topic Re: Should all cards post a balance? in Understanding FICO® Scoring

Should all cards post a balance?

Anonymous — Tue, 24 Nov 2015 17:38:07 GMT

I have two credit cards. An AMEX which is my main card, and a Visa which I have only one reoccurring bill on. I usually pay my Visa balance on the 12th (due date) and before the statement generates (around the 19th), and unless there is a time where a merchant doesn't accept AMEX that I use it, and the card may report as $0. Am I negatively affecting my score if an occasional $0 balance is reported? The reoccurring bill comes in after statement date, and before the due date which is around the 26th.

I noticed that my FICO credit score dropped and then rebounded 25 points in a two month span. Was this all because of a $0 balance on my Visa? I recently opened the AMEX, and I saw my score go from 771 when pulled for the new account down to a 729, before going to a 754. I am young, and have only about 3 years of credit history. Im trying to get a handle on this early on.

Thanks,

Re: Should all cards post a balance?

Anonymous — Tue, 24 Nov 2015 18:54:00 GMT

Let one report a zero balance and the other report a small balance under 10% of the credit line. You also might consider adding a third card. General consensus is that three to five cards is the sweet spot for Fico scoring.

Re: Should all cards post a balance?

Anonymous — Tue, 24 Nov 2015 21:54:34 GMT

+1 to Captool.

You ask:

"Am I negatively affecting my score if an occasional $0 balance is reported?"

As Captool observes, you won't experience any penalty for having exactly one $0 balance if the other card is positive. The penalty comes from all cards being zero.

Even more important, however, is that the all-cards-at-zero penalty, like many other kinds of factors that measure how much you owe, is fleeting. It vanishes as soon as at least one card shows a positive balance. So although the best way to squeeze every possible point out of your CC-related factors is to have all cards at $0 except one (with the remaining card showing a small but positive balance) you don't have to do that most of the time. Just before some important credit pull.

Captool is right that you'd get long term benefit from adding 1-2 more credit cards. No rush, just something to consider.

Re: Should all cards post a balance?

vanillabean — Wed, 25 Nov 2015 03:12:30 GMT

@Anonymous wrote:
General consensus is that three to five cards is the sweet spot for Fico scoring.

If enough people say it, does it make it true?

You can be in the 800s with two cards. Three cards may well be the peak and downhill from there.

Re: Should all cards post a balance?

Thomas_Thumb — Wed, 25 Nov 2015 04:03:13 GMT

@Anonymous-own-fico wrote:
@Anonymous wrote:
General consensus is that three to five cards is the sweet spot for Fico scoring.
If enough people say it, does it make it true? [truth is relative - yes/no, maybe so]

You can be in the 800s with two cards. Three cards may well be the peak and downhill from there.

Low card count 850s posted include: 3 open cards (that profile also reported 2 closed card accounts on file). Another "cards only file" 850 reported 4 open cards + 2 open AU cards. yet another reported with 5 open card accounts, 1 or 2 of which were AU.

Based on data from posters: Minimum cards for 850 = 3 open with 5 total on file.

P.S. This "over the hill" poster has 6 open cards (one being AU and one being a true charge card) plus 2 or 3 closed cards on file depending on CRA.

OP - IMO, you're young and building credit. It's fine to post a balance on two cards at this stage of the game but reporting a balance on one card is fine too. Try to keep you aggregate utilization under 20% - under 9% is better. However, really no need to focus on the 9% level until after you get a 3rd card.

Re: Should all cards post a balance?

Anonymous — Wed, 25 Nov 2015 21:51:48 GMT

Thanks everyone

Re: Should all cards post a balance?

NRB525 — Thu, 26 Nov 2015 04:36:53 GMT

@Anonymous wrote:
I have two credit cards. An AMEX which is my main card, and a Visa which I have only one reoccurring bill on. I usually pay my Visa balance on the 12th (due date) and before the statement generates (around the 19th), and unless there is a time where a merchant doesn't accept AMEX that I use it, and the card may report as $0. Am I negatively affecting my score if an occasional $0 balance is reported? The reoccurring bill comes in after statement date, and before the due date which is around the 26th.

I noticed that my FICO credit score dropped and then rebounded 25 points in a two month span. Was this all because of a $0 balance on my Visa? I recently opened the AMEX, and I saw my score go from 771 when pulled for the new account down to a 729, before going to a 754. I am young, and have only about 3 years of credit history. Im trying to get a handle on this early on.

Thanks,
MG

If you are building a file, why do you want to hide your borrowing? Let both cards report. Every month. See what the score does after several months like that.

My reason for letting cards report is, on your file in the future? It shows numbers in your history, not a string of zeros.

Which cards do you have?

Do you have any sort of installment loan? Adding that sort of variety can help.

Your score is ranging from 729 to 771. Any score in that range is going to get you decent loan terms. Just pay on time, keep utilization in check, look into whether you want to open a basic installment loan, and your file will get stronger over time, your score will continue to improve with the passage of time, even with balances reporting.

Get some more credit cards too. Two is enough to get by, but if you want your history to be solid and your score stable, extra CC are a way to build in more stabilizing history for the long run, more borrowing history with more banks.

Good luck! You have an excellent start.

Re: Should all cards post a balance?

takeshi74 — Tue, 01 Dec 2015 19:32:11 GMT

@Anonymous wrote:
I noticed that my FICO credit score dropped and then rebounded 25 points in a two month span. Was this all because of a $0 balance on my Visa?

Doubtful but when trying to determine the cause(s) of any scoring change you have to carefully review reports from before and after the change. We have no idea what all might have changed on your reports in the 2 months.

Also keep in mind that you don't have just one FICO. There are 3 CRA's. For many models you have a score with each CRA.