Credit scores hurt by lack of revolving accounts

Dear Experian,

My credit report says my score is reduced because I have no revolving credit accounts. Would it help my score to apply for and use a credit card?



Dear RYN,

Each time a credit score is calculated a series of risk factor statements is generated. Those statements describe what from your personal credit report is most affecting the score you received. If your score factors indicate that not having a credit card is hindering you, opening a new credit card account should help.

However, you might not see an immediate increase in your scores. In fact, you might see scores dip a bit when you first open the account. A new, unused card represents risk. It’s not clear whether you will charge to your limit, or use the card carefully and pay your balances as agreed.

But with time, and wise use, your scores should bounce back up and then surpass your previous scores. The longer your credit card account remains open and in good standing, the more it will boost your credit scores.

Having a credit card is important because you decide how much to charge and how much to repay each month. This independent decision making gives lenders additional insight into a consumer’s debt management and payment habits. Therefore, demonstrating that you can manage credit card debt over time is often a good way to improve your scores.

You don’t have to carry a balance or pay finance charges. Just using your cards and not letting your balances get too high compared to your limits will demonstrate that you can manage your credit obligations well.

Thanks for asking.

- The “Ask Experian” team

Our policies for Ask Experian:

The information contained in Ask Experian is for educational purposes only and is not legal advice. You should consult your own attorney or seek specific advice from a legal professional regarding your particular situation. Please understand that Experian policies change over time. Posts reflect Experian policy at the time of writing. While maintained for your information, archived posts may not reflect current Experian policy. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team will include it in a future post.