Testing "all-zero-but-one" theory -- Never mind, dropping this experiment. Too much work.

[Thomas_Thumb]

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@Anonymous wrote:

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@SouthJamaica wrote:

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This thread is supposed to be about testing the "all-zero-but-one" theory on revolving accounts.

A number of people on this forum have stated that scores are maximized by having all but one of one's revolving accounts post at zero balance, and that each small, even nominal, balance counts as a slight negative.

I am skeptical of that theory, and over the course of the month will be moving from having 10 out of 13 accounts reporting at zero to none reporting at zero, and then over the following month going back to zero balances, to see what effect if any that has on scores.

My guess is that it will have no effect, and that the all-zero-but-one theory is simply not reality based.

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I tested this earlier this year, but I only have 3 cards.

Not sure if you read my post here http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Utilization-Percentage-question/m-p/4092481#M95548

My file isn't clean and I don't have a lot of cards, so my results may be different from yours.  I also suspect I am at or near the top of my score card.  At the time, I wasn't willing to pay $40+ dollars each month for 3B pulls, so I only used my EQ as it was reliable on the monitoring service.  Unfortunately, I had a mortgage account where the servicing was sold in the 5th month and it completely screwed up any further testing.

The estimator found here http://www.myfico.com/Fico-Credit-Score-Range-Estimator/ asks the questions

How many cards do you have?

How many cards have balances?

There is no reason to ask the questions if they aren't part of the calculation.

Other problems with testing over a period of several months include installment balances, aging and payment history.

Often the simulator will show me an increase if I pay my bills on time for 3 months, this could counteract the small effect of an additional card with a balance.

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I do agree that the only one card reporting (as opposed to 2, 3 or 4) may not show a change particularly for profiles having thick files with a lot of credit cards. That is where the % of cards reporting may come into play. I suspect having 100% of cards report a balance will trigger a drop. Over the past 1 1/2 years I have allowed 2 of 6, 3 of 6, 4 of 6 and 5 of 6 cards report (aggregate utilization held between 1% and 5% in all cases) with Fico 8 score staying at 850 through out. I have not tested 100% reporting.

However, another poster had maintained an 850 score while reporting balances on 2 of 5, 3 of 5 and 4 of 5 cards. When balances briefly reported on 5 of 5 (100%) score dropped 6 points to 844 before going back up to 850 as soon as # cards reporting dropped back to less than 5.

So 100% of cards reporting a balance (assuming one has 3 or more cards) should, IMO, result in a small score drop regardless of the associated scroecard. If a profile has only one or two cards, # cards reporting is not all that relevant compared to building payment history on the cards.

[Anonymous]

Good point, TT.  Our OP will be testing exactly that.  He's got 13 cards (meeting your criterion on having many cards) and will be going from only 3 with a balance to all 13 with a balance.

[jamie123]

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@masscredit wrote:

I'm not really in a rush to obtain new credit. I'm actually trying to avoid that so I don't take on any new inquiries and don't reduce my AAoA at all. But, if there was something that would really be worth it. Like one more card with a starting limit of over $10K or if that personal loan was going to be really benefical, then I would have gave up one inquiry (if needed) and a few months of AAoA. I'm pretty content where I am though. My scores have been gradually climbing as time goes on and my IIB accounts are falling off. Plus my credit limits have been increasing through SPs. My auto loan is at 1.74% so that is cheap money. I pretty much just pay the minimum on that each month. This whole thing has been a long road. I've learned a lot that I wish I would have known 10+ years ago. I guess I'll just sit tight, like time hear the old wounds then go from there. 

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You are on the right track. My reports looked like yours a few years ago. A lot of baddies in the past but clean for a long time. I am just now starting to see the very last of my baddies age off my reports. In the mean time I've been rebuilding my credit as best as I could but topped out at about 700-715 no matter what I tried.

I had 1 State tax lien on each of my reports. The tax lien fell off my EX report about a month ago and my EX mortgage score shot up from 682 to 786! A difference of 104 points! I'm just posting to let you know what your future holds once the baddies are gone. You've done a great job in rebuilding your credit and as soon as the baddies drop off your scores will skyrocket!

