Your FICO score is a snapshot of your credit reports at any one moment in time. If all of your accounts are reported $0 at the same time to the CRAs, you'll incur the all zero penalty. There's just a lot of variables in that. The lenders report to the CRAs, the CRAs update your file with the newest info from the lenders, etc. It takes time for everything to be posted, and it varies by when lenders send in info to the CRAs, how long it takes the CRAs to add it to your files, etc. If your revolving accounts all report 0 at the same time, you'll get hit with all zero. Utilization has no memory in current FICO models, so the all zero points will return the moment 1 revolving account reports a balance.
@FreedomHammer wrote:Thanks so much for your reply.
With AZEO, is there a way to avoid the drastic score changes? I tried AZE2, but my other cards are not reliable in their reporting.
First, the AZEO penalty is usually 10-15 points. I wouldn't call that drastic. Second, and this is just my humble opinion, I feel like people stress AZEO too much month to month. Are you applying for new credit soon? Do you need your absolute max score every month? Utilization has no memory. You lose 10 points...you gain 10 points. Who cares? Now, if you're applying for new credit, and need your best scores, I totally get it. If not, just roll and use your cards responsibly in your every day life. You can always get AZEO implemented in 4-5 weeks anytime you choose to prepare for a credit application.
If you're just determined to have AZEO optimized every month, the method is pretty straightforward. Make a spreadsheet or set reminders in your phone for every account's statement closing date. Pay all to $0 2-3 days before your statement closes except one to ensure payments have enough time to post, and don't use a card until you see the statement has closed with a $0 balance. For your 1 card with a balance, make a payment leaving a small amount ($10 is fine) 2-3 days before your statement closes, and don't use it until your statement closes with the small balance. Cap One is the perfect AZEO card, as you can make a payment on your actual statement closing date before the cutoff time, and it will post the same day. This should optimize AZEO every single month. If you mess it up...again, utilization has no memory. Just try again the next month. I just simply wouldn't stress over it month to month, but that's just me.
@FreedomHammer wrote:"as you can make a payment on your actual statement closing date before the cutoff time, and it will post the same day. This should optimize AZEO every single month"
This I don't understand. I have a $6 balance now and it closes on the 18th. I will make a payment on the 19-21, as I've gotten caught with C1 before. Wouldn't I want to wait a couple days after statement close?Also, is $6 enough? That's 1% of my measly $600 limit.
Are you saying to pay it down to 1%
I think you're a little confused on when your accounts report and what balances are reported to the CRAs. For every card I'm aware of except US Bank and Elan Financial (and I guess Chase bc they report anytime an account is paid to $0), the reported balance and utilization of any account is a snapshot of your account on your statement closing date. Whatever the balance is on your account on its statement closing date is what is reported. To practice AZEO, you have to make payments to get the balances to the desired level BEFORE your statement closes. Your statement balances on every account should be $0 with no payment due except for 1 account. The balance on the 1 remaining account should be under 5% of the credit limit of the account. 5% is believed to be the lowest possible threshold for utilization scoring. For your $600 Cap One card, make a payment on your statement closing date (or a day or 2 before) to drop your balance to $10, and let your statement close with a balance of $10. Pay all the rest to $0 BEFORE their individual statements close, and have their statement balances report $0. This is AZEO.
@FreedomHammer wrote:Thank you. That cleared up my confusion.
Fill you in on a trick I did when I started rebuilding. You can change statement dates with most creditors. So all my cards statement dates fall between the 12th and 15th. Paid before due date on my AZEO card. Falls on the second payday of the month. We all know what happens on the first. Rent ot Mortgage. Less stress. KISS method.
