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How do Un-Activated Credit Cards Impact my Credit Score?


Have you ever filled out a credit card application at a booth because of what they were giving away? Maybe it was a T-shirt or a coupon? Perhaps it was an entry in a raffle to win a car? Chances are, you received the card, but never even opened the envelope. You would think that by not opening the envelope you are protecting yourself from making a bad decision with the card. If that is the case, you are only partially right.

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According to FICO a credit card will impact your credit score whether you activate that card or not. Founded in 1956 as Fair, Isaac and Company, FICO has gone on to become the most widely-known and used credit score model in the U.S.

There are five factors that impact a person’s FICO score.

  • 35% – Payment history – Late payments on any credit card bills, mortgages or car loans will lower your score, whereas a history of paying them on time will raise it. This would not affect an un-activated account in either way, as there is no activity.
  • 30% Credit utilization – This is the ratio of current revolving debt to current available credit. This does have an impact upon closing. For example, if you had a $1,000 limit on that card and you close it, $1,000 less credit is available according to this analytic. It will reduce your FICO score.
  • 15% Length of credit history – Like wine, your credit gets better with age, as long as it was good to begin with. Opening and closing an account will show up on your history, but it is inconclusive what effect it may have.
  • 10% – Types of credit – This will impact your score as long as the account is open. Being able to maintain different types of credit (revolving, mortgage, installment, etc.) can help your score.
  • 10% Recent credit inquiries – This includes all applications for new credit, whether it be a store card, American Express or a car loan. Each application requires a credit history search. Each of these searches can reduce your FICO score by 3-5 points. The un-activated card will not impact this part of your score, but your other activity will.

Pre-Approved Offers

This is not the same as an un-activated card and does not affect your credit score. However, if you decide to accept the offer, than it will as soon as the account is opened.

What Do I Do Now?

According to American Express, new credit card accounts are reported a full billing cycle AFTER the application is approved. While not confirmed, this seems to be a common sense approach that most would take. If you are in that window of time, you should call and cancel the card immediately so it will not show up on your credit.

If that window has closed, you still may want to close the account. When you call the credit card company, ask them to mail you a letter stating that you closed the account in good standing. It won’t show up in your credit score, but you have it to answer any questions in the future.

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The Final Result

The quick answer to the ultimate question here is “yes, it will impact your credit score.” However, the total impact is undetermined. Every person’s credit is different, and the variables that affect your score are too numerous to come up with a fair answer that covers everybody. Ultimately, it comes down to each person monitoring their credit score to see how much it changes.

You can do this, without affecting your credit. You can access your credit report from each of the big consumer-reporting agencies — TransUnion, Equifax and Experian.

As soon as a credit issue pops up you can address it immediately and prevent further damage to your credit score.

Photo Credit: stevendepolo