Credit Cards Center Credit cards from our partners
Reply
Regular Contributor
Posts: 142
Registered: ‎05-16-2013
0

If maxing a credit card is so bad, why does a score not move when paid to 0 balance?

Very, very interesting....

I've been waiting for my last statment to close on a card that I had maxed.  I recently paid all of my accounts to zero with the exception of 2.  One still remains: $487/2200 (this is a 0% 6 month purchase on my Firestone).

 

Anyway, I had my Amazon maxed out $639/$700.  On the 13th of last month, I paid all my CC's after learning the importance of low utilization.  So, I've been patiently awaiting results getting boosts little by little as the statements closed.  I received the alert this morning from myfico....report 0 balance (and my CL increased from 700 to 2500) - not even an inch of a move in score...stayed exactly the same.

 

So that brings me to my question.  If maxing a card takes such a hit on your score - then why no movement on this last one posting?

Amex BCE 24.5K | BofA Cash Rewards 15K | CSP MC 13.5K| Chase Freedom 7.5K | Discover IT 3K
Established Contributor
Posts: 595
Registered: ‎02-14-2013
0

Re: If maxing a credit card is so bad, why does a score not move when paid to 0 balance?

[ Edited ]
0% reporting on all accounts is not the best for scoring. A small balance on 1 card is best. There are different opinions on the ideal percentage for utilization, but it's usually under 9%. For me personally, my best scores are with 4% overall utilization, and 1 card with a balance.

You got small bumps as you paid balances down, and it flat-lined at 0%. Sometimes, it can even drop a little at 0%. The scoring likes to see card use.

This is based on my reading and experience, YMMV.
Epic Contributor
Posts: 22,398
Registered: ‎01-17-2008
0

Re: If maxing a credit card is so bad, why does a score not move when paid to 0 balance?

It also depends on what your utilization was before you paid it off.  If it wasn't very high, just dropping down 5% probably wouldn't give that much of a boost.

 

I agree you should not let them all report a 0 balance,  FICO doesn't like that.

Regular Contributor
Posts: 142
Registered: ‎05-16-2013
0

Re: If maxing a credit card is so bad, why does a score not move when paid to 0 balance?


guiness56 wrote:

It also depends on what your utilization was before you paid it off.  If it wasn't very high, just dropping down 5% probably wouldn't give that much of a boost.

 

I agree you should not let them all report a 0 balance,  FICO doesn't like that.


I'm still reporting a balance of 487 on a card with a CL of 2200 -22%

Overall, my utilization right now is: 6%

As of May 13th my utilization was bad---very, VERY bad.  About all the cards I had were maxed out.  That's why I thought when the last reported as paid with a zero balance it would have triggered at least some type of increase - even 1 point.


I have a 30 day late well over 4 years and a collection that is an error (reported Nov 2011) and should be removed soon (I don't know how long that process takes but the utility company did advise it was their error and are currently reversing this collection).  That's all the bads. 
My EQ is standing at 683


according to the similutor, just paying all my balances should have shown a max score of 717.  I know it's not 100 but I thought I'd at least hit 700 - 690 at minimum.

 

I've been doing a lot of research and it appears the scoring for utilization is in addition to if your card is maxed out.  Per Bankrate, they stated that myfico advised that simply maxing out 1 card can cause a 10-30 pt decrease, so I find it interesting that it's appears to be difficutl to reverse that type of damage being my score didn't move.

Amex BCE 24.5K | BofA Cash Rewards 15K | CSP MC 13.5K| Chase Freedom 7.5K | Discover IT 3K
Contributor
Posts: 112
Registered: ‎05-08-2010
0

Re: If maxing a credit card is so bad, why does a score not move when paid to 0 balance?

From my experiences I can tell you 2 things. You'll probably see a 10 point upswing if you pay that 1 card that's left down to 1-4% like the others said. The second thing is that with a collection on your record it is unlikely that you'll get much past 700 until its gone. I had a really thick file with no late payments listed, but I had a derog statement listed for settling a HSBC account for less than full balance. I couldn't get any higher than low 700's. When the derog statement fell off instant 800+. My baddie was a full 7 years old, yours is only 2. My point: its impossible to get much past 700 with a major baddie. Get rid of it and your score will skyrocket.
Moderator Emeritus
Posts: 14,868
Registered: ‎12-30-2011
0

Re: If maxing a credit card is so bad, why does a score not move when paid to 0 balance?

There's been some good analysis done elsewhere on this topic: my own personal experience as mixed-file with scores in the 660-680 range, a single month for having a tradeline be maxxed is identically a loss of 14 points; however, that's individual to me and my current credit report.

