How is this possible? I paid down one of my credit cards to 1% utilization - Score Dropped!

[Anonymous]

CGID adds some great points above.  I agree completely that no one should ever spend unnecessarily, "try" to achieve a greater "high balance" by over spending, or consistently (intentionally) show a high balance.  Where it could be beneficial is to someone that's a Transactor and always does PIF every month.  If this type of person is the type to pay off their entire current balance (or very close to it) come the due date rather than simply pay off the statement balance, chances are their "high balance" isn't very substantial.  There could be a benefit in this person simply paying the statement balance every now and again and allowing a greater "high balance" to report.  As CGID stated above, that "high balance" will remain on your credit report for as long as the account is there, or until you exceed that high balance, thus creating a new (higher) "high balance."  

A possible best practice here could potentially be evaluating your current balance vs statement balance at the time you are about to make your monthly payment.  If once or twice a year your current balance is greater than your reported "high balance" on the account due to a heavy spend that cycle, perhaps that would be the time to allow that new higher balance to report.  

I know there are differing views on this topic.  Some thing greater "high balances" are a good thing, so long as you have perfect payment history and low current utilization.  Others thing only allowing small balances to report is the smarter way to go.  Finally, a fair share of people simply allow their balances to report naturally, so depending on your monthy spend/payment pattern your reported balance could fluctuate quite a bit.  

[Anonymous]

I like BBS' idea of allowing a vastly higher balance to report if a person is (1) a transactor (pays in full every month anyway) and (2) he's carefully monitoring his spending and knows he was not spending any extra.

(2) is a lot harder to control than you might think.  Even a hardass like me probably spends more on a rewards card because I subconsciously think it's ok because I am getting "rewards."  Intellectually I know I am losing almost all of every dollar I spend beyond what is needed, but unconsciously I probably am being influenced by the nature of a credit card to spend more.

Still, I like BBS idea enough that I may spend a little effort figuring out when I am likely to have a lot of non-category spending in a given month.  (Non-C spending is stuff that I can't find a 3% card for -- medical bills, vitamins, etc.)  I think in the next few weeks I will go through my existing cards, identify the ones that have a really low "high balance", and then over the next few years periodically choose a different one if I see a weird spike in non-C spending approaching and spend it all on that one card.  Even still I'll be losing 1% typically.  (E.g. if I spend $3000 on a 1% card just to raise its high balance, that's $30 I lost because I didn't place it on my Citi Double.)

I am most likely to do this with cards that are exceptionally old and which I don't use much -- but which because of their age I wouldn't ever want to see closed.  My guess is that CC issuers will be less likely to close a card if they see that I once used it for several thousand dollars -- even if lately all I do is buy something small with it every four months.

PS.  Just a couple years ago it was easy to create arbitrarily high HB values on many cards.  Citibank had a policy where you could open a bank account with them and "fund" it with a credit card (limited to the first deposit in that account).  Citi did place a maximum amount you could fund it with, but it was 100k -- vastly higher than any other bank and much higher than almost any person's credit limit on any particular card.  That's how I got a 17k high balance on one of my credit cards -- I funded a Citi checking account with 17k. 

[Anonymous]

Thanks for elaborating on individual & aggregate UT. I was unaware that it changes with a second card, and so fourth. That is good to know.
I like that idea better, it can be a bit of a nuisance paying it down all the time (reporting micro balances).

[Anonymous]

Interesting perspective and it seems highly plausible.

[Anonymous]

Very interesting. It’s good to know that HB refers to the highest balance only in the lifetime of the card.
so hypothetically, in case a rare creditor were to find interest in the HB Field, it couldn’t hurt to have a decent size HB reported?
I completely understand/agree. I wouldn’t go out of my way financially to achieve this, but if the circumstances present themselves... sure why not.

[Anonymous]

FWIW paying all cards to $0 offers the same FICO boost in “credit utilization” as AZEO does.

The problem is all cards to $0 songs your “credit mix” points as FICO can’t score a mix that isn’t being utilized. AZEO let’s credit mix boost for showing a balance.

The same is true with paid installment loans and no remaining balances. Credit mix portion of installment loans ding because anything group type of accounts with $0 balance has no credit mix bump.

The point loss for all cards at zero or all installment loans at zero fit well into the credit mix 10% FICO total.

[Anonymous]

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@brickie74 wrote:
Very interesting. It’s good to know that HB refers to the highest balance only in the lifetime of the card.
so hypothetically, in case a rare creditor were to find interest in the HB Field, it couldn’t hurt to have a decent size HB reported?
I completely understand/agree. I wouldn’t go out of my way financially to achieve this, but if the circumstances present themselves... sure why not.

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Again, IMO this comes down to the profile of the individual.  My opinion is that the reporting of a relatively high "high balance" should only be done by a Transactor (someone that pays in full every month) and by someone with a clean credit report.  A dirty file by definition points to higher risk [relative to a clean file] and when you're talking higher risk, a greater "high balance" could be a cause for concern for a lender looking at your credit report.  It basically shows that you do run your balance up high while also possessing less than stellar payment history in the past.  For someone that's a Revolver (doesn't PIF monthly) a greater high balance IMO could be viewed as a risk, as that high balance wouldn't exist for just 1 reporting and could be carried for a length of time.  Again, this constitutes a far greater risk over a Transactor that will without question bring that high balance right back down the following cycle.

CGID, I think it's definitely a good idea to consider "high balance" when discussing a very old card or one that you want to ensure AA (closure, CLD, etc) doesn't happen against.  I think any creditor that sees a record setting high balance followed by a PIF would be far less likely to take AA any time soon against a customer.  Again, this is assuming a clean credit report.

I think that reporting a new high balance on a card that one plans on requesting a CLI on in the next few cycles could also be beneficial.  This is something I plan on experimenting in over the next 3-5 months on the few cards that I'm still attempting to grow a bit.

[Anonymous]

Gentleman, you are correct. though i never doubted you.

I let my Discover card report $6, and all of the points came right back.

I'm going to provide this for future viewers to see.

[Anonymous]

Well executed above!

[Anonymous]

Thank you sir