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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?
i think you should abandon your exotic strategy and just pay your credit cards in full soon after the statement cuts.
@UpperNwGuy wrote:i think you should abandon your exotic strategy and just pay your credit cards in full soon after the statement cuts.
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.
@thornback wrote:
@UpperNwGuy wrote:i think you should abandon your exotic strategy and just pay your credit cards in full soon after the statement cuts.
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.
thanks guys
@thornback wrote: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.
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 wrote:
$1->$200, lower scores;
$200->$1, nothing changes.
Thoughts?
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.
@Anonymous wrote: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.
I stand corrected.
@Anonymous wrote:
@Anonymous wrote:
$1->$200, lower scores;
$200->$1, nothing changes.
Thoughts?
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.
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?
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 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.
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!