Benefits of letting a card report a balance?

[masscredit]

I usually just let one card report a balance each month. I'll sometimes rotate the cards that report to give most of them use.  Other cards almost never report a balance. What are the benefits of letting cards report a balance once in awhile? I read in another thread doing that will give the account an "ok" or "paid as agreed" for the month. I haven't scanned my reports to see what they show when there are multiple months at zero. I have found that high balances are reported, even if the card closes without a balance that month. Someone else has mentioned that it can have long term benefits such as a greater history of on-time payments. 

[Anonymous]

Good question... I'm new to all of this too, so I've been wondering the same.   

I'm aiming to keep ~5% on each card, not exceeding 20%, but i'm not sure if that only needs to happen for one card, or if it should be on each.  Should i avoid $0 balance whenver possible?

[masscredit]

Ideally it's best to just let one card report and keep utilization at 1-9%. Do this to try to maximize your scores. 

[racer-x]

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@Anonymous wrote:

Good question... I'm new to all of this too, so I've been wondering the same.   

I'm aiming to keep ~5% on each card, not exceeding 20%, but i'm not sure if that only needs to happen for one card, or if it should be on each.  Should i avoid $0 balance whenver possible?

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The fewer cards reporting balances, the better.

In my experience, it's better to have a higher utilization on a few cards in order to have more cards reporting $0, than to have many cards reporting balances with lower utilization.

I have 21 cards, 5 are reporting balances.....utilization is 79%, 45% X 2, 28% x 2....overall utilization is 15% or so.

I MAY BE  getting 'dinged' for higher utilization on individual accounts, but I know from past experience, if I had twice the cards reporting balances, I'd lose 30 pts easy...

I carried a new balance of $154 recently and dropped 8 pts alone.  (Forgot about an auto pay for DTV)

[masscredit]

I just took a look at my EX report. Checked an account that I don't use often (Merrick). It says "ok" every month. The account info provides all of the basics like credit limit, high balance, monthly payment and recent payment. Looking at other accounts, they all say the same thing.  To me, it looks like it doesn't matter if an account reports a balance. A good payment history is shown as long as there are no late payments. 

[tonyjones]

Yeah if you have all your cards reporting a small balance, that's no bueno! 

[racer-x]

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@masscredit wrote:

I just took a look at my EX report. Checked an account that I don't use often (Merrick). It says "ok" every month. The account info provides all of the basics like credit limit, high balance, monthly payment and recent payment. Looking at other accounts, they all say the same thing.  To me, it looks like it doesn't matter if an account reports a balance. A good payment history is shown as long as there are no late payments. 

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Well yea, it will show 'ok' whether an account reports a balance or not...as long as you're making your monthly obligations on the account(s), they will be 'ok'.

But, your score will not think it's 'ok' if you have many accounts reporting balances.  "Many" accounts being more than 1, in FICOs' eyes.

[lg8302ch]

Yes it is correct that for optimal scoring you should let all accounts report with 0 balance and 1 account with 1-9%. This is if you want to have the best results with your Fico score. With Fico 08 now I noticed with my profile at least  that it does not matter much anymore. Last year when I had balances reported on most accounts the score difference was 40+ points. My ultimate test was 1$ on each account (8 accounts at that time) and then paid down and let 7 accounts report with 0 balance and 1 account with 8$ and even though my overall util was the exact same Fico had me punished with like 40 points drop for too many accounts with a balance. Now with the Fico 08 I can have several accounts with balances and if the util range does not change it does not make much of a difference anymore. Right now I have balances reported on 8 accounts and overall util of 4% but if I would have the overal util still 4% but on fewer accounts I would probably gain less than 5 points from my past tests. I might try the same ultimate test once again just to see what would happen with Fico 08. 

As for reporting high balances it is not with every lender the same. Even if you pay down and let 0 balance report some lenders  will report the highest balance during the month. But this is a figure that does not have any impact on Fico scoring. Also some lenders to not report at all if there is no activity on the account. So if you rotate your cards and not always the same 0 balance  it is not a bad idea IMO. Also make sure you do not report 0 balance on all accounts. Fico does not like this. ;(   If you only have 1 account then let 1-9% report for best results. 

As I only have EQ SW  I cannot really comment how TU or EX is reacting.

[jamie123]

If I am not planning to apply for new credit in the next month or so, I lightly use as many cards as I can and let them all report balances. I feel that this builds better history. This is the way the FICO scoring system and credit cards were designed to operate.

We are short circuiting the FICO scoring system when we continuously have our scores groomed using the 1 card less than 10% method. Sure you will have higher scores all the time but I think you won't have as solid a history with your lenders. There are some lenders that will give you a hard time getting CLIs unless you have had at least 4 months of reported balances since your last CLI so there must be a difference.

[vanillabean]

DW once had 4 card balances reporting along with $1000s in debt. Her score was 838.