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Even if you apply for a credit card and receive it in the mail, it does not mean that the card is active and ready to use. Once you receive a physical credit card, you will need to activate it. But what happens if you change your mind about the card or just forget about it?
The good news is that not activating your credit card won’t hurt your credit score, but it won’t help either. Here’s what you need to know about how it can affect your credit score.
What happens if you don’t activate your credit card?
You’re in luck – nothing will happen if you don’t activate your new credit card after receiving it. Card activation (or not) does not affect the status of your account – your account was opened when your application was approved. Not activating the card simply affects your ability to access credit.
The reason your credit score will not be affected if you refuse to activate a credit card is because your credit score has already been affected by your credit card application.
When you apply for loan products such as a credit card, lenders will require you to view a copy of your credit report. This request initiates a so-called hard request. This hard inquiry will hurt your credit card a bit (soft inquiries about things like prequalifications and job applications won’t hurt your credit score at all), but not much. Usually, a thorough investigation will only result in a five-point or less decrease in your credit score, and it will return to normal over time.
If you choose to leave your new credit card inactive, it will not directly affect your credit score. That being said, by not activating and using your credit card, you are missing out on the opportunity to improve your credit score through consistent, responsible credit habits. When you use your credit card and make timely payments, you will see your credit score improve over time.
Fortunately, whether you activate the card or not, your credit score should increase by increasing your credit limit. This helps keep your credit utilization ratio low if you don’t have a large balance.
The damage from a hard credit request will remain on your credit reports whether or not you activate and use a credit card. If you do not activate the card and use it responsibly, this hard credit request will be wasted and negatively impact your credit score for no good reason.
How much time do you have to activate a credit card?
The credit card activation period depends on the issuer of your non-activated credit card. Typically, you have 45 to 60 days to activate a new credit card. The day your application is approved, this activation period begins, so it’s best to activate your credit card right away so you don’t accidentally miss this window.
If you do not activate your credit card within this time period, the credit card issuer may contact you to confirm that you have received the credit card, but there is no guarantee that they will register. If you do not activate a new credit card within this activation period, you will need to contact your credit card issuer to ask for a new credit card to be sent to you for activation.
Should I cancel a non-activated credit card?
If you choose not to activate a new credit card because you no longer need it, you can cancel the card and close your account. Whether this is the right financial move is up to you.
If you are paying a high annual fee for a card and do not intend to use it or enjoy any of the cardholder benefits you are paying for, it is recommended that you cancel your credit card so as not to waste your money.
When you close your credit card account, your credit score will suffer. But since this credit card has never been used or has a long history attached to it, the impact on your credit score is likely to be minimal. If your card has an annual fee, it’s probably not worth paying to keep your card open just to avoid a small mark on your credit report.
If you are not charged an annual fee for using a credit card, even if you do not plan to use the card extensively, it may be worth activating it. You can add a small recurring purchase, like a Netflix subscription, to your credit card and set up automatic card payments every month to showcase a solid payment history that will help improve your credit score. At the very least, a credit card can serve as a backup in case of emergencies.
bottom line
Your credit score will not be affected if you choose not to activate the card, but there really is no reason not to. The account is open and active, so if you do not activate the card, you simply deprive yourself of access to your credit. However, not activating a credit card won’t do much harm, unless you’re paying a hefty yearly fee for a credit card you’re not using.
Editorial disclaimer
The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.