Hubby paid CC my score dropped!

[Ladyk06]

I am an AU on hubbies CC. I usually pay my CC's off every month. I have one with a balance. Hubby paid his CC off and my score dropped 13 points on EX and 5 points on TU. His score was not affected at all. All of my scores are at least 750. Is it better to carry a balance every month to get the highest score?

[JoeRockhead]

There is a score penalty for having all zero balances, silly I know, but still a thing. For best scoring, try leaving a 1% to 4.9% balance. 

[Ladyk06]

Yes it is silly! Thank you for the advice. I really prefer to be debt free. I have 6 cards, how many should I leave a balance on? 

[Thomas_Thumb]

You only need a balance to report on one revolving account to avoid the "no recent revolving activity" penalty. No need to carry a balance. Just pay off cards that report a balance before the due date.

It is better to report small balances on 2 cards than zero cards. The no revolving activity penalty is typically 15 to 20 points. There is often no penalty for AZE2 for those with 5 or more cards. In your case even AZE3 is likely 5 points or less.

Test it yourself.

There is a 2nd type of all zero penalty worth noting. That relates to AU accounts. Profiles with one or more AU accounts may be subject to a penalty if all their AU accounts report $0 balances. That happens independent of personal accounts reporting a balance. Numerous MyFico members have reported this rather obscure penalty. The best solution to avoiding it is to not be an AU on any accounts - IMO.

[Ladyk06]

Thank you! Please explain what AZE3 means. 

[Thomas_Thumb]

AZE3 is shorthand for all zero except 3 - meaning 3 cards on which you are the primary account holder reporting balances.

I have 6 cards and have reported balances on up to 3 of them at a time without experiencing a penalty. I start seeing points deduct when 4 or more cards report balances on EQ and TU. EX is more tolerant.

[Ladyk06]

Thank you!

[Jordan23ww]

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@Ladyk06 wrote:

Yes it is silly! Thank you for the advice. I really prefer to be debt free. I have 6 cards, how many should I leave a balance on? 

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@Ladyk06  I leave a $5 to $10 balance on one of my cards each month and one of my wife's cards that she's primary on.  We are both able to avoid the 0 balance score penalty doing this. Then I just pay the card off after the new statement is issued.  Other than that we always pay all the other cards off before the statement their closing date. 

[Ladyk06]

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@Jordan23ww wrote:

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@Ladyk06 wrote:

Yes it is silly! Thank you for the advice. I really prefer to be debt free. I have 6 cards, how many should I leave a balance on? 

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@Ladyk06  I leave a $5 to $10 balance on one of my cards each month and one of my wife's cards that she's primary on.  We are both able to avoid the 0 balance score penalty doing this. Then I just pay the card off after the new statement is issued.  Other than that we always pay all the other cards off before the statement their closing date. 

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Thank you so much for this valuable information! I had no idea about this zero balance penalty, until I asked hubby to pay off his AU card on my report, and posed the question to this community. I'm pretty sure I have been hurting my score by keeping zero balances. I appreciate all the input, you guys are amazing. 

[Jordan23ww]

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@Ladyk06 wrote:

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@Jordan23ww wrote:

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@Ladyk06 wrote:

Yes it is silly! Thank you for the advice. I really prefer to be debt free. I have 6 cards, how many should I leave a balance on? 

---

@Ladyk06  I leave a $5 to $10 balance on one of my cards each month and one of my wife's cards that she's primary on.  We are both able to avoid the 0 balance score penalty doing this. Then I just pay the card off after the new statement is issued.  Other than that we always pay all the other cards off before the statement their closing date. 

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Thank you so much for this valuable information! I had no idea about this zero balance penalty, until I asked hubby to pay off his AU card on my report, and posed the question to this community. I'm pretty sure I have been hurting my score by keeping zero balances. I appreciate all the input, you guys are amazing. 

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@Ladyk06  you're welcome! I remember when I finally paid off all my credit card debt in spring 2020 after carrying a balance for years. I got hit with the penalty and was in shock. I worked so hard to get all my balances to $0 and initially it felt like I was being punished.  There were people on here who taught me about the $0 balance penalty. Thankfully once you leave a balance and it gets reported your scores will go back up.