Clarification question about AZEO

[Anonymous]

Hello,

I now have three card -- all secured -- First Premier (which I have had for many years) and (new ones) Discover and CapitalOne.

My original plan was just to put a few dollars on each one, each month -- around 10 dollars.

Will the AZEO strategy help me? I was under the impression (perhaps incorrest impression)  that a ZERO balance (no usage) doesn't help.

Please tell me your thoughts on this.

Thanks.

[Anonymous]

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@Anonymous wrote:

Hello,

I now have three card -- all secured -- First Premier (which I have had for many years) and (new ones) Discover and CapitalOne.

My original plan was just to put a few dollars on each one, each month -- around 10 dollars.

Will the AZEO strategy help me? I was under the impression (perhaps incorrest impression)  that a ZERO balance (no usage) doesn't help.

Please tell me your thoughts on this.

Thanks.

---

All Zero Except One

You want three cards (3 is the easiest)

When the statements cut, make sure ONE CARD has a balance of less than 9 percent, preferably 2-3 percent

The other 2 must have a zero balance.

The under 9% is important, 1 to 8.99 percent is the "best bucket" for fico scoring

(If the card has a 1000 CL, put a tank of gas on it, etc, or lunch. If it's only 300, put McDonalds on it... etc)

Although they shouldn't, they could round down a buck to zero... 

You can use the cards as much as you want, but make sure to Pay in Full (PIF) BEFORE the due date, and before the statement cuts.

Also keep in mind -

It usually goes "Due on the 21st, statement three days later" type of timeline...

So even if you PIF before the due date, don't use the card till the statement cuts.

AZEO is only "useful" the month you are trying to boost your score. If you are not after any credit, it is just for looks mostly.

So it is fun to see it happen, it doesn't do anything for the long term. 

[Anonymous]

Play it a little more conservatively though - there are lenders who will report $5 or under as a zero balance, so on your one reporting card, have over $5 but under 8.9% reporting to ensure you report a balance.

[NRB525]

Will it help you? That depends.

Much of the benefit of AZEO is associated with the low utilization it requires. The final few points you pick up from having only one card report a balance, may not be worth the effort.

What are your current scores?
Have you had First Premier for a long time because of prior credit difficulties? Because what would help you financially is to try to get a replacement card with no fees, and close First Premier.

Monitor your credit scores as you try to achieve AZEO. You may be disappointed at the small points difference with changes in number of cards reporting, once you get utilization down to a low level.

[Anonymous]

Thanks NRB525,

I now understand it more clearly.

My utilization is going to be well below 8.9 per cent.

So based on what you told me, the AZEO will only bring me a few extra points -- nothing dramatic.

I understand what you are saying about First Premier.

My scores are 639, 640 and 728.

Unfortunately, First Premier is my only old account and if I get rid of it my average age of accounts will suddenly drop significantly.

I am hoping to get everything into the 700 range.

I have also just taken out an SSL loan with Navy Federal.

I have three negative -- late bills, all medical, that have gone to collection.

I have gotten one deleted -- I THINK the two others are about to be deleted.

The only other negatives are three late payments to First Premier -- one 30 day late in 2014 and one 30 and one 60 day late in 2013.

That is my situation.

Any additional guidance or suggestions are appreciated!!!

Thanks again.

[Anonymous]

Feel free to go right ahead and close First Premier - if you pay it off and close it in goodstandjng it will continue to report and figure in your scoring for 10 years, thus not harming AAoA or AoOA. Dump it and get a better card confidently

[Anonymous]

Thanks ImTheDevil,

I didnt realize that First Premier would still remain part of AAoA even after I close it.

Someone also suggested that I try to get First Premier to remove the late charges, in exchange for keeping the card.

Any thoughts about that???

[Anonymous]

Definitely - lol use that as leverage, get them gone, then close it and never look back. Once you’re in with Discover or another prime card, you’ll have zero use for FP.

[Anonymous]

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@Anonymous wrote:

---

@Anonymous wrote:

Hello,

I now have three card -- all secured -- First Premier (which I have had for many years) and (new ones) Discover and CapitalOne.

My original plan was just to put a few dollars on each one, each month -- around 10 dollars.

Will the AZEO strategy help me? I was under the impression (perhaps incorrest impression)  that a ZERO balance (no usage) doesn't help.

Please tell me your thoughts on this.

Thanks.

---

All Zero Except One

You want three cards (3 is the easiest)

When the statements cut, make sure ONE CARD has a balance of less than 9 percent, preferably 2-3 percent

The other 2 must have a zero balance.

The under 9% is important, 1 to 8.99 percent is the "best bucket" for fico scoring

(If the card has a 1000 CL, put a tank of gas on it, etc, or lunch. If it's only 300, put McDonalds on it... etc)

Although they shouldn't, they could round down a buck to zero... 

You can use the cards as much as you want, but make sure to Pay in Full (PIF) BEFORE the due date, and before the statement cuts.

Also keep in mind -

It usually goes "Due on the 21st, statement three days later" type of timeline...

So even if you PIF before the due date, don't use the card till the statement cuts.

AZEO is only "useful" the month you are trying to boost your score. If you are not after any credit, it is just for looks mostly.

So it is fun to see it happen, it doesn't do anything for the long term. 

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Great advice by Retched.  Very thorough and helpful.

The only tweak I would make is the need for the one card showing a positive balance to have an ultrasmall individual utilization.  You urge less than 8.99% and recommend 1-2%.  There's actually no evidence that FICO imposes any individual utilization penalty below 28.99%.  Remember that for some people their cards have individual limits of $200.  Trying to keep the balance at $2 is difficult and indeed could cause the issuer to report the balance as $0.

AZEO as a simple strategy is All Zero Except One with the remaining card reporting $10-20 (roughly).  The balance could be quite a bit higher of course (for most people) but then it takes a lot more words to describe the strategy.