If you’re under the impression that having a credit card, but never activating it is like not having the card at all, it’s time to adjust that perception. Activation is primarily a security measure. So, even if you applied for a card, decided against using it and never activated it, having it can still impact your life.
So, does credit card activation matter? Yes — and no.
Applying Changed Your Credit Score
More precisely, your score changed when the credit card company pulled your report to determine your eligibility. Any review of it by a creditor is considered a “hard inquiry”. These occur when a potential lender is evaluating your history because you’ve applied.
Credit checks that come in when you’ve requested an auto loan, student loan, mortgage or credit card all count as a single inquiry. That is, except when you’re shopping for a mortgage, car– or student loan with several lenders. Multiple inquiries of those types occurring within a single 45-day period only count as one. Other than that, having numerous inquiries reflected on your report will reduce your score.
There’s an Upside to That Though
If you’re approved for a card with a substantial limit and never use it, your credit availability to utilization ratio will increase. Creditors want to see you have credit, but they don’t really want to see you using a lot of it.
If your outstanding debt is high in comparison to your limit, you’re considered to be more of a risk. After all, if you’re out too far on that ledge, one slip could render you insolvent.
In fact, if your cards are maxed out and you’re having trouble making the minimum payments, you should consider hiring a respected company like Freedom Debt Relief. They could help you explore strategies by which you can get your credit card bills back under control through debt settlement and other services.
Meanwhile, even if you’re in good shape financially, closing the account might actually lower your credit score. Doing so will reduce your available credit, which in turn will make your availability to utilization ratio lower.
But Activation Doesn’t Always Matter
In some cases, you can use a card to make purchases, even if you haven’t activated it. Issuers will sometimes permit charges without formal activation, if you can verify your identity at the point of purchase.
With this in mind, if a week or so has gone by and you’ve yet to receive a card for which you’ve been approved, you should call the issuer to see if it has been used. Thieves are good at recognizing those “plain” envelopes in the mail. You should also keep an eye on your credit report to make sure others haven’t hijacked your good credit to nefarious ends.
The best way to do this is request your free copy of your credit report each year. The government has mandated we be granted access to our credit reports each year. AnnualCreditReport.com has been authorized to provide them from all three of the major credit reporting agencies (Experian, Equifax and TransUnion).
If you’ve never done this, right now is a good time to do it.
So, does credit card activation matter? Yes and no.
The moment your application was processed, the card affected your credit score, even before it was activated. Further, some cards can be used even if you haven’t called their 800 numbers or visited their websites to acknowledge receipt. However, activation is one of the security layers put in place to protect you against fraud. Even if you don’t plan to use the card, you should activate it if you’re going to keep it.