer period of inactivity than a bank branded credit cards, as retailers recognize that a certain percentage of their card holders will only shop during semi-annual sales or promotional events.
Keeping Your Credit Card Active:
You should try to use your credit card at least once every three months to keep the account open and active. This frequency also ensures your card issuer will continue to send updates to the credit bureaus.
Alternating Multiple Credit Cards:
If you have multiple credit cards, alternate small purchases between your various accounts in order to keep each of them active, and remember to pay your balances on-time and in their entirety. All of this information gets reported and can add or subtract from your overall credit score.
The average American held 4 active credit cards with an estimated balance of $6,194.00, this is based on 2019 credit data. If you want to proactively raise your credit score by carrying multiple, balance-free credit cards, consider a strategy where you divide the credit cards into three groups and rotate them on a quarterly basis. The first group would be used in January, April, July, and October, for example. The next group would be for use in February, May, August, and November.
Just because you need to use your credit card regularly to keep it active doesn’t mean you have to go on a spending spree. It’s important to keep your credit card spending within an amount that you can afford to pay in-full each month and avoid interest. Small charges will keep your card active.
