topic Re: Accounts with balances in General Credit Topics

Accounts with balances

CreditPoor — Sat, 09 Mar 2024 18:14:30 GMT

My overall card utilization is 2%. I generally let 4 accounts post with a balance of $5 or $10 because I was getting dinged for letting all my accounts post a 0 balance when I paid them before statement closing. Now I'm getting dinged because they are reporting balances, You just can't win with this system. It doesn't reward you for being responsible and paying your debt. In a time where credit card debt is skyrocketing and delinquency rates are through the roof, you'd think FICO would encourage and reward people for being responsible and debt free

Re: Accounts with balances

JoeRockhead — Sat, 09 Mar 2024 18:27:46 GMT

You're probably seeing a slight penalty for "having too many accounts with balances" try only letting 2 cards post small balances and see what happens.

Re: Accounts with balances

NoHardLimits — Sat, 09 Mar 2024 18:29:26 GMT

For me, the score ding for "accounts with balances" starts when I let 50% or more of my accounts report. I've just learned to keep the number of reporting accounts to less than half.

Re: Accounts with balances

CreditPoor — Sat, 09 Mar 2024 18:35:38 GMT

Do loan balances affect it? I have 2 pledge loans paid down to 97%.

Re: Accounts with balances

JoeRockhead — Sat, 09 Mar 2024 18:41:35 GMT

@CreditPoor wrote:
Do loan balances affect it? I have 2 pledge loans paid down to 97%.

Loans are scored more by your on time payment history than anything... However, when you get down to one loan and the remaining balance gets down to under 9% of the original balance, most people see a decent jump in their scores.

Re: Accounts with balances

GZG — Sat, 09 Mar 2024 18:53:31 GMT

@CreditPoor wrote:
Do loan balances affect it? I have 2 pledge loans paid down to 97%.

2 accounts with balances is worse than 1 account with a balance, so very slightly, yes.

Re: Accounts with balances

CorpCrMgr1 — Sat, 09 Mar 2024 19:49:23 GMT

@CreditPoor wrote:
My overall card utilization is 2%. I generally let 4 accounts post with a balance of $5 or $10 because I was getting dinged for letting all my accounts post a 0 balance when I paid them before statement closing. Now I'm getting dinged because they are reporting balances, You just can't win with this system. It doesn't reward you for being responsible and paying your debt. In a time where credit card debt is skyrocketing and delinquency rates are through the roof, you'd think FICO would encourage and reward people for being responsible and debt free

I totally agree with you. I've played this FICO for years. It doesn't make sense.

Re: Accounts with balances

flexin222 — Sat, 09 Mar 2024 20:27:25 GMT

hey CP, there's no rhyme or reason, just the so-called ALGORHYTM. I've learned from trying to keep that FICO & CRYPTO climbing to just let God take the wheel. I'm sure we can help God by helping a little in a human way, but you get it. The 30% rule works and so do others that we've learned and In my humble opinion...They want us in debt! I've noticed over the years if you carry some debt and give up a little interest while not carrying the debt too long...The numbers go up. So, I've got debt and my numbers keep going up with no pullback, like cypto does. I'll let y'all know when I pay it all off. A little unsolicited advice from a my FICO bro non professional retiree...Buy and HODL Bitcoin, you won't be sorry!

Re: Accounts with balances

Zoostation1 — Sat, 09 Mar 2024 23:15:29 GMT

@GZG Are you referring to loans only or revolvers too? I agree on loans, but is there any significant difference if more than one revolver is reporting as long the percentage of accounts with balances is low? I saw more of a negative on scoring (4pts on a dirty profile) from letting a card report 32% when AZEO (1/4 at the time) with 7.1% aggregate utiilization than when I'm 2/5 with no cards crossing 29% and 8-8.5% aggregate reporting. FWIW this is all FICO 8 i'm referencing.

Re: Accounts with balances

GZG — Sat, 09 Mar 2024 23:23:08 GMT

@Zoostation1 wrote:
@GZG Are you referring to loans only or revolvers too? I agree on loans, but is there any significant difference if more than one revolver is reporting as long the percentage of accounts with balances is low? I saw more of a negative on scoring (4pts on a dirty profile) from letting a card report 32% when AZEO (1/4 at the time) with 7.1% aggregate utiilization than when I'm 2/5 with no cards crossing 29% and 8-8.5% aggregate reporting. FWIW this is all FICO 8 i'm referencing.

I'd imagine it's going to depend based on the file, and the accounts with balances metric is small and won't be easily seen unless you're setting out to see the impact of it and arranging it perfectly, so it's the only potential factor that you're looking at

it also doesn't surprise me that going over 29% on one card is a worse score penalty than two accounts with balances

it also wouldn't surprise me if a clean profile had an even larger penalty for >30% on one card for <30% on two cards

Re: Accounts with balances

Thomas_Thumb — Sun, 10 Mar 2024 23:22:06 GMT

Key points:

1. Fico looks at aggregate revolving utilization. Aggregate above 9% results in a score penalty. Some see a penalty going above 5% utilization.

2. Fico looks at individual card utilizations and scores based on card with the highest % utilization. Going above 29% often causes a score penalty and going above 49% a larger penalty. Some mention 9% might be a threshold as well.

3. Cards with utilizations at 80% and above are considered maxed out and may further hurt score.

4. Fico looks at # of open accounts with balances. Too many accounts with balances results in a score penalty. With credit card accounts, the % of total open accounts is important. For me 50% or less with balances is ok. More than 50% and Fico starts penalizing.

5. Fico penalizes for "no recent revolving account activity". How is this determined? Fico simply looks at all your reported open REVOLVING account balances (charge cards and AU cards excluded). If the balances are all zero, then a no activity penalty is assigned - even if one or more cards had been used.

Given the OP has atleast 5 cards; Best strategy - IMO:

1. Allow small monthly balances to report on 2 revolving cards. If the OP drops to only 1 reporting the all zero penalty is still avoided.

2. For cards that do report a balance, the balance should be less than 9% of the card's CL. Reporting a set amount of $5, $10 or $20 is ok but, higher is ok if under 9%.

3. Maintain aggregate utilization under 5%. No need to manage to less than 2%.

Full disclosure - I personally just let cards report monthly balances naturally as long as each card UT would be under 29% and aggregate UT under 9%. Then PIF every balance.

Re: Accounts with balances

SouthJamaica — Mon, 11 Mar 2024 03:17:43 GMT

@CreditPoor wrote:
My overall card utilization is 2%. I generally let 4 accounts post with a balance of $5 or $10 because I was getting dinged for letting all my accounts post a 0 balance when I paid them before statement closing. Now I'm getting dinged because they are reporting balances, You just can't win with this system. It doesn't reward you for being responsible and paying your debt. In a time where credit card debt is skyrocketing and delinquency rates are through the roof, you'd think FICO would encourage and reward people for being responsible and debt free

You willl probably increase your score by letting only 1 or 2 accounts report a small balance.