Does not activating a card hurt my credit score?

Even if you apply for a credit card and receive it in the mail, that doesn’t mean the card is active and ready to use. Once you receive the physical credit card you will need to activate it. But what happens if you change your mind about the card or simply forget about it?

The good news is that not activating a credit card won’t hurt your credit score, but it won’t help it either. Here’s what you need to know about how your credit score stands to be affected.

What happens if you don’t activate a credit card?

You’re in luck – nothing really happens if you don’t activate a new credit card after receiving it. Activating a card (or not) doesn’t impact your account status – your account was opened when your application was approved. Not activating the card simply affects your ability to access the credit.

The reason that your credit score won’t take a hit if you decline to activate a credit card is because your credit score has already been affected by your credit card application.

When you apply for credit products such as a credit card, lenders will request to review a copy of your credit report. This request will trigger what is known as a hard inquiry. This hard inquiry will hurt your credit card a little (soft inquiries for things like prequalifications and job applications won’t affect your credit score at all), but not significantly. Usually, a hard inquiry only results in lowering your credit score by five points or less, and it will bounce back over time.

If you choose to leave your new credit card unactivated, that won’t directly hurt your credit score. That being said, by not activating and using your credit card you do miss the opportunity to improve your credit score with ongoing responsible credit habits. When you use your credit card and make on-time payments, you will see your credit score rise over time.

Fortunately, whether you activate the card or not, your credit score should see a boost from an increased credit limit. This helps keep your credit utilization ratio low – as long as you don’t carry a large balance.

The damage of the hard credit inquiry will remain on your credit reports whether or not you activate and use the credit card. By not activating the card and using it responsibly, that hard credit inquiry is wasted and will affect your credit score negatively for no good reason.

How long do you have to activate a credit card?

How long you have to activate a credit card will vary depending on which credit card issuer your unactivated credit card is from. Generally, you have around 45 to 60 days to activate a new credit card. The day your application is approved kicks off this activation period, so it’s best to activate your credit card right away so you don’t accidentally miss this window.

If you don’t activate your credit card during that time period, the credit card issuer might reach out to confirm you received the credit card, but there’s no guarantee they’ll check in. If you don’t end up activating your new credit card during that activation period, you will need to contact the credit card issuer to request they send you a new credit card to activate.

Should you cancel an unactivated credit card?

If you are choosing not to activate a new credit card because you no longer want it, you can choose to cancel the card and close the account. Whether or not that is the right financial move to make is up to you.

If you are paying a large annual fee for the card and you have no intention of using it, or enjoying any of the cardholder perks you’re paying for, it’s a good idea to cancel the credit card so you aren’t wasting money.

When you close a credit card account, your credit score will take a hit. But because this credit card has gone unused and doesn’t have a long history attached to it, the effect on your credit score will likely be minimal. If your card has an annual fee, it’s likely not worth it to pay to keep the card open just to avoid a small mark on your credit report.

If you aren’t being charged an annual fee to use the credit card, even if you don’t plan to use the card extensively, it may be worth activating it. You can add a small recurring purchase, such as a Netflix subscription, to the credit card and set up automatic payments on the card each month to demonstrate a solid payment history, which will help improve your credit score. At the very least, the credit card can act as a backup for emergencies.

Bottom line

Your credit score won’t be negatively impacted if you choose not to activate a card, but there’s really no reason not to. The account is open and active, so if you don’t activate the card you’re simply denying yourself access to your own credit. That said, not much harm will come from not activating a credit card unless you’re paying a hefty annual fee for a credit card you aren’t using.