[Revelate]

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@jamie123 wrote:

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@masscredit wrote:

I'm not really in a rush to obtain new credit. I'm actually trying to avoid that so I don't take on any new inquiries and don't reduce my AAoA at all. But, if there was something that would really be worth it. Like one more card with a starting limit of over $10K or if that personal loan was going to be really benefical, then I would have gave up one inquiry (if needed) and a few months of AAoA. I'm pretty content where I am though. My scores have been gradually climbing as time goes on and my IIB accounts are falling off. Plus my credit limits have been increasing through SPs. My auto loan is at 1.74% so that is cheap money. I pretty much just pay the minimum on that each month. This whole thing has been a long road. I've learned a lot that I wish I would have known 10+ years ago. I guess I'll just sit tight, like time hear the old wounds then go from there. 

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You are on the right track. My reports looked like yours a few years ago. A lot of baddies in the past but clean for a long time. I am just now starting to see the very last of my baddies age off my reports. In the mean time I've been rebuilding my credit as best as I could but topped out at about 700-715 no matter what I tried.

I had 1 State tax lien on each of my reports. The tax lien fell off my EX report about a month ago and my EX mortgage score shot up from 682 to 786! A difference of 104 points! I'm just posting to let you know what your future holds once the baddies are gone. You've done a great job in rebuilding your credit and as soon as the baddies drop off your scores will skyrocket!

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Rather surprised my EX mortgage score was so much higher than yours even when I started this process when we both had tax liens.

We should do another file comparison on that

[masscredit]

SouthJamaica: Sorry that we branched off into a different discussion. I’ll be following your results and will try the same thing when I have a couple months with no CLIs planned. I think you’ll see a score drop with all cards reporting a balance. Here is some of my data from the end of last year until May when I had a few cards, one card and no cards reporting.

The scores are EQ08 -

09/11 - 686
10/24 - 658 - 4 cards reporting
11/05 - 681 - 3 cards reporting
11/20 - 668 - 0 cards reporting
11/28 - 681 - 1 card reporting
12/04 - 684
01/15 - 678 - $1578 Cap 1 $245 Barclay
02/10 - 686 - $60.00 Cap 1 $453 Barclay
05/30 - 686 - $89.00 reporting - 1 card

I think the score jump from 681 to 686 is when I had some negative accounts fall off.

One thing that I’m wondering about the multiple cards reporting - will some scores being affected more than others? it takes a lot to get my EQ04 to move but my EQ08 move around without to much going on.

jamie123: I’m looking forward to my scores showing a very noticeable increase. I got to a point where they just wouldn’t climb anymore. That’s when I really started playing with utilization to see if there was a sweet spot that would give me a few more points.

[SouthJamaica]

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@masscredit wrote:

SouthJamaica: Sorry that we branched off into a different discussion. I’ll be following your results and will try the same thing when I have a couple months with no CLIs planned. I think you’ll see a score drop with all cards reporting a balance. Here is some of my data from the end of last year until May when I had a few cards, one card and no cards reporting.

The scores are EQ08 -

09/11 - 686
10/24 - 658 - 4 cards reporting
11/05 - 681 - 3 cards reporting
11/20 - 668 - 0 cards reporting
11/28 - 681 - 1 card reporting
12/04 - 684
01/15 - 678 - $1578 Cap 1 $245 Barclay
02/10 - 686 - $60.00 Cap 1 $453 Barclay
05/30 - 686 - $89.00 reporting - 1 card

I think the score jump from 681 to 686 is when I had some negative accounts fall off.

One thing that I’m wondering about the multiple cards reporting - will some scores being affected more than others? it takes a lot to get my EQ04 to move but my EQ08 move around without to much going on.

jamie123: I’m looking forward to my scores showing a very noticeable increase. I got to a point where they just wouldn’t climb anymore. That’s when I really started playing with utilization to see if there was a sweet spot that would give me a few more points.

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No problem, I don't mind. I've been enjoying the conversation

[vanillabean]

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@SouthJamaica wrote:

For the next month or so I'm going to let each account post at 1 or 2 % (haven't decided which yet), and see what happens. If the theory is correct, my scores should decrease. I'm guessing this experiment won't affect them at all.

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I haven't read any of this thread, so feel free to consider me unbiased, lol. My take on it is that if you are clean (no derogs or new credit) and have a thick file (really old cards and lots of them), your FICO 08 is like a sponge and practically doesn't care; you'll stay at 850. For all others, the number of cards reporting a balance does matter; less than half is best.

