Humans are strange creatures. We get enticed by something, such as a great credit card introductory offer, run through the intro period and charge up a storm, and then let that poor card lay dormant as we move back to our old card or chase some new offer.
Sometimes we may charge a lot one month and very little the next. Or we may charge nothing for several months, and then max out the card the following month.
Does such irregular usage matter? Does it help or hurt your credit score? Generally, there’s no real downside.
Irregular credit card use and your credit score
Let’s look at the big question first: Will this behavior affect your credit score? To understand the answer, you need to know how credit scores are calculated. Myfico.com points out the factors that go into credit scoring:
- 35% is weighted to your payment history
- 30% to amounts owed
- 15% to length of credit history
- 10% to type of credit used
- 10% to new credit.
As you can see, the most important factor is that you pay off whatever you charge. So irregular usage doesn’t really matter for that element.
However, a hefty 30% goes to amounts owed. The more you owe, the more of your credit limit is being used, and the more that will negatively impact your score. So in a month where you use a card a lot, your credit score will be impacted more than if you use the card very little. Still, that’s a short-term issue as long as (say it with me), you pay off the card on time.
Consider the psychological factors
There are issues to consider beyond credit score. This is where your personal behavior and spending psychology come into play. Here at Nerdwallet, we’d like you to always be thinking about what you charge and why. Why might you charge a lot one month and nothing the next?
If it’s because you are new to credit cards, and charged a lot in your first few months, and then realized you were in over your head, and then ceased using your card, that’s certainly worth noting! That may suggest you aren’t quite ready to handle credit cards yet.
If it’s because you faced a short-term cash flow crunch, then you’ve used a credit card for one of the many reasons it was intended for. Perhaps you purchased a car or threw a big party, and realized you would come up short that month for regular expenses. Perhaps you lost your job, and were out of work for a month before securing new employment. Using a credit card to fill that gap is a responsible use, assuming you start paying it off right away.
Going all in on credit card use
The bottom line is that credit is there for you to use when you need it and/or when you choose to use it. I personally discovered that I used my cards on a regular daily basis all my life. I use them not only to collect rewards, but because it’s much easier than using cash, and because I know I’ll have the cash to pay it off in full each month. The result is regular usage with a balance that’s always in a range of a couple of hundred dollars. I don’t get a gold star from my issuer, however.
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