Reader Judy wants to know, “If you apply for a credit card and you decide you don’t want it, does it go against your credit if you don’t activate it?”
It’s not an uncommon situation to find yourself in. Maybe you were pre-approved for a card and applied casually, then decided you don’t want it anyway, for example.
Or, after applying impulsively, you may have decided you don’t need another card to keep track of and keep track of. In any case, the deed is over and now you wonder if not activating this card will affect your credit.
Any impact on your credit score has already occurred
The card issuer has already reviewed your credit before approving you for the card. That’s the point where your credit score is affected. The lender makes what is known as a difficult research in your credit score before deciding whether to extend the credit.
Just one difficult study is unlikely to have much of an impact on your credit.
But if you applied for multiple cards in a short amount of time and multiple lenders investigated your credit score, that would have more of an impact.
The idea is that you may be overburdening yourself by taking on too much credit. Your credit score would reflect that potential risk to potential lenders if there are too many questions about your creditworthiness from many lenders within a short period of time.
However, the credit score process does take into account the possibility that you will shop for the best terms if you are applying for a large consumer loan, such as a mortgage, student loan, or car loan.
In these cases, the credit score model is shown several of these studies within a time frame of about 14 to 45 days, depending on the model generating the score, as one study. Although all questions appear in your credit report, they are counted as one question for creditworthiness purposes.
When a credit card issuer checks your credit, that hard pull can lower your score by five points or less. But it will only affect your credit score for up to a year, and it will drop off your credit report after two years.
Use your new card to improve your score
While you should have considered whether you needed the extra credit before signing up, you can’t undo what’s been done. In any case, if you engage in positive credit behavior, such as continuing to pay your bills on time, any small negative drop on your credit score will be remedied by the hard investigation within a few months.
Now that you have a new one credit card, remember that it can even positively impact your credit profile if you activate it and use it responsibly. First, the card gives you an additional line of credit that will increase the total amount of credit you have at your disposal.
For example, if you had three different cards with a total available credit of $ 30,000 and the new card offers you a line of credit of $ 15,000, the total credit available to you now would be $ 45,000.
Typically, if you tap into $ 15,000 of your available credit, your old one is credit utilization ratio would be 50%. With your new card, this means that if you don’t increase your spending, you will use less of your total available credit, which is 33%.
That would be positive for your credit score as you tap into less of the total available credit. However, this result depends on how well you manage your finances by not using up the extra credit.
See related: What is a good credit utilization ratio?
Consider canceling the card
Judy, if you don’t need the extra card and don’t think you will get any extra benefit related to credit or otherwise by sticking to it you should consider cancel it.
If not, an annual fee may be charged in case the card carries one. Since you don’t have a credit history with this card, if you cancel the card, there probably won’t be much of an impact on your credit score.