Congratulations! You've discovered the All Zero Easter Egg penalty points.
As mentioned up thread, report a small balance to regain lost points.
@Anonymous wrote:.. keeping a zero balance on statements has resulted in score decreases due to "No credit usage." Now, this is not accurate as I am using credit throughout the month for points, miles, etc. but paying them off to have 0 statement balance, which is then reported to bureaus. This is when Experian specifically reduced my score by about 12 points. (725 - 713). ... This has lead me to always keep a balance but still pay off the previous statement to not get hit with interest. ALL sites say it's a myth that keeping a balance helps your credit score but my actual experience is debunking that myth. Please let me know if I'm missing something here - it would be SO much easier to just pay everything off and maintain zero balances month to month instead of keeping my crazy spreadsheet. ... What's the answer?
Welcome to My Fico Forums! 
The "All-Zero-Except-ONE" as mentioned above is a popular technique that will help optimize your credit score before applying for new credit. But that's only one factor to consider when managing payments on your accounts. Obviously, high utilization on a single card much less multiple cards will hurt your credit score for the SHORT-term. But utilization has no long-term memory, unlike derogatory data such as late payments. So there is no need to be afraid of running up some temporary higher utilization if you know what you're doing (and have the ability to pay it off quickly, as needed.) On the other hand, the way you're doing it (paying everything off before statement cuts) is also absolutely fine unless you're trying to optimize your score to apply for more credit. Then AZEO will help you get a bump.
Lenders like to see you're using your credit lines. So yes, for example if you have a Capital One card and pay it off before statement cut, Capital One will "see" the usage internally but other banks will not see any activity since zero balances get reported month-after-month to the credit reporting bureaus (CRBs). And if you apply for additional lines of credit with a new lender, they may give you a lower limit if they think you're not already using the credit lines you've got! So letting them see prior payment activity (by allowing balances to report occassionally) shows you use your credit lines and pay them off responsibly. And your existing lenders may be more likely to give you auto-CLIs if you use a good portion of your credit limit and allow it post to the statement cut before paying it down, month-after-month. It may get their attention more than running it up and paying it down before statement cut.
Consequently, while I normally Pay-in-Full monthly, I sometimes allow balances on all my cards to report on purpose. Many My Fico members don't pay off balances early or continually practice the AZEO technique. In my case, I just used the no BT fee and 0% APR BT for one year on my new Navy FCU Platinum card to run up a very high utilization (98%), even though I didn't need the credit! It hurt my scores temporarily but I don't care. I'm in the garden for now. I'm paying off the balance rapidly over a few months to build payment history with them before asking for a CLI on the card! It's a cheap way to build a relationship and earn their trust. That will all be paid off and my scores will rebound fully before I apply for a new card. (*For an example, Experian just updated my score. I paid the balance down last month from 87% utilization to 47% of utilization and my score increased by 8 points towards where it was before the BT.)
When it comes to the myth you quoted, you are confusing two different things. The myth you are talking about is that some people think you need to CARRY a balance OVER month-to-month (pay interest) to build your credit score. This is the incorrect myth; you don't need to pay interest to build credit. But allowing multiple balances to report (especially more than one card with an outstanding balances above 8.9%) will cause a temporary score dip.
Keep in mind score isn't cumulative but analyzed on a month to month basis. As previously mentioned follow the AZEO mether mentioned above or search the forums for it. It's the best way to increase your score. Cheers!
The short answer is that a credit score is a measurement of risk the exact moment a score is generated. If you are not using revolving credit at all (which is what $0 statement balances appear to be), then you are a higher risk than someone who is showing responsible use of their cards by borrowing responsibly.
You don't have to be like me and have 20+ cards with balances reporting each month, but a small balance left to report on a card or even whatever 1 less than half of your total number of cards is better than no balance at all.
BTDH:
Don't PIF before your statement cuts. Let a balance report, then PIF. You don't get hit with interest charges and you get points for being responsible.
@Anonymous wrote:And just for new people finding this, we need to be clear about what is meant by a balance. Generally used in two ways, one of which is frowned upon, which maybe what the sources OP referred to meant:
1) Carrying a balance from statement to statement, by not PIF by due date. This, unless you are in a 0% period, generate interest and should be avoided if possible.
2) Reporting a balance. Letting the statement cut with a non-zero amount (Or in the case of Elan and others, letting the balance report at the end of the month, even if the statement is a different date) and PIF by due date.
AZEO says do 2 on just one card with the others all 0, but there are pros and cons to that as well. But generally avoid 1) whenever possible, and 2) is OK
Came to say the same thing! Carrying a balance is different from reporting a balance. Once you understand the difference, you'll understand the scoring implications.
