For purposes of improving one's FICO score, is it better have one card showing a balance + all other cards at zero, or is it better to spread the balances around over all the cards?
If it's better for FICO purposes to have more accounts showing zero balance, is that a negative for purposes of getting credit limit increases from the accounts showing zero balances?
@thebeckerman wrote:For purposes of improving one's FICO score, is it better have one card showing a balance + all other cards at zero, or is it better to spread the balances around over all the cards?
If it's better for FICO purposes to have more accounts showing zero balance, is that a negative for purposes of getting credit limit increases from the accounts showing zero balances?
You want 1 card reporting a balance others at 0. The more cards that have a balance and it doesnt matter if its 1 buck or 10K is a ding to your Fico for each one. Doesnt matter if a card never reports a balance to the CRA for CLIs the creditor is going to use their internal info to make the decision and if they do pull a report they can still see that payments are being made on an account even though it may not show a balance.
While I will agree there is a window dresing effect to reducing the number of cards reporting a balance, and we may want to do the "1 card at 1%-9% all others at zero" when preparing for an app, we have to be very careful to distinguish effects in the complex FICO scoring.
Reducing the number of cards reporting a balance results in the overall utilization on all cards combined going down. How do you separate that overall utilization reduction from the number of cards? Seeing that "Oh, this card reported zero and my score went up" may occur, is that zero reporting ultimately the root cause? Difficult to say definitively.
Getting a card to zero balance reporting, and keeping it there, will result in a ding to the score when that card comes out of zero to report something, later. That is also a temporary ding, because the score will adjust to that new reporting over time as well.
Most importantly, this window dressing is within a tight range of available scores that are more heavily influenced by the cardholder payment history, and total utilization on all cards combined.
As to getting CLI, it depends on the CCC. With low limit cards, anything $2k and under, my opinion is heavy usage and heavy payments (and not worrying about what reports) is usually the best way to use those cards. Even if it does not immediately lead to a CLI, those small limit cards cannot be managed to low utilization, the effect on behavior is too onerous and CCC recognize that 90% utilization on a $500 card, with PIF behavior, is worlds away from 60% utilization on a $10k card, when looking at their risk profiles.
So, it all depends, but ultimately the main determinant of your FICO score is payment history and keeping overall utilization in check. The rest of the short term tricks are window dressing, and can require their own level of effort to manage, which may or may not help in a particular app.
You want 1 card reporting a balance others at 0. The more cards that have a balance and it doesnt matter if its 1 buck or 10K is a ding to your Fico for each one. Doesnt matter if a card never reports a balance to the CRA for CLIs the creditor is going to use their internal info to make the decision and if they do pull a report they can still see that payments are being made on an account even though it may not show a balance.
Wow thank you so much for that explanation.
I feel like the sun just came through the clouds; you just took 2
seemingly inconsistent concepts and brought them together
for me. Finally, I get it; the CLI review has nothing to do with
the reported balances, only the actual money running through
the account. That explains so much for me that was previously
unclear.
I feel like, for the first time, I have a plan.
I wish it were possible to give you 2 kudos instead of only 1 
Thanks for the good advice