topic Re: 0% Utilization / Score dropped in Credit Cards

0% Utilization / Score dropped

Ammer — Fri, 07 Jun 2013 17:00:17 GMT

Hi,

I paid off all accounts BEFORE statement, so my credit card debt shows $75 with $17500 total credit line. The month before I had $500 debt.

Equifax score dropped from 722 to 700 !!!!! Are they crazy ? Nothing else changed, no new inquiries, no negatives. Equifax shows 0% utilization.

Do I have the credit cards report debt so I have at least 1% ? It's so counterintuitive.

Re: 0% Utilization / Score dropped

Anonymous — Fri, 07 Jun 2013 17:09:33 GMT

It's odd, but yes. 0% utilization will drop your score.

Ideally you want to keep reported utilization between 1% and 3% for score maximization.

Re: 0% Utilization / Score dropped

Creditaddict — Fri, 07 Jun 2013 17:13:30 GMT

@Anonymous wrote:
It's odd, but yes. 0% utilization will drop your score.

Ideally you want to keep reported utilization between 1% and 3% for score maximization.

Unless you are trying to buy something where having higher util. is going to be an issue with income you should ignore the whole pay before closing and then pay again before due date... that is more for people that are in the middle of rebuilding and need every point possible and have to put 3x+ charges through a card over the credit line each month so they need to get it down to below 9% vs. 99% on statement post.... but if you are just going about your daily self and don't need repair and what not I see no point at all in playing the util. game...

Re: 0% Utilization / Score dropped

Ammer — Fri, 07 Jun 2013 17:13:50 GMT

Ok, understood.

Next question, does it matter if one card reports the 1-3% debt or is it better to stretch it out on all cards ?

So if you have 3 cards :

1. option : 1st card : $0, 2nd card $600, 3rd card $0

2. option : 1st card : $200, 2nd card $200, 3rd card $200

is there score wise a difference between option 1 and 2 ?

Re: 0% Utilization / Score dropped

myjourney — Fri, 07 Jun 2013 17:14:16 GMT

@Ammer wrote:
Hi,
I paid off all accounts BEFORE statement, so my credit card debt shows $75 with $17500 total credit line. The month before I had $500 debt.
Equifax score dropped from 722 to 700 !!!!! Are they crazy ? Nothing else changed, no new inquiries, no negatives. Equifax shows 0% utilization.
Do I have the credit cards report debt so I have at least 1% ? It's so counterintuitive.

Welcome to the forum

perhaps your CR hasn't updated yet

Next month should be better if that was the case

Re: 0% Utilization / Score dropped

Anonymous — Fri, 07 Jun 2013 17:17:27 GMT

@Ammer wrote:
Ok, understood.
Next question, does it matter if one card reports the 1-3% debt or is it better to stretch it out on all cards ?
So if you have 3 cards :
1. option : 1st card : $0, 2nd card $600, 3rd card $0
2. option : 1st card : $200, 2nd card $200, 3rd card $200

is there score wise a difference between option 1 and 2 ?

If you are trying to maximize scores, ideally you'd have 1% to 3% overall utilization and keep the number of cards reporting a balance to a minimum.

I agree with creditaddict though, it probably isn't worth expending a great deal of time and effort on though. Time will boost your scores more than utilization will in the bigger picture. Best practice is to just keep utilization below 3% IMO.

Re: 0% Utilization / Score dropped

Creditaddict — Fri, 07 Jun 2013 17:21:17 GMT

@Anonymous wrote:
@Ammer wrote:
Ok, understood.
Next question, does it matter if one card reports the 1-3% debt or is it better to stretch it out on all cards ?
So if you have 3 cards :
1. option : 1st card : $0, 2nd card $600, 3rd card $0
2. option : 1st card : $200, 2nd card $200, 3rd card $200

is there score wise a difference between option 1 and 2 ?
If you are trying to maximize scores, ideally you'd have 1% to 3% overall utilization and keep the number of cards reporting a balance to a minimum.

I agree with creditaddict though, it probably isn't worth expending a great deal of time and effort on though. Time will boost your scores more than utilization will in the bigger picture. Best practice is to just keep utilization below 3% IMO.

Yes 1 card report balance and remaining report $0 IF you must maximize but you will drive yourself bonkers trying to do it each month and with no point at all! Some see score increases with higher debt... I mean 20-30% and others go crazy over 5%.... scoring is so day minute, second specific worry about multiple accounts reporting balances if you are on the boarder of a mortgage approval because of DTI (They factor each payment, even if it's only $10... you have 1 to many $10 payments and it pushes you over) but if another payment is not on the edge of pushing your DTI out of mortgage approval and with 700+ probably not, you probably will see no benefit with additional card approvals, with a car loan, etc. by having 1 card at less than 10% vs. having any or all cards at under 30%.

Re: 0% Utilization / Score dropped

Ammer — Fri, 07 Jun 2013 17:25:31 GMT

I'm reading the forum for a long time now and this was my first post. So much help in 20 minutes. I'm impressed !

Thanks guys.

Re: 0% Utilization / Score dropped

myjourney — Fri, 07 Jun 2013 17:26:22 GMT

@Ammer wrote:
I'm reading the forum for a long time now and this was my first post. So much help in 20 minutes. I'm impressed !
Thanks guys.

Welcome to the forum

Re: 0% Utilization / Score dropped

Anonymous — Fri, 07 Jun 2013 17:29:22 GMT

@Ammer wrote:
I'm reading the forum for a long time now and this was my first post. So much help in 20 minutes. I'm impressed !
Thanks guys.

No problem. I will say that Chase and Amex both like to see spendthrough - i.e. charging and paying significant sums each month. I have no experience with Wells, but I would imagine they're similar. That factors heavily (IMOAE) into their internal decisions about CLIs.

Re: 0% Utilization / Score dropped

Ammer — Fri, 07 Jun 2013 17:34:17 GMT

I'm only using the Chase and Amex card. I actually wanted to raise my score by paying off everything, because Tuesday my 61 days 3xCLI with Amex is due and I want to apply for CSP after the AMEX CLI went thorugh.

Just noticed that Chase still has to report on Monday and I haven't paid them yet ($500). So i will let report that and my utilization will go up before applying for the CSP.

Re: 0% Utilization / Score dropped

Anonymous — Fri, 07 Jun 2013 17:46:44 GMT

Ok. Just be sure that you will actually benefit from the CSP. A lot of folks seem to want certain cards because of a perceived cachet, and that I will never understand. Paying a $95 annual fee just to have a piece of plastic isn't prudent.

Re: 0% Utilization / Score dropped

Ammer — Fri, 07 Jun 2013 18:15:48 GMT

CSP is not plastic, it's metal..

I need the card to convert my Freedom UR points to real UR points

Re: 0% Utilization / Score dropped

Anonymous — Fri, 07 Jun 2013 18:21:51 GMT

@Ammer wrote:
CSP is not plastic, it's metal..
I need the card to convert my Freedom UR points to real UR points

I know it's metal. Check my sig. It was a colloquialism.

You have to factor the $95 annual fee into the value of the converted points. I'm not saying that it's a bad deal. I'm just saying that you need to have done the math and verified that it isn't a bad deal for you before you pull the trigger. Too many people don't.

Re: 0% Utilization / Score dropped

Ammer — Fri, 07 Jun 2013 18:30:31 GMT

I forgot the ;-) behind my it's metal statement.

First year fee is waived, so I have one year to see if the card is what I need.