This Is What Happens to Your Credit Score When You Only Use Your Debit Card

published Feb 17, 2019
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Maybe you’re afraid of racking up too much debt. Or, perhaps you fall into an “anti-credit card” category who loathes the potential of paying interest. It could just be that your debit card is at the front of your wallet and, by default, gets swiped far more than your credit card.

Whatever the reason, if you rely solely on your debit card for purchases—and, as a result, snub your credit card—you may have wondered how it affects your credit score—especially if you’re staying away from it in order to save up more cash for a down payment on a home. We asked financial experts to explain what happens when your credit card is idle, or doesn’t get used at all. Here’s what they have to say:

What’s the worst thing that could happen if you don’t use your credit card?

First, let’s get this out of the way: If you’re not using your credit card, it’s possible the card issuer will close out the card due to inactivity, warns Lauren Anastasio, associate financial planner at SoFi, a personal finance company.

Interestingly, most credit card companies don’t disclose their inactive card policies, so it’s tough to know how long you can keep your card inactive before it gets canceled. Six months? A year? You might want to press your creditor on this topic.

If your credit card gets canceled for inactivity, it could negatively affect your credit, as established credit history makes up 15 percent of your score. Like fine wine, credit gets better with age: The length accounts have been open as well as how long since those accounts have been used both factor into your score, according to FICO, a widely-used scoring model.

An absolute worse-case scenario of not using a credit card? Fraudulent activity occurs on your card and you overlook it.

“Even if you do not use your credit card, you should regularly keep track of your credit card statements to make sure no fraudulent activity is occurring,” says Oliver Browne, credit industry analyst with Credit Card Insider, a credit card comparison and education site.

How does only using your debit card affect your credit?

Really, your debit card isn’t doing you any favors when it comes to building credit. (Although, when released, the new UltraFICO system could help give you a boost if you let it keep tabs of how you manage your bank accounts, including the checking account to which your debit card is linked).

Your debit card could potentially affect your credit score if you overdraft, that fee goes to collections, and that collection account then gets reported to the credit bureaus, says Todd Christensen, education manager for Money Fit, a debt management nonprofit and author of “Everyday Money for Everyday People.”

If you’re not using your credit account to make any purchases or pay any bills, it will still appear on your credit report, explains Ashley Dull, a credit strategist with CardRates, a credit card guide.

“Maintaining on-time payments is the best thing you can do for your credit score, so if you’re not using your credit card at all, you’re losing the ability to show lenders you can effectively manage payments,” Dull says.

There is one perk of not using your credit card frequently, though, points out Adrian Nazari, CEO and founder of personal finance website Credit Sesame.

“Having a low or zero balance on a credit card can affect your credit positively as it will help to lower your credit utilization ratio,” Nazari says. “Credit utilization is one of the most important factors in credit score calculation.”

It helps to remember the rule of 30 when it comes to credit usage: It makes up 30 percent of your FICO score and you should keep your credit card balances under 30 percent.

What’s the most responsible way to use your credit card?

Even if you’re carrying low or no balances, Nazari says, it’s important to still use your credit card every once in awhile. You can immediately pay off the balances in full, he says.

“These can be small purchases such as groceries or gas,” Nazari says. Try doing so once a month.

That way, you get prevent having your account closed due to inactivity and are proving you can pay your debts.

A solid strategy for building credit with your credit card, even if you prefer your debit card is to keep your credit utilization rate low, and pay off your credit card balance in full and on time every month, Browne suggests.

What we’re getting at? Your debit card may be the MVP in your wallet. But think of your unused credit card as a player on the bench, eager to get in the game to score you some (credit) points for the team.

And by the way: Do you know what your credit score is? You might want to double check because this writer’s credit score was actually 70 points lower than she thought—and yours may be, too.