small or $0 balance - better for Utilization ratio and FICO?

[Anonymous]

I have paid off 3 cards and put them in the sockdrawer. Is it better to leave them at $0, or carry a small balance ($10-20). Better to have utilization of 0% or 2-3%?

[smallfry]

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@Anonymous wrote:

I have paid off 3 cards and put them in the sockdrawer. Is it better to leave them at $0, or carry a small balance ($10-20). Better to have utilization of 0% or 2-3%?

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The model seems to favor carrying a balance of between 1-9% on the cards. So I've been told. If finance charges are a concern make it 1%. That's what I am doing.

[Anonymous]

Ahh. Glad you asked. Less than 1%. But here is the "very important" thing. If you go too long in the sock drawer they go bad, well not bad, dormant. Dormant cards are not counted the same way on your credit report. I think it is between 6 months and 1 year for it to become dormant. Just use the card every 5 months to prevent that. If already dormant, just use it once and it comes out of dormant status.

[MidnightVoice]

My two credit cards actually report on my statement date.  Thus any utilization is recorded, and I can pay the full balance and avoid finance charges.

Good part - the cards are used.

Bad part - utilization seems high EVEN if I pay everything off every month

[Tuscani]

Carrying a 1-9% balance is ideal.

[fused]

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Tuscani wrote:

Carrying a 1-9% balance is ideal.

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On another thread you said this too.  Of the three FICO scores, I noticed EX seems to be the CRA that punishes you for having even small balances like your suggesting on multiple cc's.  I have three revolving cards and a Macy's, should all have 1-9% balances.  Or just one or two?  Please explain.

[MidnightVoice]

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fused111 wrote:

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Tuscani wrote:

Carrying a 1-9% balance is ideal.

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On another thread you said this too.  Of the three FICO scores, I noticed EX seems to be the CRA that punishes you for having even small balances like your suggesting on multiple cc's.  I have three revolving cards and a Macy's, should all have 1-9% balances.  Or just one or two?  Please explain.

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To quote from my Experian report of last week:

Your FICO score evaluates your total revolving credit balances in relation to your total credit limits on those accounts. In your case, this ratio of balances to credit limits is too high.

Keep this in mind: This credit usage ratio is one of the most important factors to your FICO score, so you should work on paying down your balances. Your FICO score looks at the ratio of revolving debt, but not in which accounts the debt resides. Therefore, consolidating or moving your debt from one account to another will usually not help your FICO score since the same total amount is owed.

 For FICO High Achievers, this ratio is 7%, on average.

[Tuscani]

For me, carrying 1-9% on each card has been ideal.

[MidnightVoice]

I am just going to have to apply for CL increases every year 

[Anonymous]

Don't leave them with a $0 balance.  A new CC of mine is reporting a $0 balance even though I made a small purchase to get a balance.  I guess they reported before my purchase showed up.  It's being listed as a negative factor on my credit summary (below):

 There is no recent activity on your credit cards.

1. Your credit report shows no open credit cards or it does not report recent information (such as balance or credit limit) about any of your credit cards. Your FICO score evaluates your mix of credit cards, installment loans, and mortgages. People who demonstrate responsible use of different types of credit are generally less risky to lenders.
2. What to do about this: You might want to show new activity on any credit card. If you already have a credit card, you can show new activity by using it and paying it back on time. If you don't have a credit card, consider opening one. However, be aware that the credit inquiry associated with applying for a new card may lower your FICO score in the short term.