Balance threshold to have account active?

[Anonymous]

The background:  I generally have all revolvers except one show zero balance.  I get my TU FICO 08 score via B of A, and it has been quite steady for the last several months.  Last month I had just $2 balance on one of my cards, and my score dropped 21 points with a comment that my score was iimpacted by having no active revolving accounts.  The $2 balance (checked my TU report) was on a card with a $8k CL (0.025% util).

So it appears there is a minimum % required for an account to be active in the FICO 08 model.  Does anyone know what that is ?

[Anonymous]

As I have heard it described, the threshold is not a % of one's CL but rather a specific dollar figure (but remember this is conjecture).  Many people have reported the experience of having a tiny balance treated as $0.  The amounts in question are typically balances of (say) 1 or 2 dollars.  The off the record advice seems to be to make sure your balance is at least $3. 

Why don't you try repeating the experiment (same card, but just a slightly higher dollar amount, e.g. $5)?  Then report back what happens.

[Anonymous]

Yes, it is a specific dollar amount.  I have done the same and will never do it again!  Been paying a lot of attention to what fico says when they give you your scores and what you need to do to improve them.  Always use your cards, even 50 bucks a month for somehting you would normally buy or pay anyway.  And keep a decent amount on the card.  I mean 1%.  I never keep mine below that threshold.  I've seen steady gains in my score, like every 2 weeks because of this.  I did purchase furniture which I'm paying about 3-4k a month on.  I do have quite a few cards and find that using them every month makes a big difference too.  I'm going to start using those checks we keep getting in the mail too.  I am using one to pay my HOA'S instead of sending them one of my checks.  I'm going to see what that does also. 

My scores started around the 742 mark, went down when I was app'ing to 710, then started going back up when I did the above.

[Anonymous]

So Sandibeach22, are you saying you keep ALL your cards above 1%?  I use all my cards most months, but pay them down so they report 0 except for one which reports a low balance.  I rotate the one reporting a balance each month, but this blip has shown me that I do not need to do that, as anything with a very low balance is inactive from FICO's point of view.

I could try the experiment of having one card report $5 or so, but it is too late for this monthly cycle.  This month I have already started a test to see what having 3 - 5% balance on all cards will do.  This will give me some idea of how much impact having all cards reporting will have, and so if there is much point bothering to keep all cards but one reporting 0.

[Anonymous]

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@Anonymous wrote:

So Sandibeach22, are you saying you keep ALL your cards above 1%?  I use all my cards most months, but pay them down so they report 0 except for one which reports a low balance.  I rotate the one reporting a balance each month, but this blip has shown me that I do not need to do that, as anything with a very low balance is inactive from FICO's point of view.

I could try the experiment of having one card report $5 or so, but it is too late for this monthly cycle.  This month I have already started a test to see what having 3 - 5% balance on all cards will do.  This will give me some idea of how much impact having all cards reporting will have, and so if there is much point bothering to keep all cards but one reporting 0.

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No.  Bad idea.  One would be ideal.  I do have more than that now because of the house furnishing/decorating I'm doing.  But keep it limited to a few. 

After I pay them, it's back down to 1% of my total UT of all cards since anything below would result in <1%.  And I find they view that as zero.

(Knock on wood), it's been working for me so far.  

[Anonymous]

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@Anonymous wrote:

So Sandibeach22, are you saying you keep ALL your cards above 1%?  I use all my cards most months, but pay them down so they report 0 except for one which reports a low balance.  I rotate the one reporting a balance each month, but this blip has shown me that I do not need to do that, as anything with a very low balance is inactive from FICO's point of view.

I could try the experiment of having one card report $5 or so, but it is too late for this monthly cycle.  This month I have already started a test to see what having 3 - 5% balance on all cards will do.  This will give me some idea of how much impact having all cards reporting will have, and so if there is much point bothering to keep all cards but one reporting 0.

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A key thing to remember is that the "All cards zero except one which has a smallish balance" rule is intended to help you just before an important credit credit pull.  In other words, suppose you had kept all cards at 30-50% for the next 18 months, and then on month 19 implemented the All Zero But One rule.  Your score at month 20 would be just the same as if you had been implementing the rule all 20 months in a row.

Thus there is no particular advantage to implementing the rule unless you need your score to be high for some reason. e.g. a mortgage or car loan application say.

I think paying your cards in full is a GREAT idea, but whether they report balances or not and also your current utilization may not matter much unless you need the score for some reason.

[Anonymous]

True there is no history in FICO scoring, so there is no need to maintain zero balances until the credit score is needed.  However it can take up to a month to pay off cards and have them report.  In reality for me, I am paying cards monthly anyway, so it is just as easy to click the "pay current balance" button as the "pay last statement balance" button.  That way if for example my car has a major breakdown and I decide to replace it, my credit score is good without having to wait a month.

[Thomas_Thumb]

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@Anonymous wrote:

The background:  I generally have all revolvers except one show zero balance.  I get my TU FICO 08 score via B of A, and it has been quite steady for the last several months.  Last month I had just $2 balance on one of my cards, and my score dropped 21 points with a comment that my score was iimpacted by having no active revolving accounts.  The $2 balance (checked my TU report) was on a card with a $8k CL (0.025% util).

So it appears there is a minimum % required for an account to be active in the FICO 08 model.  Does anyone know what that is ?

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This is not something I worry about because I let charges post on statements and then PIF a week later to take advantage of float. I have never experienced a negative Fico 08 score impact. However, I do keep aggregate UT under 6% and per card utilization under 30% (most of the time).

Getting to your question - If you want to be safe, $10 to $20 as a minimum balance should be sufficient to avoid a "zero designation". I'd suggest reporting above $20 as a general rule..

Note 1: Based on forum feedback from posters who micromanage to maintain ultra low UT %, the minimum amount was $3 for some cards and $2 for others.

Note 2: An ultra low UT % (meaning under 0.1%) provides no Fico score benefit relative to allowing a 1% to 2% utilization to report. 

[righthererightnow]

I've heard it's $5. That's the rule I'm using.