topic Re: AZEO IS $1 Enough in Understanding FICO® Scoring

AZEO IS $1 Enough

Yeliaba1 — Sat, 13 Apr 2019 12:12:46 GMT

Hello!

I need a little guidance. I’m preparing to apply for a mortgage in May and wanted to be at AZEO. I forgot to factor in interest when paying my PenFed card and left a $1.25 balance. If I pay my other cards to zero this month will my score tank? Or should I leave a $10 balance on my Discover as well?

Re: AZEO IS $1 Enough

HeavenOhio — Sat, 13 Apr 2019 12:20:27 GMT

For AZEO, you want to have exactly one card with a small positive balance. Technically, one cent would be enough. But most banks will forgive a small balance and report zero instead. That's why we generally recommend that the small balance be at least $5 (but not much more).

Your $1.25 balance could easily be forgiven. I'd call PenFed and ask about their policy. If it's going to show up as a balance of zero, report the $10 on your Discover card.

Re: AZEO IS $1 Enough

Yeliaba1 — Sat, 13 Apr 2019 12:31:29 GMT

Thanks! I’ll give them a call.

Re: AZEO IS $1 Enough

Anonymous — Sat, 13 Apr 2019 16:32:12 GMT

@HeavenOhio wrote:
For AZEO, you want to have exactly one card with a small positive balance. Technically, one cent would be enough. But most banks will forgive a small balance and report zero instead. That's why we generally recommend that the small balance be at least $5 (but not much more).

Your $1.25 balance could easily be forgiven. I'd call PenFed and ask about their policy. If it's going to show up as a balance of zero, report the $10 on your Discover card.

I’m curious as to the statement “but not more”. Correct me if I’m wrong but isn’t the consensus that the one card just needs to report a balance below 9%? Therefore, technically that balance could be hundreds/thousands of dollars as long as it’s below 9% for that card? Or are you saying the dollar amount matters when using AZEO?

Example card A (limit $5,000) reports $0, card B (limit $5,000 reports $0), card C (limit $5,000) reports $400 balance (8%). Is the scoring boost the same as if the card had reported a small balance of lets say $20?

Re: AZEO IS $1 Enough

HeavenOhio — Sat, 13 Apr 2019 16:48:56 GMT

The general wisdom that one will optimize the revolving portion of his score when there's a single card with a positive balance, overall utilization of 8.9% or below, and individual card utilization of 28.9% or below. Some have reported being dinged at numbers below those thresholds, possibly due to scoring for "amounts owed." AZEO recommends balances that are tiny in order to bypass any possible drama.

Re: AZEO IS $1 Enough

Yeliaba1 — Sat, 13 Apr 2019 17:00:17 GMT

Penfed CSR says they will report $1. I’ll pay Discover in full. I hope the balance $1/24800 is not tooo tiny.

Re: AZEO IS $1 Enough

FicoGuy2019 — Sat, 13 Apr 2019 17:34:34 GMT

Maker sure it's not a charge card that is NPSL that you want to report a balance, although YMMV. I just had this experience over the last 2 days thinking my Amex that reported a balance would count in my utilization however, it does not. I've always paid it before it reported for the last 8 years, but now I know.

Re: AZEO IS $1 Enough

Yeliaba1 — Sat, 13 Apr 2019 17:59:15 GMT

Thanks ! My it’s my PenFed Promise card.

Re: AZEO IS $1 Enough

SouthJamaica — Sat, 13 Apr 2019 23:07:37 GMT

@Yeliaba1 wrote:
Hello!
I need a little guidance. I’m preparing to apply for a mortgage in May and wanted to be at AZEO. I forgot to factor in interest when paying my PenFed card and left a $1.25 balance. If I pay my other cards to zero this month will my score tank? Or should I leave a $10 balance on my Discover as well?

Leave $10 on Discover too.

Re: AZEO IS $1 Enough

Yeliaba1 — Sat, 13 Apr 2019 23:50:53 GMT

I understand that ideally you want to leave a $5-10 balance for AZEO. The $1 balance was an accident. Any chance this $1 balance ( with no other accounts reporting balances) can generate a “no credit usage” penalty?

Re: AZEO IS $1 Enough

Anonymous — Sun, 14 Apr 2019 00:11:36 GMT

@Yeliaba1 There is no guarantee that a credit union credit card will count for AZEO on the EX2 algorithm. Recent thread’s have addressed this.

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/EX-FICO-2-Not-Using-Revolving-Credit/m-p/5574443#M154012

Consequently if that’s the only card you have with the balance and it’s not recognized by EX2, you’re going to suffer a no revolving balance penalty that’s decent on EX2.

