topic Re: Does rounding apply for the all-zero penalty? in Understanding FICO® Scoring

Does rounding apply for the all-zero penalty?

JonahK — Wed, 26 Jul 2023 18:57:27 GMT

Obviously, for FICO Score 8, there is a penalty for having all cards reporting a zero balance. For the purposes of calculating this penalty, is there a balance that is low enough to be rounded to zero? Or does having a balance of even a single cent on a card prevent the penalty from being applied?

Re: Does rounding apply for the all-zero penalty?

SouthJamaica — Wed, 26 Jul 2023 19:54:57 GMT

@JonahK wrote:
Obviously, for FICO Score 8, there is a penalty for having all cards reporting a zero balance. For the purposes of calculating this penalty, is there a balance that is low enough to be rounded to zero? Or does having a balance of even a single cent on a card prevent the penalty from being applied?

IMHO it's risky for it to be less than $10 or so.

Re: Does rounding apply for the all-zero penalty?

Kforce — Thu, 27 Jul 2023 17:34:51 GMT

@JonahK wrote:
Obviously, for FICO Score 8, there is a penalty for having all cards reporting a zero balance. For the purposes of calculating this penalty, is there a balance that is low enough to be rounded to zero? Or does having a balance of even a single cent on a card prevent the penalty from being applied?

I do know some issuers report zero for balances that are less than a threshold.

Many report zero for < 1 dollar and some have reported on the forum < 5 dollars.

If doing AZEO and wanting a card to report non zero, I would use at least 5 dollars.

As long as it is > 5 .and. < 0.9% CL you should be gold.

As @SouthJamaica said I just put ~10.

Pick a card and every month leave a little less.

Become our all zero threshold tester.

Re: Does rounding apply for the all-zero penalty?

Anonymalous — Fri, 28 Jul 2023 14:56:33 GMT

@JonahK wrote:
Obviously, for FICO Score 8, there is a penalty for having all cards reporting a zero balance. For the purposes of calculating this penalty, is there a balance that is low enough to be rounded to zero? Or does having a balance of even a single cent on a card prevent the penalty from being applied?

I don't know if there's a minimum dollar threshold, but I can definitively say that on the FICO scores I have access to, I see a penalty when all my cards report $0, but not when there's a positive balance that rounds down to 0%. (I do it fairly frequently.)

Re: Does rounding apply for the all-zero penalty?

OmarR — Fri, 28 Jul 2023 23:43:59 GMT

I've rotated a $1 with at least half of the cards in my signature. They have always reported and never a penalty.

Re: Does rounding apply for the all-zero penalty?

mgood — Sat, 29 Jul 2023 01:39:40 GMT

@Anonymalous wrote:

I don't know if there's a minimum dollar threshold, but I can definitively say that on the FICO scores I have access to, I see a penalty when all my cards report $0, but not when there's a positive balance that rounds down to 0%. (I do it fairly frequently.)

Thanks. I've wondered if it rounds to 0% if you'd get the penalty even though it is not $0.

Not that I have that problem to worry about right now, lol, but for future reference.

Re: Does rounding apply for the all-zero penalty?

FranknBeans — Thu, 17 Aug 2023 19:12:11 GMT

I have had small balances of a few dollars get paid by the credit card company. (Discover).

Re: Does rounding apply for the all-zero penalty?

HalFarmer — Fri, 18 Aug 2023 10:48:12 GMT

Thanks for the info, I didn't know it.

Re: Does rounding apply for the all-zero penalty?

FalconSteve — Sat, 19 Aug 2023 06:58:51 GMT

@JonahK wrote:
Obviously, for FICO Score 8, there is a penalty for having all cards reporting a zero balance. For the purposes of calculating this penalty, is there a balance that is low enough to be rounded to zero? Or does having a balance of even a single cent on a card prevent the penalty from being applied?

Cards report in whole dollars, but if the card reports $1 balance, it doesn't round beyond that

Re: Does rounding apply for the all-zero penalty?

FalconSteve — Sat, 19 Aug 2023 07:03:19 GMT

@mgood wrote:
@Anonymalous wrote:

I don't know if there's a minimum dollar threshold, but I can definitively say that on the FICO scores I have access to, I see a penalty when all my cards report $0, but not when there's a positive balance that rounds down to 0%. (I do it fairly frequently.)
Thanks. I've wondered if it rounds to 0% if you'd get the penalty even though it is not $0.
Not that I have that problem to worry about right now, lol, but for future reference.

It does not. I have ~$200k in available credit and I would be screwed if had to keep 5-10% utilization every month.

Re: Does rounding apply for the all-zero penalty?

FalconSteve — Sat, 19 Aug 2023 07:08:38 GMT

@FranknBeans wrote:
I have had small balances of a few dollars get paid by the credit card company. (Discover).

