Accounts with balances

[Thomas_Thumb]

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.

[SouthJamaica]

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@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

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