AZEO vs AZET?

[Anonymous]

Does anyone know how much of a difference it makes to be 100% AZEO vs close? As in, what if instead of having only one account report a small balance, I have two reporting a small balance? Both perhaps only around 1% of their utilization, out of around 10 open accounts plus another 3-4 closed ones.

Reason I ask is that I have all kind of automated payments running on all kind of cards, and I'm realizing it's a ton of work to go around paying everything in just the right moment so that nothing ever reports. But I get pretty close. Last month two reported a balance, and both were under $100 each on cards with >$20k limits. But still, a balance.

So how hard should I work at driving this down to being truly one card. What if next month three report like that? 

I have seen about a 5-10 point increase in my score from driving my utilization down from where it was (letting everything report all the time on all cards, with about 10% util on the highest utilization card ) to now down to "AZET" where it's well under 1% on every card and well udner 1% overall--but not quite down to just one card yet.

[Glen_M]

How many revolving and installment accounts do you have, active and closed?

AZEO is in some regards a simplification of more complex rules.  There is an underlying assessment of: do less than half of your revolving accounts have balances?  It is one of the reasons that 3 or more revolvers are suggested, because that is where the math one = less than half becomes possible -- and many people may observe that having balances on two or three acounts appears to make no difference to their scores with their profile, because they have lots of accounts, and two or three is less than half for them.

[Anonymous]

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@Anonymous wrote:

Does anyone know how much of a difference it makes to be 100% AZEO vs close? As in, what if instead of having only one account report a small balance, I have two reporting a small balance? Both perhaps only around 1% of their utilization, out of around 10 open accounts plus another 3-4 closed ones.

Reason I ask is that I have all kind of automated payments running on all kind of cards, and I'm realizing it's a ton of work to go around paying everything in just the right moment so that nothing ever reports. But I get pretty close. Last month two reported a balance, and both were under $100 each on cards with >$20k limits. But still, a balance.

So how hard should I work at driving this down to being truly one card. What if next month three report like that? 

I have seen about a 5-10 point increase in my score from driving my utilization down from where it was (letting everything report all the time on all cards, with about 10% util on the highest utilization card ) to now down to "AZET" where it's well under 1% on every card and well udner 1% overall--but not quite down to just one card yet.

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The key is the phrases I have highlighted above.  You are engaged in a ton of work.  It's unclear why you want to do all that work.  Are you about to buy a house?

A common belief is that AZEO will help your score grow over time.  It doesn't.  As an example, suppose you had 20 cards and that for 24 months all of them reported a positive balance.  Suppose further that your utilization was in the range of 31-48% that whole time.  Then at month 24 you implemented AZEO with a small balance on the remaining card. 

Your score at month 25 would be no worse than if you had aggressively implemented AZEO and the 1% utilization the whole 24 month period.

AZEO only has value in the 40 days before a crucial credit pull, typically a home purchase since it's such a big deal and because those models are much more likely to care about number of accounts reporting a balance.   (The Bankcard Enhanced flavors of FICO also care about this scoring factor.)

So my advice is to completely ignore AZEO unless you are planning to buy a house. 

If you are planning to buy a house, then my advice is to suck it up and implement AZEO.  It's not that hard to do for this one major purchase in your life.  One strategy to make it easier is to pay a good deal more than you need to have a zero balance.  I.e. create a negative balance on 2-3 cards.  Then if you need to get some gas or groceries or a Netflix charge comes through you are ok.

All that said, we can still probably speculate about the scoring difference for a sensitive model between AZEO, AZE2, and AZE3 if you tell us all your open accounts (including loans and charge cards).  But there's almost certainly no practical need to care about that, for the reasons I give above.

[SouthJamaica]

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@Anonymous wrote:

Does anyone know how much of a difference it makes to be 100% AZEO vs close? As in, what if instead of having only one account report a small balance, I have two reporting a small balance? Both perhaps only around 1% of their utilization, out of around 10 open accounts plus another 3-4 closed ones.

Reason I ask is that I have all kind of automated payments running on all kind of cards, and I'm realizing it's a ton of work to go around paying everything in just the right moment so that nothing ever reports. But I get pretty close. Last month two reported a balance, and both were under $100 each on cards with >$20k limits. But still, a balance.

So how hard should I work at driving this down to being truly one card. What if next month three report like that? 

I have seen about a 5-10 point increase in my score from driving my utilization down from where it was (letting everything report all the time on all cards, with about 10% util on the highest utilization card ) to now down to "AZET" where it's well under 1% on every card and well udner 1% overall--but not quite down to just one card yet.

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In my opinion, on most if not all of your scores, it wouldn't cost you a single point.

[rbentley]

I have 8 revolvers. AZEO gave me a 3pt gain, for a lot of work. Moving to AZET did not result in any additional point gain or loss. Just my experience on my profile. As always, YEMV.

[Anonymous]

I have only noted a loss of a few points when I pass 1/2 of my cards with a balance. Some find a loss after passing 1/3 of their cards with a balance as well. 

Its honestly not worth it and it creates a lopsided picture of your spending habits if you’re not letting things report. I decided to stop caring about it. 

[Revelate]

FICO 8 for me is 1/2 revolvers for EX/TU, and 1/3 and 1/2 of revolvers for EQ to be explicit.

Incidently last time I checked the total drop for all three at 1/2 were basically the same, the 1/3 line was like 3 points on EQ FICO 8 (/yawn).

The problem comes in when we're talking older scores as they are more sensitive: I dropped from 723 -> 706 on EQ FICO 5 month over month on DCU's reported scores.  I'm not entirely sure what happened there, but I'm fairly confident it's either revolvers or accounts with balances... I'm actually planning to pull scores tomorrow to get before scores as I think way lates are calculated mine hit the 1 year mark anyway April 1st so I will double-check that, but that's a whole tier on a mortgage application.

That's why we keep harping AZEO when it matters.  It's an oversimplification of the actual algorithm implementation as CGID stated, but it works for literally everyone assuming the revolver counts (some don't on some models, use a national bank card under 25k CL or so you've been warned haha) in that model.

Fact is though as CGID also most excellently stated: balances almost never matter if you're PIFing anyway even after the statement cuts.

Don't be a slave to your credit management, there's better things to focus on in life.

[NRB525]

OP, your Utilization is very low. You win.

End of discussion, in my opinion.

[Anonymous]

IMO, OP, you'd see no score change at all in being at AZE2 or even AZE3 compared to AZEO based on your file thickness.  It's simple enough for you to test if you really want to know the answer for your personal profile; I've tested it for S&G's just to know.  Regardless, the micromanaging isn't necessary unless you're looking to maximize your scores for a certain reason and as a safe generalization for everyone implementing AZEO is going to always give you the best possible score regardless of how many accounts you have if there's an important application approaching.

[Anonymous]

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@Glen_M wrote:

How many revolving and installment accounts do you have, active and closed?

AZEO is in some regards a simplification of more complex rules.  There is an underlying assessment of: do less than half of your revolving accounts have balances?  It is one of the reasons that 3 or more revolvers are suggested, because that is where the math one = less than half becomes possible -- and many people may observe that having balances on two or three acounts appears to make no difference to their scores with their profile, because they have lots of accounts, and two or three is less than half for them.

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I have 10 open and 4 closed. So it seems that I could have a balance reporting on up to 4 before it would matter? In that case I'll just keep on doing what I'm doing -- paying stuff down to zero just before statement cuts. The problem with that is a few charges slip through at the last moment, or go from pending to settled, or whatever, and I end up with a few small balances. 

But from what you're saying that's going to be good enough.