Your credit rating can depend partly on how you use revolving credit accounts. If you have no recent revolving activity, then you might not have as high a credit score as you might like.
| “Lack of Recent Revolving Account Information” | Credit Score Risk Factor Codes |
| Equifax | 16 |
| Experian | 16 |
| TransUnion | 16 |
| NextGen | G1 |
Revolving accounts include a wide variety of credit types. A line of credit at the bank is one example. Store cards are revolving accounts. Major credit cards issued by a bank or credit union are definite credit builders when used properly.
You might be losing valuable points off your credit score if you have not been using revolving accounts recently. If you have no revolving accounts, there is no rush to go out and open some. You should only open an account if you feel that you need or could benefit from it.
Idle revolving accounts send a signal to the lender that you don’t need them. They might close the account due to inactivity. It also sends a message to the credit bureaus that their information on your credit profile is stale or outdated. They may be less likely to give you a higher credit score when they cannot verify recent use of credit. A prospective lender similarly may be reluctant to extend credit if you have not had recent activity on other revolving credit accounts.
While a lack of revolving activity can cause your scores to drop slightly, there is an additional penalty if you have not used your major credit cards recently. Since credit bureaus place so much more prominence on your recent credit history, it is generally important to make sure there is some activity on revolving accounts within the past 6 months.
For this reason, it is important to choose wisely when selecting a new credit card to make sure it is one that you would normally use on a recurring basis. Opening a store card where you rarely shop to save 10% on a $40 order is certainly not a good decision! A major department store that you normally shop at might be a better fit.
Still, major credit cards can be used in more places than store cards and they carry more weight in the credit formulas. If you already have good credit, you might want to curtail your applications for store credit cards and maintain your major credit cards in good standing.
If you haven’t used a card in a long time, there is no need to close the account. It will not hurt to keep it open. It simply will not provide as much of a boost to your credit scores if it has been relatively dormant. Credit bureaus reward long-term relationships with lenders, so it is best to keep your oldest cards active and current.
The lack of recent revolving account information is credit bureau risk score reason 16. NextGen scoring products assign code G1. For more information on credit scoring, see the complete list of credit score factors.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
Favorite quote:
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
Thomas Jefferson
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