topic Re: Hubby paid CC my score dropped! in Understanding FICO® Scoring

Hubby paid CC my score dropped!

Ladyk06 — Thu, 30 Mar 2023 22:08:35 GMT

I am an AU on hubbies CC. I usually pay my CC's off every month. I have one with a balance. Hubby paid his CC off and my score dropped 13 points on EX and 5 points on TU. His score was not affected at all. All of my scores are at least 750. Is it better to carry a balance every month to get the highest score?

Re: Hubby paid CC my score dropped!

JoeRockhead — Thu, 30 Mar 2023 22:22:12 GMT

There is a score penalty for having all zero balances, silly I know, but still a thing. For best scoring, try leaving a 1% to 4.9% balance.

Re: Hubby paid CC my score dropped!

Ladyk06 — Thu, 30 Mar 2023 22:35:21 GMT

Yes it is silly! Thank you for the advice. I really prefer to be debt free. I have 6 cards, how many should I leave a balance on?

Re: Hubby paid CC my score dropped!

Thomas_Thumb — Fri, 31 Mar 2023 00:25:29 GMT

You only need a balance to report on one revolving account to avoid the "no recent revolving activity" penalty. No need to carry a balance. Just pay off cards that report a balance before the due date.

It is better to report small balances on 2 cards than zero cards. The no revolving activity penalty is typically 15 to 20 points. There is often no penalty for AZE2 for those with 5 or more cards. In your case even AZE3 is likely 5 points or less.

Test it yourself.

There is a 2nd type of all zero penalty worth noting. That relates to AU accounts. Profiles with one or more AU accounts may be subject to a penalty if all their AU accounts report $0 balances. That happens independent of personal accounts reporting a balance. Numerous MyFico members have reported this rather obscure penalty. The best solution to avoiding it is to not be an AU on any accounts - IMO.

Re: Hubby paid CC my score dropped!

Ladyk06 — Fri, 31 Mar 2023 00:08:21 GMT

Thank you! Please explain what AZE3 means.

Re: Hubby paid CC my score dropped!

Thomas_Thumb — Fri, 31 Mar 2023 00:36:08 GMT

AZE3 is shorthand for all zero except 3 - meaning 3 cards on which you are the primary account holder reporting balances.

I have 6 cards and have reported balances on up to 3 of them at a time without experiencing a penalty. I start seeing points deduct when 4 or more cards report balances on EQ and TU. EX is more tolerant.

Re: Hubby paid CC my score dropped!

Ladyk06 — Fri, 31 Mar 2023 02:05:16 GMT

Thank you!

Re: Hubby paid CC my score dropped!

Jordan23ww — Fri, 31 Mar 2023 15:12:41 GMT

@Ladyk06 wrote:
Yes it is silly! Thank you for the advice. I really prefer to be debt free. I have 6 cards, how many should I leave a balance on?

@Ladyk06 I leave a $5 to $10 balance on one of my cards each month and one of my wife's cards that she's primary on. We are both able to avoid the 0 balance score penalty doing this. Then I just pay the card off after the new statement is issued. Other than that we always pay all the other cards off before the statement their closing date.

Re: Hubby paid CC my score dropped!

Ladyk06 — Fri, 31 Mar 2023 19:12:43 GMT

@Jordan23ww wrote:
@Ladyk06 wrote:
Yes it is silly! Thank you for the advice. I really prefer to be debt free. I have 6 cards, how many should I leave a balance on?
@Ladyk06 I leave a $5 to $10 balance on one of my cards each month and one of my wife's cards that she's primary on. We are both able to avoid the 0 balance score penalty doing this. Then I just pay the card off after the new statement is issued. Other than that we always pay all the other cards off before the statement their closing date.

Thank you so much for this valuable information! I had no idea about this zero balance penalty, until I asked hubby to pay off his AU card on my report, and posed the question to this community. I'm pretty sure I have been hurting my score by keeping zero balances. I appreciate all the input, you guys are amazing.

Re: Hubby paid CC my score dropped!

Jordan23ww — Fri, 31 Mar 2023 23:02:44 GMT

@Ladyk06 wrote:
@Jordan23ww wrote:
@Ladyk06 wrote:
Yes it is silly! Thank you for the advice. I really prefer to be debt free. I have 6 cards, how many should I leave a balance on?
@Ladyk06 I leave a $5 to $10 balance on one of my cards each month and one of my wife's cards that she's primary on. We are both able to avoid the 0 balance score penalty doing this. Then I just pay the card off after the new statement is issued. Other than that we always pay all the other cards off before the statement their closing date.
Thank you so much for this valuable information! I had no idea about this zero balance penalty, until I asked hubby to pay off his AU card on my report, and posed the question to this community. I'm pretty sure I have been hurting my score by keeping zero balances. I appreciate all the input, you guys are amazing.

@Ladyk06 you're welcome! I remember when I finally paid off all my credit card debt in spring 2020 after carrying a balance for years. I got hit with the penalty and was in shock. I worked so hard to get all my balances to $0 and initially it felt like I was being punished. There were people on here who taught me about the $0 balance penalty. Thankfully once you leave a balance and it gets reported your scores will go back up.