Does an unused credit card affect your credit history?

A credit card that you never use has been sitting in a drawer for two years. The credit limit is still active, the outstanding balance is zero, and the bank hasn't been in touch. Yet one thought keeps lingering in the back of your mind: what if this period of inactivity is doing some damage? What if it leads to your mortgage application being rejected later?

This is a perfectly practical question, and the answer is neither "yes" nor "no". Having an open credit limit and having overdue debt are two fundamentally different things. They are recorded in your credit history differently and interpreted differently by lenders, but neither automatically means your credit rating will deteriorate. In this article, I'll explain exactly what a bank sees when your card is sitting unused, when it's worth closing it and when you can safely leave it open.

A card with a credit limit is not simply "a piece of plastic with money on it". Legally, it is a credit agreement: a revolving credit facility that you can draw on and repay as many times as you like within the approved limit. When you obtain a credit card with a limit, you enter into credit obligations, information about which may be submitted to credit bureaus, provided the necessary consent has been obtained. For consumer loans, the law establishes deadlines for submitting and recording the relevant information with credit bureaus.

This is not a matter of the bank's discretion but a requirement of the Law of Ukraine "On the Organisation of the Formation and Circulation of Credit Histories". For loans covered by the Law "On Consumer Lending", information must be submitted to the bureau no later than two working days after the agreement is signed or the information changes. The bureau must also add it to the credit history within two working days.

What information is recorded?

• information identifying you;
• details of the credit agreement: number, date, parties and type;
• the amount of the obligation, currency, term and repayment procedure;
• the amount repaid and the outstanding balance;
• the date an overdue payment arose, its amount and repayment status;
• information about termination of the agreement and how it was terminated;
• information from state registers and court decisions relating to your financial circumstances;
• separately, a register of enquiries showing who accessed your credit history and when.

So the question of how a credit card affects your credit history is not about simply having one, but about the records associated with it. A record of the agreement itself will appear even if you never spend a single hryvnia from the credit limit.

Having an unused credit card does not, in itself, mean that your credit history is deteriorating. If there is no outstanding debt or overdue payment under the agreement, there is no negative record of how you have fulfilled your obligations. At the same time, a bank may take an open credit limit into account when assessing a new application.

The important detail is something else. A credit history is built from events, and an inactive credit limit generates no events. No purchases mean no repayments, and therefore no evidence of your repayment discipline. If you do not use your card for a long time, there will be no new transactions, repayments or other events that could add information about your payment behaviour. However, the absence of transactions does not indicate a failure to meet your obligations.

Yes, and this is where the main practical consideration lies. When reviewing a new application, a bank considers not only your actual debts but also your potential liabilities. An open credit limit is money you can withdraw at any moment, so many lenders include all or part of it when calculating your debt burden.

If you want to understand how a credit limit works and what determines its size, read our article "What is a credit limit on a card?".

Let's look at an example. Suppose you earn UAH 30,000 and have three credit cards with unused limits of UAH 40,000, UAH 50,000 and UAH 60,000. Your actual outstanding debt is zero, but when reviewing a new application, the lender may consider your existing credit limits in its own assessment of your debt burden. How significantly they affect the decision depends on the particular bank's methodology.

The second consideration is servicing fees. If your card has an annual fee, insurance charge or SMS notification fee, it may be charged regardless of whether you use the credit limit. If there are insufficient funds to cover it, an outstanding balance may arise. If fees or other payments specified in the agreement are not paid on time, the debt may become overdue. Whether it appears in your credit history depends on the agreement's terms and the information submitted by the lender.

There are three possible scenarios.

1. The agreement remains active, and if there is no outstanding debt or overdue payment, the card does not create a negative repayment history. Information about the agreement may continue to appear in your credit report in accordance with the data-sharing procedure.
2. The bank may change or terminate the credit limit in the circumstances and according to the procedures established by the agreement and legislation. You should therefore check your card's terms and conditions. Banks may do this with inactive cards. Information about changes to the terms or termination of the agreement will be recorded in your credit history — and this is not negative either.
3. Debt accumulates from fees. This is one scenario that can negatively affect your credit history.

And one more thing that people often forget: after a credit agreement is terminated, information about it remains with credit bureaus for ten years. Closing a card therefore does not automatically delete records of previous credit obligations.

The decision depends on how much the card costs you and how many cards you have.

It is worth closing the card if:

• servicing fees apply but you get no benefit from it;
• you have several cards and their combined credit limits make it harder to obtain a large loan;
• you don't monitor the balance or read your statements;
• the card was issued a long time ago and your card details or contact information are outdated.

You can keep the card if:

• servicing is free;
• the limit is small and does not significantly affect your debt burden assessment;
• you need a financial reserve for emergencies.

