Decreasing FICO score not going back up.

[Anonymous]

Hey guys, 

My average FICO score usaully stays arround 730, and most of the time I leave $1 on the statement balance across all my cards. And FICO will show $1 balance, 0% utl. 

Sometimes I will miss the closing date, and forgot to pay it down to $1. When that happens I will have 1% utl. and usually $200-$500 balance on that ONE card, the rest will most likely be $1, 0% utl. It is rare I would forget to pay down all the cards. 

But, even just a $1->$200 increase in balance would lower my score like 10+ points. 

At this point I will of course pay off everything. 

However, when I get it back down to $1 for next statement, I don't see the score coming back up. 

It's like:

$1->$200, lower scores;

$200->$1, nothing changes. 

No new HP or new Acc for above situations. 

Thoughts? 

[UpperNwGuy]

i think you should abandon your exotic strategy and just pay your credit cards in full soon after the statement cuts.

[thornback]

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@UpperNwGuy wrote:

i think you should abandon your exotic strategy and just pay your credit cards in full soon after the statement cuts.

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Agree.   And why are you leaving only $1 / 0% util?  That's a no-no because 'no revolving credit usage' yields a FICO penalty.   You need to let at least one balance equating to more than 0% report each month -- that's how you build up your scores - by showing activity -- just try to keep total util under 8.9% and you'll be fine.   

[Anonymous]

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@thornback wrote:

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@UpperNwGuy wrote:

i think you should abandon your exotic strategy and just pay your credit cards in full soon after the statement cuts.

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Agree.   And why are you leaving only $1 / 0% util?  That's a no-no because 'no revolving credit usage' yields a FICO penalty.   You need to let at least one balance equating to more than 0% report each month -- that's how you build up your scores - by showing activity -- just try to keep total util under 8.9% and you'll be fine.   

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thanks guys

[Anonymous]

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@thornback wrote:

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Agree.   And why are you leaving only $1 / 0% util?  That's a no-no because 'no revolving credit usage' yields a FICO penalty.   You need to let at least one balance equating to more than 0% report each month -- that's how you build up your scores - by showing activity -- just try to keep total util under 8.9% and you'll be fine.   

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From a practical standpoint this doesn't make much sense, but in actuality if the OP is leaving a $1 balance and it reports to the bureaus it results in the FICO algorithm "seeing" 1% revolving credit use on that account, as any non-zero decimal (even .0001) rounds up to 1.  If the OP has a $1 balance reported, he would not receive a "no revolving credit use" penalty.

[Anonymous]

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@Anonymous wrote:

$1->$200, lower scores;

$200->$1, nothing changes. 

Thoughts? 

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Not possible.  Quite simply, any CR change that results in X points lost if exactly reversed would result in X points gained [back].

I'm not sure why you're micromanaging your accounts to report $1?  Do you think there's some benefit to this and if so, what?

I have no idea what your credit limits are, but any non-zero reported balance below 8.9% on an individual card and even up to 28.9% on an individual card in many cases will result in no score drop.  More important is aggregate utilization, where if you're staying below 8.9% overall your FICO scores are maximized.

One sector where you're clearly falling short is "number of accounts with a balance" as it sounds like you tend to let all of your cards report a balance.  If you were naturally letting your cards report [non-micromanged $1] balances every month, I wouldn't say anything... but since you're seemingly making an effort for all or most of them to report $1, you should know that the more accounts that report a non-zero balance the greater the scoring penalty imposed may be.  So, basically if you're taking (say) 5 of 7 cards down to a $1 balance every month, you may as well take them all the way down to $0 reported so long as you have at least one non-zero reported balance and avoid any FICO penalty related to too many accounts with a balance.

[thornback]

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@Anonymous wrote:

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From a practical standpoint this doesn't make much sense, but in actuality if the OP is leaving a $1 balance and it reports to the bureaus it results in the FICO algorithm "seeing" 1% revolving credit use on that account, as any non-zero decimal (even .0001) rounds up to 1.  If the OP has a $1 balance reported, he would not receive a "no revolving credit use" penalty.

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I stand corrected.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

$1->$200, lower scores;

$200->$1, nothing changes. 

Thoughts? 

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Not possible.  Quite simply, any CR change that results in X points lost if exactly reversed would result in X points gained [back].

I'm not sure why you're micromanaging your accounts to report $1?  Do you think there's some benefit to this and if so, what?

I have no idea what your credit limits are, but any non-zero reported balance below 8.9% on an individual card and even up to 28.9% on an individual card in many cases will result in no score drop.  More important is aggregate utilization, where if you're staying below 8.9% overall your FICO scores are maximized.

One sector where you're clearly falling short is "number of accounts with a balance" as it sounds like you tend to let all of your cards report a balance.  If you were naturally letting your cards report [non-micromanged $1] balances every month, I wouldn't say anything... but since you're seemingly making an effort for all or most of them to report $1, you should know that the more accounts that report a non-zero balance the greater the scoring penalty imposed may be.  So, basically if you're taking (say) 5 of 7 cards down to a $1 balance every month, you may as well take them all the way down to $0 reported so long as you have at least one non-zero reported balance and avoid any FICO penalty related to too many accounts with a balance.

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This is incredibly helpful!! Thank you so much! 

What about charge cards? Should I get those down to 0 before closing? Or since they have no utl it won't matter?

[Anonymous]

thornback,

One thing that is often very misleading is CMS front end (fluff) software that attempts to simplify things for members.  If someone has a $2000 credit limit card for example and their reported balance is $9, they're at under .5% ($10) utilization.  Most front end software will "round down" and show an image/graph indicating "0%" utilization of that tradeline.  When the FICO algorithm looks at that tradeline however, it sees the non-zero balance and rounds it up to 1% utilization.  This issue can become more magnified when you're talking individuals with higher credit limits.  For example, someone with a $20k card could let a balance of $195 report on their card, but some CMS software may display that at 0% revolving usage as it's under 1%.  Or, depending on the CMS, maybe it would take a $99 balance here (under half a percent) to show that rounding down, where $100-$199 may be displayed as 1%.  It's really inconsistent to say the least.

[Anonymous]

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@Anonymous wrote:

thornback,

One thing that is often very misleading is CMS front end (fluff) software that attempts to simplify things for members.  If someone has a $2000 credit limit card for example and their reported balance is $9, they're at under .5% ($10) utilization.  Most front end software will "round down" and show an image/graph indicating "0%" utilization of that tradeline.  When the FICO algorithm looks at that tradeline however, it sees the non-zero balance and rounds it up to 1% utilization.  This issue can become more magnified when you're talking individuals with higher credit limits.  For example, someone with a $20k card could let a balance of $195 report on their card, but some CMS software may display that at 0% revolving usage as it's under 1%.  Or, depending on the CMS, maybe it would take a $99 balance here (under half a percent) to show that rounding down, where $100-$199 may be displayed as 1%.  It's really inconsistent to say the least.

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So basiclly leave 1% ult on one card and pay all other down to $0 for each closing date. 

What about charge cards? 0 or leave them be? 

Thanks man you've been very helpful!