Zero revolving debt... What a hit to the FICO!

[jaysdad2k]

Thanks to the Board I have a nice assortment of cards, and fortunately no need to run them up right now. I have played the FICO game and PIF before the closing date, so they show activity but no balances, except one. Credit One insists on billing that monthly fee and showing $5 on my report every month.

In November they agreed to waive my fee for 6 months and credited $23 to my account. At last! I can show a 0 balance on revolving accounts instead of that stupid $5.

Well, I got the news today, oh boy! TU went down from 692 to 680! 12 points! "We do not show any responsible use of revolving debt".

EX, which is clean, from 749 down to 736. 13 points! They don't say anything related to the zero balance.

There is nothing new on my reports. No new accounts, or inquiries, except my Amex accounts from May and June should be hitting the 6 month bump.

I got a free EQ FICO (Thank you myFICO!), which was unchanged at 693. And they sent me an alert last night that there were no significant changes this month. Maybe EQ doesn't care, but I'm not pulling until next month at least.

Now that I have 24 months of history on Credit One, I can close it, and not mail in that check for what is now $6.50. But I'm going to show a balance on something every month from now on.

[Anonymous]

A lot of us get a dip when all of our revolving balances report zero balances. That stupid fee was probably helping you in your FICO game, allowing a small balance to report to show that you're actually responsibly using credit, vs. just responsibly having credit.

Fortunately, this is remedied easy enough. Just let a small balance report on one (certainly no more than half of your cards) card, no more than 1-9% utlization, and you should recover your lost points.

[Anonymous]

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@Anonymous wrote:

A lot of us get a dip when all of our revolving balances report zero balances. That stupid fee was probably helping you in your FICO game, allowing a small balance to report to show that you're actually responsibly using credit, vs. just responsibly having credit.

Fortunately, this is remedied easy enough. Just let a small balance report on one (certainly no more than half of your cards) card, no more than 1-9% utlization, and you should recover your lost points.

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I have been a faithful believer in leaving a small balance but here is a question in hypothesis that I want to pose and see what everyone thinks:

If you have 5 cards and you have a balance of say $5 on one and zero on the rest. Doesn't the fact that those other 4 will be reporting as dormant. Doesn't the dormant status hurt more? My own logical way of looking at this comes to the conclusion that a small balance should ride on every card at some point and maybe cycle through them each month. Wouldn't that be better? No card goes "dormant" this way and you never show a balance more than $5 on any card at a given time, will that help better or is this just an overthink and doesn't matter? Thank you.

[Creditaddict]

If the card reported a balance last month and this month reports $0, that would be a  change from last month so it would not be doormant.  So as long as you have a charge report 1 every 3 months, I think your good to keep all accounts active and optimizing score.

[Anonymous]

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@Creditaddict wrote:
If the card reported a balance last month and this month reports $0, that would be a  change from last month so it would not be doormant.  So as long as you have a charge report 1 every 3 months, I think your good to keep all accounts active and optimizing score.

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you misunderstood me, please read it again. if you have 5 cards and keep all zero except for the same one, then the others would show as dormant. obviously a card that just changed balances will not be dormant, that's a given.

[Creditaddict]

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@Anonymous wrote:

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@Creditaddict wrote:
If the card reported a balance last month and this month reports $0, that would be a  change from last month so it would not be doormant.  So as long as you have a charge report 1 every 3 months, I think your good to keep all accounts active and optimizing score.

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you misunderstood me, please read it again. if you have 5 cards and keep all zero except for the same one, then the others would show as dormant. obviously a card that just changed balances will not be dormant, that's a given.

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errr, okay, misunderstood the same account being used each month.

I use one account for the entire month, then I switch it out for one of my other cards and so on.

[Anonymous]

Thank you, then I will take that as you agree with rotating the card one at a time with a balance each month to both keep the util going and also to prevent dormancy.

[Anonymous]

Even showing a zero balance I thought based on payments and other things they could tell you used a card.

[fishbjc]

I've been told over and over again to allow a little something show.  1% or so. 

[Anonymous]

When I look at my full credit reports, my monthly "high balance" reports even when my balance is zero. I've never gotten the dormant ding from rotating a card out, say after the 4th month of reporting a zero balance after the statement cut. Only if I haven't used the card in 3-4 months does it seem to go "dormant".

For example, for the first time since last summer, my BoA card reported a balance. I've been using it faithfully every month, and PIFing before the statement cuts. I didn't get get the "blow off the dust" ding from using a card that was previously dormant. I'm assuming it's because it wasn't. I just got the scorewatch alert, earlier today, noting the significant change to the balance. There was no change in my score, and (at present) there are three balances reporting out of three of my six cards.

On the other hand, I just made put a recurring bill on my Juni B&N Mastercard, because it was going dormant. I hadn't used it since the end of October. I'm almost certain that your FICO score is somehow able to take into account that the card was used, vs. a card that really hasn't been, based on the data that's fed from the monthly high balance/usage.

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@Anonymous wrote:

I have been a faithful believer in leaving a small balance but here is a question in hypothesis that I want to pose and see what everyone thinks:

If you have 5 cards and you have a balance of say $5 on one and zero on the rest. Doesn't the fact that those other 4 will be reporting as dormant. Doesn't the dormant status hurt more? My own logical way of looking at this comes to the conclusion that a small balance should ride on every card at some point and maybe cycle through them each month. Wouldn't that be better? No card goes "dormant" this way and you never show a balance more than $5 on any card at a given time, will that help better or is this just an overthink and doesn't matter? Thank you.

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