topic Re: 0% Credit Utilization in General Credit Topics

0% Credit Utilization

Zabathan — Tue, 04 Mar 2014 00:37:57 GMT

I'm new to MyFICO, and am still learning my way around managing my FICO score. I've heard that having a credit utilization percentage of 0 is seen as a negative; is that true? If so, what's the best way you all have found to consistantly have a balance on a card without paying interest?

Re: 0% Credit Utilization

grinlikechelsea — Tue, 04 Mar 2014 00:40:58 GMT

Yes, 0% utili does negatively affect your FICO score.

The way I have manageable balances report is I pay all of my balances on a few cards off while leaving a balance of one or two cards that autopays in full after the statement cuts. That way, I always have 1-9% utilization reporting.

Re: 0% Credit Utilization

-Wade- — Tue, 04 Mar 2014 00:50:03 GMT

@grinlikechelsea wrote:
Yes, 0% utili does negatively affect your FICO score.

The way I have manageable balances report is I pay all of my balances on a few cards off while leaving a balance of one or two cards that autopays in full after the statement cuts. That way, I always have 1-9% utilization reporting.

If it does it can't be much. I have only a very small bal of $40 on 1 card and my scores are the highest they have ever been. I just started getting my Discover Fico score 2 months ago, so i have not had time to play with my utilization yet.

Re: 0% Credit Utilization

gdale6 — Tue, 04 Mar 2014 01:01:10 GMT

O% scores at the 30% util level, you want a small balance reporting on 1 card. Once cent would be good enough to make 1% as FICO rounds it up.

Re: 0% Credit Utilization

bada_bing — Tue, 04 Mar 2014 06:03:11 GMT

Easiest way to not pay interest is to set up autopay from your bank account.

That won't result in totally tweaked scores all the time, but it won't be a "negative".

Quite the contrary, your underlying CR will improve with"age" of PIF payment history.

The score tweak of paying all but one card off right before statement cut will

result in your absolute best score generated from your current report data. I

believe such a score boost isn't as valuable as a lot of posters here seem to think.

If you read through the forums, there are a lot of posts about denials for people who's

scores appear to be good enough to warrant approval. A fico score is a one dimensional

number that imperfectly distills down an entire CR into a single number. But CCC's generally

use their own internal risk assestments generated from data in the CR. I would speculate that

in general, CCC internal models don't "tweak" in the same way that FICO scores do to utilization

optimizing just before the app. In other words, a FICO score "tweaked" isn't really as strong to

CC lenders as the score suggests, their internal scoring at least somewhat discounts the activity.

A person, for example, who scores 670 when just PIF on the due dates but scores 695 when tweaking

scores by paying all but one before the statement date will probably get treated not much differently between

the two behaviors. After all, the underlying CR is the same. That's not a reason to not put your best face

on your CR for apps, but I wouldn't expect it to have the amount of benefit suggested by FICO score alone.

JMHO.

Re: 0% Credit Utilization

mattmix36 — Tue, 04 Mar 2014 06:07:03 GMT

I was wondering about this too. My total revolving credit limit is roughly 150k. I don't want to keep a balance of $1500 to keep a 1% utilization. Say that I have $1-$1000 on one account, would this be rounded up to 1%?

Re: 0% Credit Utilization

Vegas247 — Tue, 04 Mar 2014 06:46:06 GMT

@mattmix36 wrote:
I was wondering about this too. My total revolving credit limit is roughly 150k. I don't want to keep a balance of $1500 to keep a 1% utilization. Say that I have $1-$1000 on one account, would this be rounded up to 1%?

$1-$1000 would definitely be rounded up to 1%......My question mattmix36 to you is, how do you keep all those credit card companies happy? Do you use all your cards every month and spend a lot on them? All my cards in my signature are all brand new, and I want to keep them all happy.

Re: 0% Credit Utilization

Anonymous — Tue, 04 Mar 2014 06:53:31 GMT

@grinlikechelsea wrote:
Yes, 0% utili does negatively affect your FICO score.

The way I have manageable balances report is I pay all of my balances on a few cards off while leaving a balance of one or two cards that autopays in full after the statement cuts. That way, I always have 1-9% utilization reporting.

So total utilization is what counts? So having 0 on a couple cards won't hurt?

Re: 0% Credit Utilization

mattmix36 — Tue, 04 Mar 2014 06:59:45 GMT

I try to spend a little on each card at least once every two months. My reward cards, depending on which categories gives me the most bang for the buck, get used more than my other non-rewards cards. For example, my penfed is used on gas every month to get my 5% kickback, as is my Ink used every month on phone/cable/internet for the 5% kickback, but my non-rewards FNBO visi is used once every other month...typically a $20 purchase just to keep it alive.

Re: 0% Credit Utilization

takeshi74 — Tue, 04 Mar 2014 13:36:38 GMT

@Zabathan wrote:
I've heard that having a credit utilization percentage of 0 is seen as a negative; is that true?

Yup. You can't demonstrate responsible credit usage with no usage.

@Zabathan wrote:
If so, what's the best way you all have found to consistantly have a balance on a card without paying interest?

Keep in mind that paying in full doesn't mean that you're reporting a 0 balance. Balances are typically reported at statement cut (though some cards may report at other times). To report a 0 balance you'd have to pay prior to statement close. If you're paying in full after statement close and by the due date then you're letting a balance report and avoiding interest.

@bada_bing wrote:

The score tweak of paying all but one card off right before statement cut will
result in your absolute best score generated from your current report data. I
believe such a score boost isn't as valuable as a lot of posters here seem to think.
If you read through the forums, there are a lot of posts about denials for people who's
scores appear to be good enough to warrant approval.

I don't bother with it. I have balances repoting on all my cards with ~14% overall utilization and my latest TU FICO from Discover was 794. Sure, it could be better but that's good enough for me and I'd rather not micromanage my utilization. What best for others though is for them to determine. They may see more of a benefit from carefully managing and tweaking utilization.

Additionally, approvals aren't just about scores.

@Anonymous wrote:
So total utilization is what counts? So having 0 on a couple cards won't hurt?

0 on a couple won't hurt. It would be difficult to get to ideal utilization without some at 0. However, overall and individual utilization matter (i.e. you generally don't want to max one or more cards).