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Benefits of $1 balances across all credit cards?

New Visitor

Benefits of $1 balances across all credit cards?

Hello,

is it beneficial to have a monthly $1 charge on all my (unused) credit cards and have them paid off every month on auto-pay?

I am thinking about:

1) issuers would always report $1 usage to the bureaus

2) issuers would not close my accounts for inactivity (some are 10+ year old and my score would be impacted negatively)

3) I don't have to bother remembering about using this card or that card every now and then to keep them alive

4) all cc usage would be at 1% (except maybe for my primary card), i.e. in the supossedly usage sweet spot of 1%-9%

 

Thank you!

5 REPLIES
Moderator

Re: Benefits of $1 balances across all credit cards?


sebinou wrote:

Hello,

is it beneficial to have a monthly $1 charge on all my (unused) credit cards and have them paid off every month on auto-pay?

I am thinking about:

1) issuers would always report $1 usage to the bureaus

2) issuers would not close my accounts for inactivity (some are 10+ year old and my score would be impacted negatively)

3) I don't have to bother remembering about using this card or that card every now and then to keep them alive

4) all cc usage would be at 1% (except maybe for my primary card), i.e. in the supossedly usage sweet spot of 1%-9%

 

Thank you!


Welcome to My Fico Smiley Happy

 

This would result in a pretty good Fico ding for having all accounts reporting a balance, doesnt matter that the balance would only be $1. What you want is one card reporting a balance of no more than 9% of its CL and the rest at 0. You can use the cards during the month and pay them off prior to the statement cut to show usage or revolve them every few months thru your wallet.

"If there's a lack of money in your life, understand that feeling worried, envious, jealous, disappointed, discouraged, doubtful or fearful about money can never bring more money to you, because those feelings come from a lack of gratitude for the money you have."

"Reactions are powerful creators because they contain every element needed to manifest—they're a combination of thought, belief, and feeling in action. Positive reactions create more positive things, and negative reactions create more negative things. If you can respond to negative situations calmly and lightly, instead of with emotional turbulence, what happens next in your life will be so much better."

- Rhonda Byrne
New Visitor

Re: Benefits of $1 balances across all credit cards?

glad to have joined Smiley Happy

 

The credit basics page (http://www.myfico.com/CreditEducation/Amounts-Owed.aspx) mentions that "In some cases, having a very small balance without missing a payment shows that you have managed credit responsibly, and may be slightly better than carrying no balance at all." 

 

I would have thought that having $1 balances would be either neutral or beneficial, but not negative. I am planning to try this $1 balance config over the next couple of months to see what changes.

 

Have other members reported a negative impact or is that coming staright from some fico QA/info?

 

Valued Contributor

Re: Benefits of $1 balances across all credit cards?

Howdy.  Do yourself a favor, and don't let all your accounts report a balance, even if only $1.

I can tell you the result of your 'research' will not be good.  If you're not looking to apply for anything soon, then have at it I guess.

Keep in mind, once your score drops 30-40 pts, paying those balances that you let report back down to $0, will not gain you those 30-40 pts that you lost.

You may recover half of them.

 

Just the other day on these forums, an established high scoring member let a single balance increase from $9 to $146 and he lost 54 pts.

 

I recently paid in full 5 accts and my scored went up 30 across all 3 CRA's.

 

I wouldn't do it unless you wanna see for yourself what will happen.

New Contributor

Re: Benefits of $1 balances across all credit cards?

Sorry to Chime in, but I'm now confused- I know the rule - let all your cards reflect a 0 balance except for 1 and leave that on at 9% or less, my Question is would it make a difference if your TOTAL cards are 9% or less? in my case I have 2 cards which I paid off before the statement cuts however I was charged interest on the previous balance which left small balances on both cards the TOTAL is less than 9%.

 

 

 

I called Capital One and they said "next time call and get a payoff amount".

Moderator

Re: Benefits of $1 balances across all credit cards?


tippy4u2006 wrote:

Sorry to Chime in, but I'm now confused- I know the rule - let all your cards reflect a 0 balance except for 1 and leave that on at 9% or less, my Question is would it make a difference if your TOTAL cards are 9% or less? in my case I have 2 cards which I paid off before the statement cuts however I was charged interest on the previous balance which left small balances on both cards the TOTAL is less than 9%.

 

I called Capital One and they said "next time call and get a payoff amount".


Some of what Fico scores is based on the number of cards that report a balance, utilization of individual cards and utilization over all. Letting all cards report a balance is a ding and Fico doesnt care what the balance is, it could be $1 or $1000 it doesnt matter it sees it as a card with a balance. You can get away with distributing utilization across more cards with a thicker file. I carry balances on 2 of mine, if I pay 1 off totally I see a 2 point increase so its not worth it to me to put it all on 1 card, I would acually lose points if I did that due to individual card util calculations. If you only have the 2 cards make sure 1 of them is reporting 0 and the other no more than the 9% of its CL to help max your Fico score,

"If there's a lack of money in your life, understand that feeling worried, envious, jealous, disappointed, discouraged, doubtful or fearful about money can never bring more money to you, because those feelings come from a lack of gratitude for the money you have."

"Reactions are powerful creators because they contain every element needed to manifest—they're a combination of thought, belief, and feeling in action. Positive reactions create more positive things, and negative reactions create more negative things. If you can respond to negative situations calmly and lightly, instead of with emotional turbulence, what happens next in your life will be so much better."

- Rhonda Byrne