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Regular Contributor
keithc
Posts: 167
Registered: ‎05-22-2007
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Re: Found out for myself...ALWAYS owe something on a CC

you are scaring me guys!! i was going to p/o all my cards to 0 bal!! i already p/o 2!! but i am using it as leverage to bring dowm apr's and ask for cli's. so, you must keep util. to 1%-9% to get opt. score and not pay it down to 0??
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Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: Found out for myself...ALWAYS owe something on a CC


keithc wrote:
you are scaring me guys!! i was going to p/o all my cards to 0 bal!! i already p/o 2!! but i am using it as leverage to bring dowm apr's and ask for cli's. so, you must keep util. to 1%-9% to get opt. score and not pay it down to 0??

The simplest way (not necessarily the easiest way, but the simplest) is to have all but one card report $0, and have that one report something small --$10 - $20. Then, don't forget to pay it off after it reports, and before the due date! I've given myself a few good scares that way, lol.

Don't let the card that reports be one of the screwball cards like HSBC or Orchard that go on periodic reporting vacations, or like AmEx that reports a month behind, so it takes two months to get it to show $0 again. :smileytongue:
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008
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Re: Found out for myself...ALWAYS owe something on a CC

Uborrow,

 

If you think about this from a creditor stand point, it makes perfect sense.

 

Credit reports and FICO are tools to determine credit risk.  Risk of lates, default and risks to PROFIT.  If you do not use your credit, this is a risk to profit.  Thus, FICO will not provide the maximum score because you are not actually the "ideal" credit consumer.

 

The ideal credit consumer has low utilization, but does have utilization, pays timely, pays far above (or mostly in full) the minimums, has aged accounts, has an aged history, etc.

 

The lenders have a cost to obtain new accounts....sometimes their average cost per new account can be $50-200.  If you don't use it or little use it, then they won't recover costs, let alone make a profit.

 

ALSO:  Car notes do not offset your revolving inactivity.  Having an auto loan with balance, but all cc's zero balance, you will still take the FICO hit for "no recent use" of revolving credit.

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09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Established Contributor
KingAdrock
Posts: 656
Registered: ‎07-17-2007
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Re: Found out for myself...ALWAYS owe something on a CC


txjohn wrote:

If you think about this from a creditor stand point, it makes perfect sense.

 

Credit reports and FICO are tools to determine credit risk. Risk of lates, default and risks to PROFIT. If you do not use your credit, this is a risk to profit. Thus, FICO will not provide the maximum score because you are not actually the "ideal" credit consumer.


It's not a risk to profit. It's simply how can you prove you use credit responsibly if you don't use it at all? FICO scores rate your risk of default, not how much money you'll make for the CCCs.


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