Keep 0% or 7% utilization?

[omgitsMatt]

What, strictly concerning a credit score, is better?

Lenders like utilization of some sort, but what makes a better score?

I'm going to apply for a credit union CC and they don't care if I have revolving debt, I am confident I'll get what I want.

Discover, Cap One, Credit One etc likes a revolving debt of some kind but I'm not applying there, at least right now

What is better for my raw credit score, thoughts anyone?

[Anonymous]

There is a score penalty for no revolving utilization and there is a score penalty on some at 8.9% although recent DPs suggest there is a small one around 5% too. 

Realistically charging $5 a month and paying the statement in full should be high enough to avoid them forgiving the debt and low enough to avoid crossing a utilization threshold. 

[thornback]

0% utilization will yield a FICO penalty for having 'no revolving credit usage' - folks report a loss of anywhere from 10-20 points; the actual point loss is profile specific - but 0% util always results in a loss of points for FICO 8.   Anything from 2% - 7% aggregate util is ideal.

[Anonymous]

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@omgitsMatt wrote:

Discover, Cap One, Credit One etc likes a revolving debt of some kind but I'm not applying there, at least right now

What is better for my raw credit score, thoughts anyone?

---

I think you are confusing "debt" with a reported balance or not.  In order to maximize your FICO scores, you want to have one reported (small) balance on a revolving account.  This doesn't mean you have "debt" as you can allow this small (say, $5-$20) balance to report and then immediately pay it off.  Your "debt" is $0, but the reported balance will allow your FICO scores to be 15-20 points higher than if you reported all $0 balances across all revolvers.

A small reported balance (verses all $0 balances) without question and unarguably is better for your FICO scores.

[omgitsMatt]

Oops.

2/3 of my accounts report at zero

0/300 Primary User
0/1500 Authoritied User
206/3500 Authorized User

The 206/3500 is reporting at 2565 actually atm, but in a few days it'll update.

If I take the 300 and the 1500 up to 6% like the 3500 how long before it'll bounce back?

What happened was I paid down the 1021/1500 to zero just before monthly statement cut.

I almost did the same with 3500 (tax return money btw)

Close call.

I only saw an increase on Transunion from
725 to 731

But all three reflected the new balance, so they know too.

Equifax and Experian stayed at 704 and 719, no increase OR drop.

Is this normal?

With your help at informing about utilization and not dropping the 3500 to zero was I able to prevent that 10 to 20 point score drop?

[omgitsMatt]

Edit/

Accidentally pressed post with typing mssg, phone fumble mistake

[omgitsMatt]

I was, thank you. I'll remember that so I dont confuse folks when asking for help

I understand the difference now

Car loan, student loan, mortgage is debt?

CC balances is revolving credit?

[Anonymous]

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@omgitsMatt wrote:

CC balances is revolving credit?

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No, credit card balances are revolving debt.  It's important to not confuse credit card debt with a reported balance, though.  Someone can have a balance of $8000 on a $10000 credit card.  They have $8000 of debt.  They pay off $7995 of it, leaving a $5 balance just before statement cut.  The CCC reports $5 to the bureaus; this is your reported balance.  2 days later, this person pays off the $5 balance to $0.  That $5 reported balance will remain on the person's CR for the next 30 days until the CCC reports a new balance.  This person however has no current revolving debt at all, as it's all paid off. 

[omgitsMatt]

Got it now, I totally get it

Thanks again for clarifying that, I was still a bit confused I see now

[Anonymous]

All good.  When I first found this forum I needed clarification on that several times too, as it can be confusing.