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Regular Contributor
Posts: 236
Registered: ‎12-09-2011
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Is 0% Util a bad thing?

I prefer to keep all my accounts at a zero balance, mostly because I don't have a single place to check all of the balances across 4/5 different cards. I don't want to miss something one month and let it slip past ala Lucy and the chocolate factory....so is it bad to regularly have activity on all the cards but not allow any balance to ever get reported to the CRA?


Starting Score: TU 660 EQ 623 EX 644
Current Score: TU 670 EQ 683 EX ???
Goal Score: 700 on all 3

Freedom: $3k, CSP: $5k, Chase Disney Premier: $5k, AmEx Zync: NPSL, Cap1 NH: $750, Cap1 Plat: $750, USC CU: $500
Super Contributor
Posts: 9,674
Registered: ‎01-28-2010
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Re: Is 0% Util a bad thing?

 

Personally I think it is great to have zero balances reporting.

 

Are you trying to tweak your FICO score for improvement ?   If so then allowing one card to report a balance less than 9% util is optimal.

 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Regular Contributor
Posts: 236
Registered: ‎12-09-2011
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Re: Is 0% Util a bad thing?

[ Edited ]

pizzadude wrote:

 

Personally I think it is great to have zero balances reporting.

 

Are you trying to tweak your FICO score for improvement ?   If so then allowing one card to report a balance less than 9% util is optimal.

 


I'm not trying to tweak it just working my way to the 700 club, we plan to apply for a mortgage at years end so I'm in this for the long term. EDIT: However the reason I ask is because I hear people talk about the having 9% or less report, I just want to make sure we will see FICO gains but having a history of 0% Util being reported.


Starting Score: TU 660 EQ 623 EX 644
Current Score: TU 670 EQ 683 EX ???
Goal Score: 700 on all 3

Freedom: $3k, CSP: $5k, Chase Disney Premier: $5k, AmEx Zync: NPSL, Cap1 NH: $750, Cap1 Plat: $750, USC CU: $500
Moderator
Posts: 17,419
Registered: ‎07-14-2009
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Re: Is 0% Util a bad thing?

[ Edited ]

Mickey11 wrote:
I prefer to keep all my accounts at a zero balance, mostly because I don't have a single place to check all of the balances across 4/5 different cards. I don't want to miss something one month and let it slip past ala Lucy and the chocolate factory....so is it bad to regularly have activity on all the cards but not allow any balance to ever get reported to the CRA?

Everyone's situation is different and there is no one size fits all approach to this but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

 

ETA: It seems counter productive but all zero balances all the time is actually bad for your scores. FICO likes to see some activity. But that doesn't mean you ever have to carry a balance from month to month.

 

 

 

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".





Epic Contributor
Posts: 21,623
Registered: ‎03-19-2007
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Re: Is 0% Util a bad thing?

In trying to understand the apparent contradiction that low % util helps your score, but zero util on everything might not, it begins to make some sense to me when I consider what a FICO score is.  It is an evaluation of risk of delinquency in payment within approximately the next two years, based on ones prior history.

 

To evaluate risk, FICO needs to see some evidence of debt, and how it is repaid.  If it constantly sees zero balances, it does not tell them that you are accruing debt and timely paying it.  Is the consumer, regardless of ability to pay, cavalier with timely payment?  Only having some reported debt gives them such information.

Regular Contributor
Posts: 212
Registered: ‎06-20-2009
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Re: Is 0% Util a bad thing?

RobertEG's explanation makes sense, and it's the thought behind my approach.  LIke the OP, I generally pay off the balance on each account before its billing cycle ends.  But then I make an exception every six months or so, let a balance (preferably large) go through to be billed and reported for a single card, then pay it off right after the statement date, and repeat the process for another card in sequence, etc.


Starting Score: EQ 804 - (April 2009)
Upgraded thanks to FICO Forums: EQ 813 / EX 842 / TU 823 - (FICO scores from mortgage lenders, June 2010)
Recent Scores: EQ 807 / TU 799 - (March 2012)
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Frequent Contributor
Posts: 315
Registered: ‎05-28-2011
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Re: Is 0% Util a bad thing?

I try to keep my util under 10% for each card individually and let the CC report the balance and than PIF the day the statement is generated. All my 3 scores had been playing around from mid to high 700's.

TU Auto enhanced FICO (9/2012): 744
EX FICO (8/2012): 748
EX FICO (6/2010): 739
Valued Contributor
Posts: 1,863
Registered: ‎09-20-2011
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Re: Is 0% Util a bad thing?

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