Why is showing responsible use lowering my score?

[SouthJamaica]

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@Anonymouswrote:
I would think my CC’s behave the way you described. I have a Capital One and a Chase Unlimited Feedom. Honestly I don’t pay attention to statements very well as I always pay off the balances quite quickly. For example I had those balances from Christmas and paid them off in February. I guess I need to pay more attention to not keeping the balances zero. Just seems so odd that a zero balance for a card that’s obviously being used is a bad thing ...lol.

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@Anonymous, you have a Chase card. Chase is one of the exceptions, since as @Adkins and @Anonymous pointed out, Chase will often report mid-cycle zero balances -- when you pay it down to zero they'll report the zero balance. So they are right that you should use the Chase card as your zero balance card.

[SkyCommander]

Ok makes sense that also my Discover card reports 0 balance all the time and the score it gives me hovers around 750. Nice to learn about this thanks.

[Gregory1776]

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@Anonymouswrote:
Thank you so much. Yes both cards reported zero balance. The ‘no memory’ was what stood out for me. Great explanation! I was dismayed because I was thinking ‘ well last time my balances were $1000 and $2700... (utilization being shown) and now they’re zero ( dependenbility being shown). But I get what you’re saying. I probably don’t use them enough. I’ll use them for larger purchase then pay them off usually in less than 3 months. Would it be more beneficial, score wise, to use them for groceries, gas to show more usage yet maintain responsible payments? Thanks again!

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No, it’s best to allow a small balance to cut/show on a statement every month. That doesn’t mean spend like you wouldn’t with cash or spend more than typical. Also, carrying a balance month to month doesn’t do your scores favors, just the bank.

[Anonymous]

You can continue to pay your cards off in full every month, while still using the AZEO method.

1.  You can pay the Chase card down to zero anytime and they'll report the zero balance, so use that as your zero-balance card.  Even if a statement balance is reported, it will re-report the zero balance when paid in full, so just pay this one to zero when you get the bill and you'll be golden.  If for whatever reason you don't want a balance to report at all (say, when you're applying for a loan/mortgage and want to keep your score as high as possible for a period of time), make sure the statement cuts with a zero balance: avoid using the card between the time you pay it off and the time the statement cuts.

2.  The Cap1 card most likely reports the statement balance at the time the statement cuts, or a few days after.  This is the card to have a small balance report on.  To avoid paying interest, pay the card down to the desired "report" balance (<8.9% util) before the statement cuts, then when you get the bill, pay the rest off.  Or, if it's a card you use on a regular basis, pay it off shortly before the due date but let new charges appear before the statement close... don't wait too long though since if the charges are still pending they won't affect the reported balance.

It's possible to do AZEO without making 2 payments/month on the "report-a-balance" card, it just requires correct timing of when to pay it off and when new charges appear to give it a balance again.  This is easiest to do on a card you use regularly.  Whatever you do, make sure the full statement balance does get paid off each month so you aren't hit with interest.

[CramEiko]

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@HeavenOhiowrote:

That's an excellent explanation. Let one card report a small balance, and your points will come back. The good news is that once you understand where the fluctuations come from, there'll be no need to panic.

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@Anonymous know? This is strange to me and I'm curious. I usually carry 0% ut on all my cards. The moment 1 balance catches and reports my score takes a dive by several points. For example: A balance of $135.00 came off pending the same day that a statement cut. Why would a CC with a $15,800 cl show score point drops with only a $135.00 statement balance? Especally when I'm @ 0% across the board? I don't want to hijack this thread but wouldn't mind watching the info roll in.....

[Anonymous]

If you are at $0 balances reported across all cards and let just one of them report a small balance, it's impossible that your score would go down.  It could only go up from this.  If your score went down, it was because of something else.

[Anonymous]

Don't worry! Like everyone said, you're doing good. Don't panic about your credit score as well. You're a responsible borrower. Now you need to be a smart consumer. Use your credit cards for buying groceries and gas. It'll be easier for you to manage them. 

Keep a small balance on your cards because something is better than nothing. The score loves to see some kind of activity. Try to maintain a 10% credit-utilization ratio. Zero balance on all your credit cards can drop your points. 

[HeavenOhio]

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@Anonymouswrote:

Keep a small balance on your cards because something is better than nothing. The score loves to see some kind of activity. Try to maintain a 10% credit-utilization ratio. Zero balance on all your credit cards can drop your points. 

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Welcome!

With two cards like the OP has, one card reporting a small balance is better than two. Two is probably better than zero, but the OP would have to check that out to be sure.

Also, it should be clarified that for optimal scoring, utilization should be under 10%, which is actually 8.9% or below. That's because 9.0000001% rounds up to 10%.

As you said, the OP isn't in a position where she needs to worry. If her balances aren't where she she'd like them to be one month, she can address them the next month. The impulse to panic goes away once one understands that and realizes where the score changes come from.

[Anonymous]

Thank you all so much. Excellent advice. Yeah I’m a late bloomer with learning all this at my own fault. All my negative score marks are from my wonderful student loans from medical school and I’ve been trying to get my score back ever since.

[Anonymous]

HeavenOhio: Very nice explanation. Thank you. 

As you said, she needs to maintain a 8.9% credit utilization ratio, which means she needs to be extremely careful at the time of making purchases.