Many of you here already know the impact on scores when utilization reports 0% to CB’s. This thread shares my recent experience and the penalty for letting my CR’s reflect “zero usage.”
For awhile now I’ve been using the AZEO (all zero except one) method, meaning I let only one of my CC’s report a balance less than 28.9% of the card limit (individual) and less then 8.9% of my overall limit (aggregate) when statement cuts and have the rest of my accounts report zero. Whether or not you use the AZEO strategy, keep in mind those individual and aggregate utilization thresholds aforementioned as it may help improve your scores if below them.
I’ve noticed that this AZEO method works for me, but generally is not needed unless you are in the works of seeking new credit, a mortgage or loan.
Recently, my CR’s reflected 0% utilization due to the account being rotated with utilization was last to report among all my cards. Thus, dropping my scores for a short period of time until the account that reflected a balance finally reported.
Prior to this change, the card I was letting report reflected a 3% individual utilization and less than 1% aggregate making a 3% individual dip and minute aggregate decrease.
I was penalized by all 3 Bureau’s, EQ, TU, EX dropping my scores -20, -16, -14 respectively. When my account with a balance (a 3% individual utilization too) finally reported, my scores increased EQ (+23), TU (+16), EX (+16)
Note that points may differ depending on profile type. I have a clean, but thin profile with only a couple years of history.
Using AZEO does not mean you are only using one card per statement period. You can use as many cards you like as long as you pay them down to zero before statement cut, except for one. Hence why I put zero usage in quotation at the end of the first paragraph.
TLDR: As a result of letting util report 0%, my scores declined -20, -16, -14 for EQ, TU, EX respectively. Then scores inclined EQ (+23), TU (+16), EX (+16) when a 3% utilization (individual) and less than 1% aggregate. The exact utilization’s for which was reflected prior to the 0% report.
