topic Re: Maintaining Zero Balance in Understanding FICO® Scoring

Maintaining Zero Balance

Anonymous — Wed, 20 Jun 2007 00:31:13 GMT

Hi Folks,

I recently applied for and recieved a Capital One card. After reading this site, I am learing that this may not have been the best option. I have no plans of using the card. I paid the anual fee in full and I have not made a purchase on the card. How does inactivity affect my FICO score. Would I be better off making small purchases and paying of the balance each month?

WBLAKE

Re: Maintaining Zero Balance

Tuscani — Wed, 20 Jun 2007 00:40:02 GMT

Inactivity will not hurt you.. But it won't help you either. Either max it out and pay it off AFTER the statement cuts, or close it.

Re: Maintaining Zero Balance

Anonymous — Wed, 20 Jun 2007 02:53:29 GMT

Yep!

I can add to this. The reason why maxing this card out helps is because Cap1 mostly or never reports credit limits. No credit limit posted doesn't help your UTL. After you max out the card the high balance is recorded on your credit report and then excepted as credit limit. So when you use other credit cards they can take advantage of the total UTL of all available credit effecting your score or I should say hurting your score. You do not have to max out cards that report credit limits. This is an issue with Cap1 cards.

But I wonder... Does a dormant card (card with no activity for longer than 12 months) still have it's credit line counted?

Re: Maintaining Zero Balance

Anonymous — Wed, 20 Jun 2007 02:58:12 GMT

Not using it will just make it go dormant after a long enough time. And you are just paying a fee to keep it. If you use it every few months and never pay late it will help you. Keep balances down. Not using it at all is not worth keeping it since it costs you money.

Was this a Cap1 card with Fee or With Out Fees? I wonder if their Prime cards report credit limits? That would change this advise I give. The advice I gave you was for the Cap1 card with fees.

Message Edited by ilovepizza on 06-19-2007 07:58 PM

Re: Maintaining Zero Balance

Anonymous — Wed, 20 Jun 2007 03:01:02 GMT

OK so that leads me to another questions. Do I have to allow the high balance to bill or can I pay it off prior to the closing date of the bill.

I have a Credit One Bank Card w a 200 dollar limit. The Cap One account is $300. If I max out the CAP One, wont that kill my utilization and therefore hurt my FICO score?

WBLAKE

Re: Maintaining Zero Balance

Tuscani — Wed, 20 Jun 2007 03:04:25 GMT

Dormant or not.. as long as the TL is open it counts against age and util.

OP: You want the high balance to post. Then PIF when you get the statement. Remember, your scores will drop during the month it is maxxed out.

Re: Maintaining Zero Balance

Anonymous — Wed, 20 Jun 2007 03:07:59 GMT

You may want to close one eye when looking at your score when your card is maxed out. hehe. Don't worry it rebounds right after you pay it off.

Re: Maintaining Zero Balance

SoulSmilen — Wed, 20 Jun 2007 05:25:38 GMT

Just a note to make sure you understand.. 'max it out' doesn't mean charge 300 on it. Just get it close.. 275 is plenty (you don't want to risk an over the limit fee). Let it hit your report, then pay it down and use it every few months as advised.

Re: Maintaining Zero Balance

smallfry — Wed, 20 Jun 2007 09:53:22 GMT

Cap One is supposed to start reporting credit limits in 2008. Keep the card. As for them reporting credit limits when I see it I'll believe it. I'm sure they could do it in the flip of a switch.