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Fico goes down every time I pay off balances

New Visitor

Fico goes down every time I pay off balances

I'm curious why my Fico goes doen everytime I pay off balances.  I try to keep my cards at zero by paying them off every time I get paid.  I have noticed that If there is a small balance on my card my score will go up by 20 points or so, as soon as I pay off the balance my score will drop by 20 points.  Should I be carrying a small balance month to month?

Message 1 of 15
14 REPLIES
Valued Contributor

Re: Fico goes down every time I pay off balances

Are you letting at least one account report a balance? If you're not, that's the issue. For maximum FICO optimization, all accounts but one should report a $0 balance. The singleton account should then report a [1$-10%) balance. If all accounts report a zero balance, you're not "utilizing" your credit. Thus, your score will drop. 

Message 2 of 15
Established Contributor

Re: Fico goes down every time I pay off balances

Try carrying 1-9% on one card for optimal scoring. 

Message 3 of 15
New Visitor

Re: Fico goes down every time I pay off balances

Thank you for your feedback, this is obviously the problem.  I will carry a small balance on one card.  Is there a card that works better for the balance than another?  I normally use my Chase Visa and My Macy's with AMEX.  I have had the Chase Visa for much longer, but both are "seasoned" cards.

Message 4 of 15
Contributor

Re: Fico goes down every time I pay off balances

Huh, I should do the same. I'm guessing whatever card has the lowest APR would be the best to use.

| BoA BBR 5k | Discover it 1k | freedom 2.2k | Fidelity AMEX 1.5k | Sallie Mae 1k | AARP 2.2k | BJ's PPlus 3.7k |
Message 5 of 15
Frequent Contributor

Re: Fico goes down every time I pay off balances


flawesome wrote:

Huh, I should do the same. I'm guessing whatever card has the lowest APR would be the best to use.


You need not carry a balance  and pay interest to show one card >0% utilization , so in each billing cycle it can be any card , which you want to show a balance and pay off before the due date.


         
FICO08 12/2014EQ 777TU 799EX 767
 
    
Message 6 of 15
Established Member

Re: Fico goes down every time I pay off balances

I'm having the same problem now. I have tried this for the last two months and my scores keep dropping.
Message 7 of 15
Senior Contributor

Re: Fico goes down every time I pay off balances

Keep in mind that letting a balance report in order to get those ~20 points does not mean you need to "carry" a balance.  "Carrying" a balance suggests having to pay interest, when simply letting a balance report doesn't mean that any interest needs to ever be paid.

Message 8 of 15
Valued Contributor

Re: Fico goes down every time I pay off balances


geisler wrote:

Thank you for your feedback, this is obviously the problem.  I will carry a small balance on one card.  Is there a card that works better for the balance than another?  I normally use my Chase Visa and My Macy's with AMEX.  I have had the Chase Visa for much longer, but both are "seasoned" cards.


Hey geisler, maybe you don't know but Chase will report your card again if you pay to zero.

 

Let's say you buy something with the card and have a $10 balance and it closes on the 15th, you let that report on the 15th but pay it to zero on the 20th, Chase will report again your card on the next few days with $0 balance. If your other card is $0 too, then your score will drop around 20 points.

 

You need to use it for something, let it report, use it again and pay last month's balance before due date to not pay interest. This is no carrying a balance, just reporting a balance. Carrying a balance is when you do not pay the last statement balance in full by due date.

 

Message 9 of 15
Valued Contributor

Re: Fico goes down every time I pay off balances


newhis wrote:

geisler wrote:

Thank you for your feedback, this is obviously the problem.  I will carry a small balance on one card.  Is there a card that works better for the balance than another?  I normally use my Chase Visa and My Macy's with AMEX.  I have had the Chase Visa for much longer, but both are "seasoned" cards.


Hey geisler, maybe you don't know but Chase will report your card again if you pay to zero.

 

Let's say you buy something with the card and have a $10 balance and it closes on the 15th, you let that report on the 15th but pay it to zero on the 20th, Chase will report again your card on the next few days with $0 balance. If your other card is $0 too, then your score will drop around 20 points.

 

You need to use it for something, let it report, use it again and pay last month's balance before due date to not pay interest. This is no carrying a balance, just reporting a balance. Carrying a balance is when you do not pay the last statement balance in full by due date.

 


Interesting - so Chase reports mid cycle. I don't have a chase card. Do other banks such as Citi or BOA do this?

 

I generally pay balances a few days before due date and don't recall having this happen but, I admit I don't watch that closely.

Fico 8: .......EQ 850 TU 850 EX 850 (3/2017)
Fico 9: .......EQ 850 TU 850 EX 850 (3/2017)
Fico 4 .....:. EQ 804 TU 823 EX 830 (3/2017) EX Fico 98: 839 (3/2017)
VS 3.0:...... EQ 832 TU 832 EX 832 (3/2017)
Fico 8 BC:. EQ 887 TU 899 EX 900 (3/2017)
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950 (4/2017)
Message 10 of 15