Senior Contributor
Posts: 3,070
Registered: ‎11-02-2009
Re: To Pay or Not to Pay, that is the Question..

daybreakgonesXe wrote:

Walt_K wrote:

daybreakgonesXe wrote:

VikingsLoyalFan wrote:

Ok, so I imagine this question has been asked over a 1,000 times but I keep reading something different. Can someone please explain to me the difference of paying a cc completely to 0 or leaving 9% utilization on it? I have never let the balance go to 0 in fear of not having reoccurring account (OK) on my credit. Do I pay them completely off or leave them with a really low balance? Thanks in advance!  

That depends what you want to do! If you have multiple cards, many people like to pay off the accounts to 0 while leaving one account with a 1-9% utilization amount over their total credit lines, in order to really maximize their scores.


If you're not planning on apping for anything anytime soon, this really isn't necessary. Feel free to have a small balances on whatever you want!

This is slightly incorrect.  The general rule of thumb for optimal scoring is to have only one card report a balance with that balance being 9% or less of that card's individual credit limit.  This makes sense if you think about it.  If you have $50K in total available credit, 9% would be $4500.  You don't want to let a $4500 balance report on a card with a $5K CL. 

That's true, but usually that's a common sense thing. FICO scoring wise, as long the one account isn't maxed out, they're not gonna notice.But, then again, that doesn't mean though your creditor won't notice either!


But say for example I used my Shell card for utilization and the rest at zero to calculate 1% utility. When utilization is calcuated for a FICO purpose, it's over your total open revolving accounts. If i did 1% on my Shell, that's $8. Then, over my total accounts: $8/$29400 = 2.72108843537415e-4 = .027%!!!


Now, not sure how the FICO scoring model will weigh that. Will they round it to 0%? 1%? Would I be losing points this way now?


So take caution to the wind when playing around with utility!

It's worth pointing out for people that do not understand how this works.  While it's common sense to not max out a card, it's not so much common sense that you are getting dinged around 20-30% even.  If you're aiming for 9% total utilization it would be easy to end up around 20-30% individual utilization.  For the most part this won't matter, but there are people that need every last point, e.g., people trying to qualify for a mortgage. 


Utilization always rounds up.  .000001% is 1%. 


Starting Score: ~500 (12/01/2008)
Current Score: EQ 681 (04/05/13); TU 98 728 (01/06/12), TU 08? 760 (provided by Barclay 1/2/14), TU 04 728 (lender pull 01/12/12); EX 742 (lender pull 01/12/12)
Goal Score: 720

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