Like SJ said, add a balance on Discover. If you add a balance on Discover and your AZE2, you’re only gonna lose a couple points. It would be a safer bet. Or pay off that PenFed card and carry a balance on discover or any major card and be AZEO.

And to address a point someone else questioned. We don’t know for sure whether dollar amount has any effect some fico white papers indicate that it does. @Tom_Thumb might chime in on that.

Re: AZEO IS $1 Enough

Yeliaba1 — Sun, 14 Apr 2019 00:12:26 GMT

Thanks for your response. The statement cut with $1 reporting. I’ll have to leave 2 cards reporting. As suggested by S Jamaica. Had no idea the algorithm sees a credit union somewhat different but it’s nice to know.

Re: AZEO IS $1 Enough

Anonymous — Sun, 14 Apr 2019 00:15:02 GMT

We don’t know that it will 100%, but some credit union cards are discounted. Do you wanna take that chance? I know revolving balance penalty is way higher than a couple points by being AZE2. And you may not even lose the couple points for being AZE2. There’s some people that can have two or three cards reporting without losing a point depending on bureau

Re: AZEO IS $1 Enough

Yeliaba1 — Sun, 14 Apr 2019 02:26:46 GMT

@Birdman thanks again. I’ll take the advice and let Discover report $10. It looks like the safer bet to me.

Re: AZEO IS $1 Enough

Anonymous — Sun, 14 Apr 2019 02:43:07 GMT

No problem, great general advice on which card to use is in the following thread, read and enjoy:

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/AZEO-Question/td-p/5546749

Re: AZEO IS $1 Enough

Anonymous — Sun, 14 Apr 2019 04:59:47 GMT

My thoughts/advice:

Contact your lender with which you have the $1 balance and ask if they're willing to do an "off cycle reporting" to the bureaus. If the answer is yes, pay the balance to $0 immediately and request that off cycle reporting to get that new $0 balance reported. Then, do the same thing with Discover; Make sure you have a small (say) $10 balance or so on that card and call them and ask for an off cycle reporting. Discover will do an off cycle reporting and it only takes 30 seconds on the phone with them to get it done.

What are your credit scores currently, specifically your mortgage scores? Do you know if those scores being 10-20 points higher or lower would have any impact on your potential mortgage in terms of the rate you'd acquire? Have you been pulling your own scores? If so, if you pulled them before/after your recent $1 balance reported you should be able to see what happened to your scores. If they didn't drop, you aren't being hit with a "no revolving credit use" penalty and are fine with where you're at now, as your scores are maximized. If your FICO score source also provides you with negative reason statements, simply read the statements and ensure with your $1 reported balance present that you don't see anything to the tune of "no recent revolving credit use."

Re: AZEO IS $1 Enough

Yeliaba1 — Sun, 14 Apr 2019 12:38:52 GMT

@ Brutal. Thanks for the advice. Penfed has the $1 balance and will not off cycle report. This month I’ll let Discover report $ 10 as well. My PenFed statement has already cut , while Discover cuts later in the month and scores update on the 27th. Current mortgage scores are EQ 706, TU 722, and EX 710. In hindsight, it shouldn’t impact the type of mortgage I’ll need. I prequalified with NFCU and VACU and both say I’m fine. (Currently rebuilding so this is a lot about see my best scores ever). I’ ll have to be at AZEO next month.

Sidenote: EX CreditWorks updated this morning reporting a $1 balance from PenFed. No changes to Fico 8 or any of the ancillary scores. Went from 8% to 6%.

Re: AZEO IS $1 Enough

jamie123 — Sun, 14 Apr 2019 14:08:20 GMT

I tested my AZEO vs all at $0 many times by using just a $3 balance on one major CC and it always reported just fine.

And yes, the difference for my AZEO vs all at $0 was pretty consistent at 18 points. I gained 18 points by letting $3 report!

Re: AZEO IS $1 Enough

Yeliaba1 — Sun, 14 Apr 2019 14:32:21 GMT

@Jamie Has that $3 balance been on a CU credit card? It sounds like I would have been fine if my $1 balance was on a major bank CC.

Re: AZEO IS $1 Enough

HeavenOhio — Sun, 14 Apr 2019 16:15:40 GMT

I would think the effect of the credit union card would be easy to test. The problem is that mortgage time isn't the time to do that.

I'm betting that the PenFed card is going to be fine. If it wasn't, you can bet we would have heard about it. Still, it's mortgage time, so why take chances?