Decrease in my credit score!

[Anonymous]

Good Morning everyone,

What's frustrating to me is the fact my credit score from Equifax and Experian has decreased 15 & 16 points. That's because I paid my credit card balance off a couple of days ago. Now correct me if I'm wrong I was always under the impression that having a 0 balance was a good thing. When I called to verify what's going on because I was not understanding this decrease, I was told by the agent that having a 0 balance is bad in the credit world because there's no activity. He suggested that I always keep a low balance instead of paying the credit card off. Has this happened to anyone else? 

[tooleman694]

Yup there is a penalty if all the cards are zero. You need at least one card with a small balance. But you only need to do this if you are about to pull your credit.

[Anonymous]

Thanks for responding. And what do you mean by "pull your credit?"

[tooleman694]

Like if you were getting ready to buy a house or car, id let the credit card report something.

[SouthJamaica]

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@Anonymous wrote:

Good Morning everyone,

What's frustrating to me is the fact my credit score from Equifax and Experian has decreased 15 & 16 points. That's because I paid my credit card balance off a couple of days ago. Now correct me if I'm wrong I was always under the impression that having a 0 balance was a good thing. When I called to verify what's going on because I was not understanding this decrease, I was told by the agent that having a 0 balance is bad in the credit world because there's no activity. He suggested that I always keep a low balance instead of paying the credit card off. Has this happened to anyone else? 

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If all revolving accounts report a zero balance you get the "all zero penalty". If you let just one card report a small balance before you pay it off, the penalty goes away.

[ChiknNuggz]

Its due to utilization. Its only once a month snap shot of your credi card use. Next month let a couple dollars report and then pay off the balnce so you dont have interest and you will gain the points back.  Like the other person said you dont always have to do this unless your going to have your credit ran for something.

[designated_knitter]

Just how big is the penalty?  I realize that it is definitely a YMMV thing but a range would be nice.  

Depending on your credit scores 15 points is a pretty big deal and could easily be the difference between average and good or good and excellent.

thanks in advance for any wisdom.

Good luck, OP!  I, too, would be frustrated to work hard to pay off all my CCs only to take a score hit for doing the fiscally responsible thin!

[tooleman694]

I think my Wife lost something like 20 points on her Fico 8 when they all went zero. That said they are still zero, and even with a mortgage pull coming, her scores are in the 700s. So we don't really care.

[Anonymous]

But wouldn't the penalty come back when the credit card reports the new 0 balance for the next month? 

[Anonymous]

That's the exact word the telephone said to me, utilization. So basically I should use my credit card on a purchase, but not pay the entire balance off correct? Always leaving a small balance on the account. That's what the agent suggested.