@Anonymous
You get a penalty if all cards report zero balance. You also get a penalty if you have no installment loan reporting (auto, mortgage, personal etc).
The reason for this is that the score is based on statistical modeling that compares your lending risk with everyone who matches those same inputs. For some variables it's a snapshot that does not account for history. If you have no balances reporting, to the model, you look the same as someone who never uses their cards. Despite the fact that someone who has responsibily used their credit and paid down to zero might be less risky than someone who has not used their cards, the model assigns same risk level for that parameter. It makes the math simpler to do it that way. The improvements in later models are meant to address these types of flaws. But apparently the version 8 is considered a good enough predictor by lenders, despite those drawbacks, because uptake of later models has lagged.
I sympathize with your frustration. I felt the same when I found out you fare better with bad credit than no credit.