[Anonymous]

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@Thomas_Thumb wrote:

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@Anonymous wrote:

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@SouthJamaica wrote:

---

This thread is supposed to be about testing the "all-zero-but-one" theory on revolving accounts.

A number of people on this forum have stated that scores are maximized by having all but one of one's revolving accounts post at zero balance, and that each small, even nominal, balance counts as a slight negative.

I am skeptical of that theory, and over the course of the month will be moving from having 10 out of 13 accounts reporting at zero to none reporting at zero, and then over the following month going back to zero balances, to see what effect if any that has on scores.

My guess is that it will have no effect, and that the all-zero-but-one theory is simply not reality based.

---

I tested this earlier this year, but I only have 3 cards.

Not sure if you read my post here http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Utilization-Percentage-question/m-p/4092481#M95548

My file isn't clean and I don't have a lot of cards, so my results may be different from yours.  I also suspect I am at or near the top of my score card.  At the time, I wasn't willing to pay $40+ dollars each month for 3B pulls, so I only used my EQ as it was reliable on the monitoring service.  Unfortunately, I had a mortgage account where the servicing was sold in the 5th month and it completely screwed up any further testing.

The estimator found here http://www.myfico.com/Fico-Credit-Score-Range-Estimator/ asks the questions

How many cards do you have?

How many cards have balances?

There is no reason to ask the questions if they aren't part of the calculation.

Other problems with testing over a period of several months include installment balances, aging and payment history.

Often the simulator will show me an increase if I pay my bills on time for 3 months, this could counteract the small effect of an additional card with a balance.

---

I do agree that the only one card reporting (as opposed to 2, 3 or 4) may not show a change particularly for profiles having thick files with a lot of credit cards. That is where the % of cards reporting may come into play. I suspect having 100% of cards report a balance will trigger a drop. Over the past 1 1/2 years I have allowed 2 of 6, 3 of 6, 4 of 6 and 5 of 6 cards report (aggregate utilization held between 1% and 5% in all cases) with Fico 8 score staying at 850 through out. I have not tested 100% reporting.

However, another poster had maintained an 850 score while reporting balances on 2 of 5, 3 of 5 and 4 of 5 cards. When balances briefly reported on 5 of 5 (100%) score dropped 6 points to 844 before going back up to 850 as soon as # cards reporting dropped back to less than 5.

So 100% of cards reporting a balance (assuming one has 3 or more cards) should, IMO, result in a small score drop regardless of the associated scroecard. If a profile has only one or two cards, # cards reporting is not all that relevant compared to building payment history on the cards.

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My scores aren't up there yet..........but it's been about the same with me.  No change at all.  I have 17 cards reporting and had as many as 8/9 reporting a balance with no change.  Now changed things up with 4 reporting a larger balance (but cl's are high on them) but still no change.  I'm hoping to see a rise in my scores once they're back reporting zero.  All but one that is with a 1% balance.  I know my scores will go up over time, just trying to get them there a bit quicker.  Right now the simulator is showing a higher score improvement quicker.  I'll let everyone know what happens when my accounts are back to normal.

[jamie123]

Sorry for hijacking the thread earlier.

Here are my results of "One card reporting a small balance versus all cards reporting $0".

My credit report stats:

My EQ and TU reports are identical and contain:

7 open CCs, 1 closed CC, 2 installment loans and 1 tax lien.

AAoA is 1 year 9 months.

My EX report contains:

7 open CCs, 2 closed CCs and 2 installment loans.

My EX doesn't have the tax lien and does have a closed CC from 1990.

My EX report is clean without any negative information.

These scores were pulled 12 days apart with the only difference being the CC reporting. The scores from 6/9 reflect ALL CCs reporting $0 versus the scores from 6/21 showed 1 CC reporting a balance of $387/$6000 CL card. My overall UTI on 6/21 is 1%.

After seeing these scores, I hope everyone has a small balance reporting on 1 card before apping for any kind of new credit!

Here are the scores:

[Thomas_Thumb]

Jamie123,

Your results are in-line with what others have posted - If ALL tradelines report a zero balance, scores drop relative to one card reporting.

Take a look at having two report a balance instead of one. Results from others indicate your score should stay the same (if you hold aggregate utilization at the same level). Ultimately as you let more cards report, you should reach a break point where score drops some. That point (whether count or % triggered) appears to be profile dependent. The impact is very short term. If you are willing to test your own profile, it would provide some good comparative data.