 

That said, I never float my balances as I'm playing silly reindeer games while CLI chasing; in some instances, people with a longer-term trend of higher utilization can be rebucketed, and that may mean several months may go past before the algorithm changes.  This may be what you ran into, or it may be something else entirely, it's just hard to know for any one individual and their credit report information, especially sanitized as it is on this forum.

Starting Score: EQ 04 561, TU 98 567, EX 98 599 (12/30/11)
Current Score: EQ 04 693, EQ 8 716, TU 8 713, EX 8 740 (09/06/16)
Goal Score: 700 on EQ 04 (01/01/17)


Take the myFICO Fitness Challenge
Regular Contributor
Posts: 142
Registered: ‎05-16-2013
0

Re: If maxing a credit card is so bad, why does a score not move when paid to 0 balance?

[ Edited ]

longclimbback wrote:
From my experiences I can tell you 2 things. You'll probably see a 10 point upswing if you pay that 1 card that's left down to 1-4% like the others said. The second thing is that with a collection on your record it is unlikely that you'll get much past 700 until its gone. I had a really thick file with no late payments listed, but I had a derog statement listed for settling a HSBC account for less than full balance. I couldn't get any higher than low 700's. When the derog statement fell off instant 800+. My baddie was a full 7 years old, yours is only 2. My point: its impossible to get much past 700 with a major baddie. Get rid of it and your score will skyrocket.

I guess time will tell.  Clearly I'm watching very carefully to ensure the company does what they say and notifies the collection company that due to their error it's not valid.  It's been two weeks, so I'm giving them a month.  I have documentation so I will move forward if it's not dropped within the next couple weeks.  I don't have experience with this, so I'm not sure if I should wait longer, but I felt that 30 days was good. 

 

And to update, my score actually did increase 7 more points; it just wasn't an alert that was sent.  I bought my report again and that's when I received the 7 point increase.  My Ex is 717 (no collection), EQ 688.  I'm hoping in the next 3 months I will have 1-3% utilization and that this $231 collection has been removed.  This time next year, I'm hoping for 760+ so I can qualify for the best mortgage rate when I go to apply for my 1st home.

 

Edited to update score increase: It was by 5 points, not 7.

Amex BCE 24.5K | BofA Cash Rewards 15K | CSP MC 13.5K| Chase Freedom 7.5K | Discover IT 3K
Super Contributor
Posts: 7,132
Registered: ‎02-27-2013
0

Re: If maxing a credit card is so bad, why does a score not move when paid to 0 balance?

An important thing to note as well.

Your scores are not the only thing lenders evaluate during an application. A maxed out card alone can pretty much be grounds for denial with most prime banks.

I'm not trying to tell you to ignore your score entirely, but what's inside your CR is sometimes more important than just the score that comes out of it.

 

 

JPMorgan Palladium (100k), AmEx Platinum (NPSL), AmEx SPG (46k), AmEx BCP (42k), Chase Sapphire Preferred (47k), Citi Prestige (31k), Citi Thank You Preferred (27k), Citi Executive AAdvantage (25k), JPMorgan Ritz-Carlton (21k), Merrill+ (15k), US Bank Cash+ (22.5k), Wells Fargo (12k), Bloomingdale’s (12.4k), Chase Freedom (5k), Discover IT (5k).
Established Contributor
Posts: 534
Registered: ‎01-23-2013
0

Re: If maxing a credit card is so bad, why does a score not move when paid to 0 balance?

If you are speaking of Score Watch alerts, keep in mind it's not instant. I believe the "by the book answer" is 7-10 days (although I personally usually see alerts 3 days ish behind the change).
Frequent Contributor
Posts: 416
Registered: ‎11-03-2012
0

Re: If maxing a credit card is so bad, why does a score not move when paid to 0 balance?


jlfce1 wrote:

Very, very interesting....

I've been waiting for my last statment to close on a card that I had maxed.  I recently paid all of my accounts to zero with the exception of 2.  One still remains: $487/2200 (this is a 0% 6 month purchase on my Firestone).

 

Anyway, I had my Amazon maxed out $639/$700.  On the 13th of last month, I paid all my CC's after learning the importance of low utilization.  So, I've been patiently awaiting results getting boosts little by little as the statements closed.  I received the alert this morning from myfico....report 0 balance (and my CL increased from 700 to 2500) - not even an inch of a move in score...stayed exactly the same.

 

So that brings me to my question.  If maxing a card takes such a hit on your score - then why no movement on this last one posting?


How are your SW alerts setup? Any chance you have your alert treshold set to high? perhaps your score has moved but not enough to trigger an alert based on your setup. 


Starting Score: 501
Current Score: 754 EQ,TU 745,EX 750
Goal Score: 800

Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.

Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
† Credit cards for FICO Score ranges: The score ranges are guidelines based on internal myFICO analysis of actual applicant approvals, and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range. These ranges were not provided by any card issuer.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.