I have had Wells Fargo write off $2 and Apple Card/GS pay $0.99, AmEx used to. Truist only writes off credit balances. Discover SOMETIMES writes off small balances. Citi & SoFi/TBoM & REDcard/TDBank haven't ever written off a penny in my experience.

Re: Does rounding apply for the all-zero penalty?

mgood — Sun, 20 Aug 2023 15:10:30 GMT

@FalconSteve wrote:
@mgood wrote:
@Anonymalous wrote:

I don't know if there's a minimum dollar threshold, but I can definitively say that on the FICO scores I have access to, I see a penalty when all my cards report $0, but not when there's a positive balance that rounds down to 0%. (I do it fairly frequently.)
Thanks. I've wondered if it rounds to 0% if you'd get the penalty even though it is not $0.
Not that I have that problem to worry about right now, lol, but for future reference.
It does not. I have ~$200k in available credit and I would be screwed if had to keep 5-10% utilization every month.

That's what I was thinking. I'm at ~~$172,750~~ $173,850 [Just now got a CLI. Off to the other forum ] on credit card limits. Even 1% of that would be $1727, but people with much higher limits that me have suggested that it should ideally be below $1000. If I got my credit card debt down to $850, for example, That would be less than half of a percent and could round to 0%. I just wanted to make sure that would not earn the all-zero penalty. People say having $10-20 on one card is fine, or even $1, I suppose.

I have a ways to go before I worry about that. I have recently gotten down to 4%, which is the lowest I've been in some time.

I'm not paying interest. The bulk of mine is on cards that are still in the 0% interest introductory period. Others are cards that I pay off before the due date, but might not always get paid off before the statement date.

Re: Does rounding apply for the all-zero penalty?

SouthJamaica — Mon, 21 Aug 2023 02:14:23 GMT

@mgood wrote:
@FalconSteve wrote:
@mgood wrote:
@Anonymalous wrote:

I don't know if there's a minimum dollar threshold, but I can definitively say that on the FICO scores I have access to, I see a penalty when all my cards report $0, but not when there's a positive balance that rounds down to 0%. (I do it fairly frequently.)
Thanks. I've wondered if it rounds to 0% if you'd get the penalty even though it is not $0.
Not that I have that problem to worry about right now, lol, but for future reference.
It does not. I have ~$200k in available credit and I would be screwed if had to keep 5-10% utilization every month.
That's what I was thinking. I'm at ~~$172,750~~ $173,850 [Just now got a CLI. Off to the other forum ] on credit card limits. Even 1% of that would be $1727, but people with much higher limits that me have suggested that it should ideally be below $1000. If I got my credit card debt down to $850, for example, That would be less than half of a percent and could round to 0%. I just wanted to make sure that would not earn the all-zero penalty. People say having $10-20 on one card is fine, or even $1, I suppose.

I have a ways to go before I worry about that. I have recently gotten down to 4%, which is the lowest I've been in some time.
I'm not paying interest. The bulk of mine is on cards that are still in the 0% interest introductory period. Others are cards that I pay off before the due date, but might not always get paid off before the statement date.

As long as there's a card with a $10-20 balance or so, you won't get hit with the all zero penalty.

Re: Does rounding apply for the all-zero penalty?

Kforce — Mon, 21 Aug 2023 16:14:03 GMT

@SouthJamaica wrote:
As long as there's a card with a $10-20 balance or so, you won't get hit with the all zero penalty.

This ^^^^^

Re: Does rounding apply for the all-zero penalty?

SeeingTheLight — Sun, 17 Sep 2023 05:18:47 GMT

Really glad this question was asked . Currently have $141k of available credit across 7 cards and paid down a $13k balance in my CSP on one swoop. Left with a $16 reported balance on another account and Experian app has me at 0% utilization across the three scores. I'm wondering if I'm being penalized or not.

Re: Does rounding apply for the all-zero penalty?

SouthJamaica — Sun, 17 Sep 2023 16:11:30 GMT

@SeeingTheLight wrote:
Really glad this question was asked . Currently have $141k of available credit across 7 cards and paid down a $13k balance in my CSP on one swoop. Left with a $16 reported balance on another account and Experian app has me at 0% utilization across the three scores. I'm wondering if I'm being penalized or not.

No you're not.

Re: Does rounding apply for the all-zero penalty?

Horseshoez — Sun, 17 Sep 2023 16:58:14 GMT

@SeeingTheLight wrote:
Really glad this question was asked . Currently have $141k of available credit across 7 cards and paid down a $13k balance in my CSP on one swoop. Left with a $16 reported balance on another account and Experian app has me at 0% utilization across the three scores. I'm wondering if I'm being penalized or not.

To expound on @SouthJamaica's comment, a 0% utilization has absolutely nothing to do with the All-Zero penalty (unless all of your accounts report exactly zero for the month, then both are true). I virtually always show 0% utilization, however, I've only been hit with the AZ penalty a few times over the last several years.