Closing a card does not erase the past. All previous payments and overdue amounts remain in your credit report. So there is no point in closing it solely to clear your credit history. An unused credit card with no outstanding debt or overdue payments does not, in itself, worsen your credit history. However, the bank may consider the existing credit limit when assessing a new loan application.

The most common mistake is to repay the debt, cut up the card and assume the matter is settled. Meanwhile, the agreement remains active, fees continue to accrue, and six months later an outstanding balance appears.

Here's what to do:

1. Repay the outstanding balance in full — principal, interest and fees. Confirm the exact amount due on the closing date rather than relying on the figure shown in the app.
2. Ask the bank exactly what steps are required to terminate all credit obligations. If necessary, submit an application to close the credit limit and current account, either in writing at a branch or through the bank's official channels.
3. Allow for the settlement period — ask the bank how long it takes to close the card and credit limit, whether any pending transactions or additional charges may arise, and when you can obtain confirmation that the agreement has been terminated.
4. Obtain confirmation that the account is closed and there is no outstanding debt. Keep the certificates confirming account closure and the absence of debt. They may be useful if questions arise about the terminated agreement.
5. Check your credit report after one or two months — it should contain a record showing that the agreement has been terminated.

To answer briefly what negatively affects your credit history, an inactive card is not on the list. However, the following are:

• making only minimum repayments over a long period can increase the total amount of interest and extend the debt repayment period. If minimum payments are not made on time, overdue debt may arise;
• transferring debt to debt collectors. In the case of restructuring, the reasons, terms and how the fulfilment of obligations is recorded are important;
• court decisions on debt recovery;
• frequent credit enquiries may be considered by some lenders when assessing an application, depending on the particular lender's methodology;
• a loan fraudulently taken out in your name without your knowledge;
• the consideration of unused credit limits depends on the particular lender's methodology.

Such records may place you in a category of customers for whom a separate product exists — loans for people with a poor credit history. One detail worth understanding in advance is that lenders may offer customers with a poor credit history different terms, including interest rates, loan amounts and collateral requirements. Lending to borrowers with a poor credit history is available, but the terms may be less favourable and depend on the lender's assessment. So it's better not to end up in this situation simply because you weren't paying attention to a card you don't even use.

Your information is stored by credit bureaus, not by the bank. There are several in Ukraine, and each works with its own group of lenders, so their reports may differ. The Ukrainian Bureau of Credit Histories (UBCH) has the widest coverage. The First All-Ukrainian Bureau of Credit Histories and the International Bureau of Credit Histories also operate in Ukraine. The National Bank maintains an up-to-date list.

Your rights are set out in Article 13 of the Law:

• once per calendar year, you can obtain your credit report and information from the enquiry register free of charge;
• you can also obtain this information free of charge after each rejection by a lender;
• the bureau must respond within two working days;
• if you disagree with an entry, you can submit a statement with a comment of up to 100 words. The bureau must contact the lender within five working days, and if the lender does not respond within 15 days, the disputed information is removed in accordance with the statutory dispute procedure.

There is also the NBU Credit Register, which collects information about large debts owed to banks, starting from 100 minimum monthly wages where the statutory threshold for debt under credit transactions applies, rather than covering every credit card or open credit limit. You can obtain a report online through BankID.

And here's another situation. Many people receive an SMS once a year saying something like "A request has been made to access your credit history for the purpose of granting a loan." If you haven't applied for anything, you shouldn't ignore the message. If you don't recognise the enquiry, check where it came from and contact the relevant lender. The steps are simple: order your credit report, check the enquiry register, contact the bank that made the enquiry and, if necessary, file a police report.

If you don't use your credit card, no new transactions occur. If you need the card, use it responsibly. If it remains unused, periodically check your statements and servicing terms. The rules are simple:

• Repay your outstanding balance on time if you use your credit card. Regularly meeting your obligations is reflected in your credit history, but does not, in itself, guarantee an improvement in your credit rating.
• Make repayments 3–5 days before the deadline. A payment may take a day to process, and the calendar won't make allowances for you.
• Don't use your credit limit unnecessarily, and assess whether you can comfortably manage your current outstanding balance. Using a significant proportion of your available limit may be considered by a lender when assessing an application, but the specific criteria depend on its methodology.
• Check your statement once a quarter, even for an inactive card, so you don't miss a fee or automatic payment.
• Don't submit applications "just in case" to five banks at once.
• Check your credit report every year — free of charge and without consequences.
• Check the card closure conditions if you no longer need it, as well as any potential consequences for future borrowing.

So an unused credit card does not, in itself, damage your credit history — it simply adds nothing to it. What can damage it are overdue payments, unpaid fees and fraudulent loans taken out in your name. The question you should ask is therefore not "Should I close my card?" but "Do I know what is currently happening with my credit obligations?"

Translation into English was created with the help of artificial intelligence.