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FROM THE FICO GODS' MOUTH - 0% vs. 1% UTILIZATION

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
Valued Contributor

Re: FROM THE HORSES MOUTH - 0% vs. 1% UTILIZATION


@My-own-fico wrote:

@cashnocredit wrote:

Letting a card report 0 balance for 3 or more months can also reduce scores. Cards have to have a certain activity level or they get put in an unsued category.

 

Are you sure?

 

 


I haven't personally experimented with letting a card go unused more than 3 months or so but it has been reported by others here and it can reduce a score slightly.

 

 

Oh I see, lol.

 


"Can" is not the same as "will" but this has been reported a few times by posters here at MyFico. I've only let a card stay unused for 3 to 4 months, perhaps once a year, so I don't have any personal data on this and I so stated.


I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy18k, Amex Plat (60k H/B), Citi AA EWMC 25k
Message 11 of 14
Valued Contributor

Re: FROM THE HORSES MOUTH - 0% vs. 1% UTILIZATION


@Revelate wrote:

@cashnocredit wrote:

Letting a card report 0 balance for 3 or more months can also reduce scores. Cards have to have a certain activity level or they get put in an unsued category. I haven't personally experimented with letting a card go unused more than 3 months or so but it has been reported by others here and it can reduce a score slightly.

 

I always let my balances report except when I want to "optimize" and then I prepay all but one. That seems to result in better (5 to 10 points) FICO scores than prepaying all of them. I don't actual;ly do that in order to aapp for credit. It's just interesting to experiment.


I know I've heard that before and even pontificated it myself, but it's certainly longer than 3 months though it may depend on lender.

 

I do know when a recent 8 month no activity card (Wally) had a balance land on it my FICO 8's didn't move at any rate.  


I've only had a few cases where an inactive card, also Wally, posted a balance after an inactive period and all except one time was with the EQ 4 score. I haven't seen any effect I would chalk up to having the card go dormant. There were pretty significant affects reported by a person here last year who just saw big drops in an otherwise stable report. it may have to do with percentages. I would suspect having all or amost all cards dormant then suddenly using them all might be a sign of stress.  Who knows. My fallback position to optimizing scores is just use all my cards and prepay most when I want to optimize a score. Depending on scorecards it may not help a lot (or at all) but it doesn't ever hurt. It does seem that FICO 8 is less sensitive to numbers of cards with small balances in comparison to FICO 4. Even FICO 4 seemed to care only when my oldest account reached 4 years.


I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy18k, Amex Plat (60k H/B), Citi AA EWMC 25k
Message 12 of 14
Established Contributor

Re: FROM THE HORSES MOUTH - 0% vs. 1% UTILIZATION

I don't buy into the one card with less than 10% B.S.  I had a small balance on 2 cards and another small balance on a card I am an AU. I lost 9 pts after paying the first card balance. I lost an additional 14 points when I paid the 2nd card. I had 1 card with 4% util. and lost 24 points! I have seen many others having the same issue. I won't make that mistake again.

 

Because of this and seeing so many others losing points when paying something down or off, don't chasne anything until you close. If that means uh you pay $25 then charge $25 asap to keep it the same, do it. It isn't worth the risk! I now have to wait god knows how long to get 23 points back so we can get a mortgage loan. Don't let it happen to you too!

Nov 2014 Starting credit score TU 598; EQ 602; Ex 614; April 2018 TU 778; EQ 771; EX 768
Blispay $7.5k/Citi DC (wemc) $9k/Amex $35k/Wayfair $9.2k/Chase Freedom $13k/NFCU $15k/Discover $27.5k/Amazon $7.5k/synch $9k/OS $3.2K/cap1 qs $6k
Message 13 of 14
Moderator Emeritus

Re: FROM THE HORSES MOUTH - 0% vs. 1% UTILIZATION


@mimsof4 wrote:

I don't buy into the one card with less than 10% B.S.  I had a small balance on 2 cards and another small balance on a card I am an AU. I lost 9 pts after paying the first card balance. I lost an additional 14 points when I paid the 2nd card. I had 1 card with 4% util. and lost 24 points! I have seen many others having the same issue. I won't make that mistake again.

 

Because of this and seeing so many others losing points when paying something down or off, don't chasne anything until you close. If that means uh you pay $25 then charge $25 asap to keep it the same, do it. It isn't worth the risk! I now have to wait god knows how long to get 23 points back so we can get a mortgage loan. Don't let it happen to you too!


It's certainly not a one size fits all approach but but it works very well for many people including myself.

 

Each of us has to experiment to see what works best for our own situation.

Message 14 of 14