At the 0% baseline

[vanillabean]

There's something nice about an overall util of 0%, so it's a pity you're spanked for having one. I can't remember the last time I didn't use a card during a billing cycle, but somehow the system can't figure out I'm handling the credit risk responsibly.

Surely the CCCs aren't pulling out the red flag for inactivity to the CRAs, so why would FICO spank you so severely for enjoying a 0% baseline? If the flag isn't enough, I have a non-util card with a $100 balance which is readily available for intense scrutiny.

If we can put a man on the moon and wheels on suitcases, then a simple acknowledgment of active credit card use should be a piece of cake. As sweet as a 0% util can be, I didn't even aim for it; another card just happened to report unexpectedly early.

So here I am, stuck at 0%. I suppose I should be grateful that my score didn't drop, but that was only because of a major positive offset in the form of paying off in full a card's 49% util. The result was a score that did not change one point.

Come to think of it, the offset was even more positive than so, because naturally the number of reported balances went down by one. Only one card, the ideal number, is reporting now, and that's the non-util joker card with the $100 balance.

That's not the way, uh-huh uh-huh, I like it, uh-huh uh-huh.

[smallfry]

It would require the CCC's to report usage though there was a 0 balance. Asking too much.

[llecs]

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@Anonymous-own-fico wrote:

so why would FICO spank you so severely for enjoying a 0% baseline?

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It's fact that the FICO score was developed via input from the creditors out there. With that in mind and assuming that the $0 balances penalty comes from that input, then you have to look at a CCC's mindset and why that penalty exists on many FICO reports. Why wouldn't they want $0 to report? Or better yet, why would they want a balance to report? Interest. If $0 reports, they don't make money. My theory anyway. What do I know?

[vanillabean]

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@smallfry wrote:

It would require the CCC's to report usage though there was a 0 balance. Asking too much.

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It's my experience though that if a billing cycle has activity, reporting takes place regardless of what the statement balance is. That would in a myFICO report correspond to the Status as of field, unless I'm mistaken.

[haulingthescoreup]

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@Anonymous-own-fico wrote:

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@smallfry wrote:

It would require the CCC's to report usage though there was a 0 balance. Asking too much.

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It's my experience though that if a billing cycle has activity, reporting takes place regardless of what the statement balance is. That would in a myFICO report correspond to the Status as of field, unless I'm mistaken.

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This is correct.

If there is any activity on the card during the month --charges or payments --this is reported to the bureaus, and that's when you get an updated Status date, or Date reported (the terms vary by bureau.) Doesn't matter if it reports $0 month after month after month.

This is the same factor in play on those three things you need to have a FICO score: have an account that's at least six months old, have an undisputed account that has reported activity within the last six months, and not be dead.

A lot of us have thought that there was a ding for "activity on a dormant account", and I was one of those who posted this. In fact, we were just getting alerts that someone was using a card that normally isn't used. There's no score penalty for using a card that hasn't been used in a while. It just means that hey, there's some activity on this account, and you get the alert even if it winds up reporting $0.

[vanillabean]

It's spanking time once again, for a few days. My myFICO EQ is at 809, down from 814 with a card reporting several thousand dollars. It should be interesting to see what $10 does. I certainly expect a wider gap than jello experienced, 807 811 +4.

[marty56]

I have ntoiced that EQ is is less sentive to balances than TU.  I lost points for 0% util on EQ but it was only 1 point.  Now that my EQ report is clean, I wonder if it will behave that way.

LOL it is always easy to get some util to report.  In a few months I will be in the position to 0% util baseline and then get  a good idea where my sweet spot for util is.

[RobertEG]

Speculating.... maybe it's just FICO's way of guesstimating something they want to evaluate, but dont really know and cant get from simple credit reporting.

A creditor knows, when they report a $0 balance in any given month, whether or not the account was used that month.

However, when the FICO algorithm sees a $0 balance reported each month, it does not know that. 

Creditor reporting to the CRA would look the same for one consumer who had activity during the month as another consumer who didnt if both get the balance to $0 by CRA reporting date.

So, assuming FICO considers long periods of apparent non-use as a factor affecting their ability to do a risk assessment of timely paying credit when due, maybe they just use the next best guess to make a psuedo-determination that a consumer is using revolving credit....... that being a showing of at least a $1 balance reported to a CRA.

Just my guess, but that would make sense.... at least in the minds of the algorithm gurus.

[vanillabean]

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@RobertEG wrote:

A creditor knows, when they report a $0 balance in any given month, whether or not the account was used that month.

However, when the FICO algorithm sees a $0 balance reported each month, it does not know that.

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Based on the date of last activity I would think it would. Ordinarily this date and a balance update go hand in hand. The whole package is either reported or not. (Amex is different of course. When you zero the balance, this balance is updated, but the activity date is not.)

[Revelate]

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@RobertEG wrote:

Speculating.... maybe it's just FICO's way of guesstimating something they want to evaluate, but dont really know and cant get from simple credit reporting.

A creditor knows, when they report a $0 balance in any given month, whether or not the account was used that month.

However, when the FICO algorithm sees a $0 balance reported each month, it does not know that. 

Creditor reporting to the CRA would look the same for one consumer who had activity during the month as another consumer who didnt if both get the balance to $0 by CRA reporting date.

So, assuming FICO considers long periods of apparent non-use as a factor affecting their ability to do a risk assessment of timely paying credit when due, maybe they just use the next best guess to make a psuedo-determination that a consumer is using revolving credit....... that being a showing of at least a $1 balance reported to a CRA.

Just my guess, but that would make sense.... at least in the minds of the algorithm gurus.

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I don't think that can be stated explicitly. I know on the Experian report I pulled it reported not only monthly balances but monthly aggregate payments.  If I can see this on a consumer-pulled report, there's no reason that it can't be factored into the algorithm. 

In the times I wasn't using the card there was a slew of No Data's on the report.  This was on a BOFA credit card tradeline specifically, but it appeared to hold true on the other newer cards I'd obtained as well.

Also I think it's pretty well known that the consumer pulled reports are (or at least were) sanitized versions of what's actually in the CRA's databases.  As a theoretical creditor, I'd certainly what to know what someone was paying down on their debts, so it's not unreasonable to think those have been part of the model for a long while... FICO and the bureaus view the banks as their customers after all, not us.