9% vs 0%

[Anonymous]

I have become obsessed with paying my balance off as soon as it posts. Everytime I get money, the first thing I do is pay my CC down to 0.

However seeing threads here, there keeps being mentions of a 9% utilization when using CCs. Am I hurting myself by not letting a balance post?

[Anonymous]

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@Anonymous wrote:
I have become obsessed with paying my balance off as soon as it posts. Everytime I get money, the first thing I do is pay my CC down to 0.

However seeing threads here, there keeps being mentions of a 9% utilization when using CCs. Am I hurting myself by not letting a balance post?

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Yes.  FICO gives a penalty of about 20 points (very roughly) when all cards report $0.  You can eliminate that by having one card report a small balance.  Indeed, the simplest way to optimize your CC balances is to have exactly one card report a small balance ($10, $15, whatever) with all other cards reporting $0.

The other threads you remember here are probably not suggesting that you need a utilization of exactly 9% but rather that you want to aim for LESS than 9%.

BTW, keeping all cards zero except one (AZEO) does not help you build a score over time.  It doesn't hurt you either.  But it won't help you in the long game of seeing your scores increase gradually over time.  Thus many people don't worry about AZEO or ultralow utilization.  They just use their cards naturally while making sure their utilization is reasonably low (less than 29% say).  Then they use AZEO in the 40 days before an important credit pull and get all those extra points then.

If you want to do AZEO every month that's ok too.  Either is fine.

[Anonymous]

Paying off your card every time a balance posts will not help your credit score. Also, if you're thinking at all about increasing your credit limit at all on your card(s) I wouldn't suggest this behavior, as you're showing the creditor that you don't need a higher limit since you tend to over manage your balance with ton of payments. If that behavior is simply something you like to do as it makes you feel good that's fine, just be aware that in terms of your credit score it isn't helping anything.

[SouthJamaica]

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@Anonymous wrote:
I have become obsessed with paying my balance off as soon as it posts. Everytime I get money, the first thing I do is pay my CC down to 0.

However seeing threads here, there keeps being mentions of a 9% utilization when using CCs. Am I hurting myself by not letting a balance post?

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As CGID points out, no need to go as high as 9%, but you will get some more points by having one card report a small balance each month, while the others report a zero balance.

[jamie123]

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@SouthJamaica wrote:

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@Anonymous wrote:
I have become obsessed with paying my balance off as soon as it posts. Everytime I get money, the first thing I do is pay my CC down to 0.

However seeing threads here, there keeps being mentions of a 9% utilization when using CCs. Am I hurting myself by not letting a balance post?

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As CGID points out, no need to go as high as 9%, but you will get some more points by having one card report a small balance each month, while the others report a zero balance.

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Yes, this is correct!

In my case I lose 18 points if all cards reort a $0 balance vs one card reporting $3.

[Anonymous]

In most months I let autopay pay my bills, which means it pays my cards the day before the due date, well after the statement cut.

I believe that if I juice my scores by controlling what reports I will get a score in the 780s. But in practice my score is usually in the 760s because of utilization on my cards. I pay in full, but the reported utilization still makes a small difference, 15 to 20 points.

But so what?

760 is high enough to get approved for any card. My goal is to increase that "normal usage" score so that it's consistently higher than anything I need it to be. Right now that's already higher than what I've read is required for anything. I try for CLI on my cards when I can so that my ordinary spending is a smaller amount of utilization and find it interesting to try and maximize this "ordinary" score that way. 

Now if I were applying for a mortgage I'd take no chances, I'd pay down my balances and go in with the highest possible score I could. If I could get a score 50 points higher than it needs to be I'd do that, to impress the mortgage officer as much as possible and try and get the best deal.

But for ordinary applications my 760 is good enough and I'm too lazy to micro manage it.

[Thomas_Thumb]

^ Agreed

That's the way you do it.

[Anonymous]

Confirm others on Fico Score loss as I saw 22 points go out the window (oops ... I goofed). Suspect credit file has an effect. Found a few bucks was all I needed to report not even a 1/2% (surprised me).

[iced]

The easiest way to deal with this is to just pay the statement balance each month. In doing so, you'll never pay interest yet the charges you made since the last statement cut will be shown as your "utilization" come reporting time so you'll look like you're always carrying a balance. Has worked well for me for several years now.

If you use more than one card regularly, you can keep doing whatever you're doing with the other cards currently.