Too many accounts with balances question

[Anonymous]

I'm trying to work on improving my score and my WF app is telling me I have to many accounts with balances. 

I searched on here and read to keep less than half of you accounts with a 0 balance. My problem is that even though I have all but 1 of my cards on auto pay to fully pay the last statement balance by the time the auto payment pays and is reported to bureaus there is a new current balance that gets reported. Therefore I never have a 0 balance reported even though I paid in full. 

I currently have 13 total accounts. 1 is a closed auto loan. 3 are open installments and 9 are credit cards. If I follow the 50% rule I would have to stop using 7 of my 9 credit cards due to issue above. I would rather not do that because I enjoy different benefits with diff cards, 5% off Target, 3% off Amazon, 5% off Lowes, etc.

Assuming my total and indiviual credit card utilization is below 8.9%, does anyone know how much "to many accounts with balances" actually impacts your score? 

[DollyLama]

You do not need to stop using your cards. You simply pay in full by statement cut not due date. For an added insurance, set up your account on auto pay in case of you forget, or hospitalized, etc.  It is balance on the statement that reports. It normally cuts a few days after your due date, check them. One of my credit cards is due on the 11th and my statement cuts on the 14th. So I make sure I pay at least by the 8th or 9th of month, switch off to using another card, and once statement cuts on 14th, resume using the card again. Just make sure you never pay all to zero, let one always have a balance, and let it PIF with your auto pay. If you can do this to 8 of 9 cards of which we refer to as AZEO, =All Zero Except One, it would be optimal, especially if the 1 remaining has a low utilization balance. 

Although I would not sweat it too much, unless you feel your credit scores are not high enough for periodic soft pulls for credit line increases, or if you are planning on app'ing for something major within the next year, an auto or mortgage- then it would be best to implement this technique the sooner the better. 

[Anonymous]

I wouldn't worry too much about the "too many account with balance" comment as long as both aggregate and individual UTI are at a "responsible usage" level (<28.9%). In my opinion, your current spending and payment strategy is the best practice, maximize rewards on spending, let charges post to statement, set autopay to pay full statement balance on due date while earning interest on your money during the grace period, the only thing missing is the realization that you can still control UTI by making extra payments on top of autopay. For example, if you want to report $0, you can either make a payment equal to statement balance plus current charges prior to due date (this will cancel autopay for the month for most issuers) or you can make a payment for current charges after autopay but before statement cut date (3-5 day window), this is important because you will want to do this when large purchases are made in order to keep UTI under 28.9% without disturbing your autopay setup.

You may also want to implement AZEO (all zero except one) the cycle prior to applying for credit to give your score a few point bump by reporting 0 balance on all except one with a < 1% balance, personally I don't think the few points will make or break unless your score is very low.

[Anonymous]

It's also worth nothing that one can have the "too many accounts with balances" reason statement with very few accounts out of your total number of accounts percentage wise with balances reported.  I get that reason statement with my mortgage and 1 of 7 credit cards with balances, so 2 of 8 total accounts have balances reported and I see that reason statement.  Obviously I can't not have a balance on my mortgage, but my only other option would be to go from AZEO to AZ to have 1 less account "with a balance" but then I'd of course take the scoring penalty for no revolving credit use. 

Basically, I think the reason statement can often be bogus and just a filler, perhaps not impacting score by more than a few points and quite possibly not adversely impacting score at all in many cases.

[Anonymous]

Thanks all! I appreciate the advice and thanks for the info about the cut date. I will just have to experiment and see if it is worth setting a bunch of calandar alarms to make manual payments after the auto pay then not use the card for a few days. If we are only talking 5 points or less I don't think it's worth it. I'm close to 2 different thresholds depending on which version I check. FICO 2 EX = 698, FICO 8 TU = 762, VantageScore 3.0 TU = 703, EQ = 681. I'll report back after trying it out.

[HeavenOhio]

Welcome, @Anonymous.

My suggestion would be to try AZEO, i.e. a small balance on one card with the rest reporting zero. That way, you'll know how much bother it is for you, and you'll know your optimal FICO scores. After that, you can play around for a couple of months and possibly find a middle ground that's comfortable for you.

Don't worry about your VantageScores. They aren't used much, if at all.

[NRB525]

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@Anonymous wrote:

Thanks all! I appreciate the advice and thanks for the info about the cut date. I will just have to experiment and see if it is worth setting a bunch of calandar alarms to make manual payments after the auto pay then not use the card for a few days. If we are only talking 5 points or less I don't think it's worth it. I'm close to 2 different thresholds depending on which version I check. FICO 2 EX = 698, FICO 8 TU = 762, VantageScore 3.0 TU = 703, EQ = 681. I'll report back after trying it out.

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OP what are all the Reason Codes you get? Because they must give you three or four reason codes, and if nothing is really derogatory, the reason codes become filler, not too meaningful.

[Anonymous]

I like the suggestion of trying AZEO to see what your maximized scores look like knowing that the utilization sector of the FICO pie is as good as it can be for you.  From there allow additional cards to report balances and see what happens.  You may see only a very small score ding, or perhaps no loss at all depending on how many report balances.  From there, you can make the determination as to whether or not it's "worth it" to you to implement AZEO most of the time, or if it isn't necessary unless you're planning to app.