Your scores would recover as soon as a single revolving account reports a balance. With your scores where they are now, it's strongly unlikely to impact any underwriting decisions made before that point. But if you want them back as soon as possible just take a glance to see which of your cards has the soonest statement closing date (which is the reporting date for the vast majority of lenders, US Bank being the last business day of the month a noted exception) and let it report at least $5 to immediately lose that penalty.
It's not one of those things that makes immediate sense, but the FICO algorithms see someone as not using any revolving accounts as a slightly higher risk than those who are showing responsible revolving use at the moment the score is generated. Loans are similar; owing say $2500 on your sole $30,000 auto loan is better for scoring purposes than having that same loan paid in full - getting credit for having a substantially paid off loan (under 10%) rather than being penalized for having no open loan accounts.
@TDS1120 At least you have the peace of mind of not having credit card debt(high%apr), many of us would wish to have your problem... easy fix.
@TDS1120 wrote:
@Thomas_Thumb wrote:Accounts with $0 balance reported are classified as not having recent revolving activity. When all cards report zero Fico views that as no recent revolving activity. The no revolving activity penalty is usually 10 to 20 points. This penalty is NOT associated with the accounts with balance metric.
If you have 3 or more cards, much better to have 2 report balances than zero. I gather AZE2 costs you 1 to 2 points.
Let more than 1 card report a small balance when switching cards to avoid risking another "no revolving activity" penalty. Limiting reporting to one card has no tangible scoring benefit in your situation.
Thank you for this explanation! It's almost like a setup 😂....**bleep** if you do, **bleep** if you don't. Any idea if applying AZE2 going forward will result in a fairly quick recovery? I have 11 cards and no negatives or other potential reportings that would otherwise affect it.
It's not as bad as all that. If you a lot of zero balances reporting, and not too many with balances reporting, your scores will be fine in terms of 'accounts with balances'. If your overall utilization is low, there's no real need to micro manage unless you're at a juncture that you need to squeeze the utmost out of your mortgage scores. The important thing is to make sure that at least one bankcard reports some kind of balance. If four or five report it's no big deal. In my experience, even if you have all cards reporting small balances there's no large penalty in the FICO 8's and 9's. It only stings a little in the mortgage scores.
