topic Re: Does having a $0 balance on all of your accounts hurts your score ? in Understanding FICO® Scoring

Does having a $0 balance on all of your accounts hurts your score ?

pat0812 — Sun, 02 Dec 2012 04:49:00 GMT

I have 3 credit cards and 1 American Express charge card

To obtain the best fico score should i have only one credit card show a balance ?

What happens to my score if all my credit cards report as $0 balance ?

Re: Does having a $0 balance on all of your accounts hurts your score ?

RobertEG — Sun, 02 Dec 2012 09:17:33 GMT

Util of revolving has three major components: overall % util, the combined effect of % util on each individ card, and the % reporting a balance.

The scoring sub-category your question pertains to is % reporting a balance.

Obviously, having none report a balance gives max under that subcategory.

However, anecdotal experiences of many who post on the site seem to indicate that the scoring of individ util on a card gets slightly better scoring if it reports a very small util (1-9%'ish) than if reported at 0%. I cant attest to that, as it really makes no sense to me, but the accepted wisdom on the site seems to accept that as fact.

Thus, it appears to be somewhat of a trade-off, with lower % reporting a balance helping in that subcategory, but with the potential offset in scoring of individ card utils.

Since FICO has never released the specific weightings given to the three sub-categories, the net result is speculative.

Re: Does having a $0 balance on all of your accounts hurts your score ?

llecs — Sun, 02 Dec 2012 14:49:55 GMT

It's quite OK to have $0 balances on individual CCs, though as mentioned, all $0 balances on every single CC can result in a small ding.

Re: Does having a $0 balance on all of your accounts hurts your score ?

my-own-fico — Sat, 15 Dec 2012 14:35:23 GMT

I can't say that I have ever considered the percentage of cards (or mortgage and installment accounts) reporting a balance to be a part of utilization. Maybe it's because the percentage of cards reporting a balance includes charge and NPSL cards while utilization does not.

It makes perfect sense to me that no credit card debt is not optimal, since no responsible handling of risk is shown. To the credit bureaus that is; you can use your cards diligently and pay them down before the statement date.