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How many cards should report a balance?

Frequent Contributor

How many cards should report a balance?

I have 5 cards. Two months ago i had two cards reporting a 1% balance. Last month i only had one card reporting and my score dropped 5 pts. How many cards should i have reporting a balance

Equifax - 658, Experian -628, Transunion- 704 In the garden until 01/01/2016
Message 1 of 7
6 REPLIES
Moderator Emeritus

Re: How many cards should report a balance?

The general thought is to have one card report a balance, with the balance being somewhere between 1-9% UTIL. People have different sweet spots in that range.

 

What score was it?

Message 2 of 7
Frequent Contributor

Re: How many cards should report a balance?

663

Equifax - 658, Experian -628, Transunion- 704 In the garden until 01/01/2016
Message 3 of 7
Valued Contributor

Re: How many cards should report a balance?


CreditGuy03 wrote:
I have 5 cards. Two months ago i had two cards reporting a 1% balance. Last month i only had one card reporting and my score dropped 5 pts. How many cards should i have reporting a balance

 

That's how my EQ08 acted too, opposite of my EQ04. It appears to vary with FICO models.

 

Message 4 of 7
Moderator Emeritus

Re: How many cards should report a balance?


CreditGuy03 wrote:
I have 5 cards. Two months ago i had two cards reporting a 1% balance. Last month i only had one card reporting and my score dropped 5 pts. How many cards should i have reporting a balance

Are you certain that nothing else changed on your CR? I assume your talking about your FICO score, right?

Message 5 of 7
New Contributor

Re: How many cards should report a balance?

 My husband also paid two cards to a zero balance that were over the limit and his score only jumped 13 pts. All of his revolving accts are at zero balance 

Message 6 of 7
Valued Contributor

Re: How many cards should report a balance?

It might be worth considering some of the background here.

 

Suppose that I'm trying to help a friend improve his finances, and I go over to his house one day, and notice a large stack of bills on his desk.  I look through the bills, and notice quite a few CC statements, with balances like $59 and $387.

 

Is there an issue here?  Possibly so, because my friend may not be able to manage all the bills, and his finances may spin out of control.

 

Suppose I have another friend with good credit, and she doesn't care about paying off her balances before the statement date, and instead, just sends in a check as soon as she receives CC statements.

 

Is there an issue here?  Probably not.

 

The point is that for some people in some circumstances, the number of CC balances may be a useful indicator.  Presumably this is driven by the person's credit history (bucket), and the number and size of balances.  A useful scoring algorithm has to distinguish between the two cases above.

 

At the other extreme, I have lost around 10 points with EX 04 when all CCs are reporting $0.  I expect that there are several scenarios that lead to this situation -- (1) serious illness, (2) disengagement from the credit world, (3) anticipation of future financial difficulties with a switch to cash, and (4) overzealous MyFico readers trying to optimize their scores.  I imagine that these kinds of behaviors are negative indicators, but they're not in the same category as something that is more tangible, like a 30-day late payment.

 

My understanding is that FICO weights are based on statistical crunching of actual reports, so it's not a case of a FICO analyst plucking numbers out of thin air.

 

Message 7 of 7