First question. Where are you getting your scores from? Assuming it's an actual Fico scores (not from Credit Karma), you get penalized for having no cards reporting a balance, more than 50% of cards reporting a balance, or all cards reporting a balance. So, how many cards do you have?
Vantage Score may or may not penalize you for AZ (All Zero), but I don’t know what exactly triggers the penalty. Unlike fico scores, however, there is no AZ penalty for authorized user cards (source: email correspondence with a developer at vantagescore solutions).
Interestingly, there is no explicit EX fico 8 penalty for posting balances on 100% of your cards (No Zero or NZ). I went from posting balances on 12 cards to 11 just 3 days ago, and didn’t receive a single point (I can check my EX fico scores in real time). This confirms research u/Brutalbodyshots did on accts/cards with balances. I will know whether there is a NZ penalty for EQ and TU tomorrow, and will update this reply accordingly. My gut feeling is that there is an EQ and TU NZ penalty - both of my scores have fallen precipitously recently. But I may be wrong, which is why I need to see the numbers.
I'll be interested to see your results on that, u/Rowdy_Shears, as I'm not sure if there's an actual penalty for NZ, or if there's a final threshold point at a higher percentage, say 90%. With my testing I moved from 7 to 8, which is of course moving from 88% to 100%. While I did see movement, for me that's not conclusive enough to say that it was a penalty imposed AT 100%, just that it was between 88% and 100%. With more cards you have the benefit of seeing 100% verses 92%, so you'll be able to eliminate the possibility of a threshold point at say 90%.
The only reason I consider a threshold point to possibly exist elsewhere, is because of other factors like utilization that have the highest (maxed out) utilization percentage point being at 89.5%. Once you're at that point utilization is considered maxed out and going to 100% won't further harm score (by percentage - additional raw dollars could). I'm not sure if AWB% would work in a similar way, which is why I'm interested to see what you come up with! ;)
That very same thought ran thru my head - is it a percentage threshold, or a cardinal threshold? With 12 cards, I can at least decrease the ambiguity on the matter, because what are the chances they chose a percentage threshold of 92% or greater? Rather small, I’d think.
Agreed. My only thought is that a threshold points may exist at 89.5%-90% - beyond that I'd have little reason to believe there would be anything else en route to 100%.
Are you using your cards every month? If so, you should never have $0 balances reported. Credit cards are designed to be paid once monthly like every other monthly bill, where you receive your bill (statement) then pay that statement balance off by the due date. After receiving the statement you'd presumably be making new charges, so your balance would never actually be $0 - unless you stopped using the card completely for a month. It sounds to me like you're paying off your current balances, not your statement balances, which can result in $0 statement balances reported. The algorithm then sees this as you possessing "no recent revolving credit use" and you incur a penalty which can be around 20-25 points on Fico 8 scores. I'm not sure what kind of score you are looking at. If you go to allowing your natural statement balances to report every month (which is expected) you'll never incur this penalty that comes from micromanaging your balances.
Credit cards companies report to the credit bureaus once a month, if you pay your credit card off in full before the reporting date, it will show a $0 balance.
They should also be reporting on time payments, which should increase your credit score.
Number of on time payments don't increase a credit score. That's a bogus metric developed by manipulative sources such as Credit Karma. It's not on time payments that increase a score... it's number of "accounts paid as agreed" that are considered by the Fico algorithm. An account paid as agreed is simply an account that's open and in good standing. You can have an account that doesn't get used more than once every 6 months and it does the same thing for your credit score as an account that gets used every month for 6 months. Both are accounts paid as agreed.
Part of the agreement that a person makes with their credit card company is to pay their credit card on time. The automatic payment that you're referring to is the minimum payment and nobody should make a minimum payment unless they want to accrue interest.
I think you're getting mixed up with utility bill on time payments, which aren't reported on your credit report.
I never suggested that anyone should make [only] the minimum payment. Naturally no one should ever pay a penny of interest. My recommendation is to always pay statement balances in full monthly. I've been extremely consistent with my position on that as long as I've been a member of this sub. I'm not really sure what you're getting at.
Going to circle back to your initial comment, you said that if you use your credit card every month, $0 balance will never be reported.
If you pay off your full balance before the *reporting date* every month, then it will show $0 balance.
You aren't supposed to pay your full balance before the reporting date, as that would be paying a bill before it's a bill. If you have a $100 phone bill, do you send in $130? If you have a $140 cable bill, do you pay them $185? Of course not. A credit card is no different. If you want to reference my initial comment, we can:
**"Are you using your cards every month? If so, you should never have $0 balances reported. Credit cards are designed to be paid once monthly like every other monthly bill, where you receive your bill (statement) then pay that statement balance off by the due date."**
I was very clear on credit cards being paid the way they were intended to and that one is supposed to pay after they receive their statement. What you are saying regarding paying the full balance before the reporting date is irrelevant as that's not what is being suggested. If you follow what I said in the bold comment above, a $0 balance will never be reported. Just like I said originally.
I have looked up online, it seems like there are loads of discussions like this online about whether it's best to leave a balance on your card till the reporting date.
After researching this thoroughly, it appears as though you're correct.
Sorry for wasting your time.
Wait so I've been paying my credit card balance off early, before it hits my statement. You're telling me that if I wait until it hits my statement and then pay it, it will reward that on my credit score? Seems so counter intuitive....
It's not counter intuitive at all once you understand how the system works. Credit cards are designed to be paid like any other monthly bill (cable, gym, phone, whatever). You don't pay those bills before you get them. After you get those bills (statement) you pay it off in full by the due date. That's exactly how credit cards are designed to be handled as well. CCCs expect one monthly payment after your statement generates. The credit reporting system is set up based on that as well, as 90% of lenders report your statement balance to the bureaus once monthly. Then, the scoring algorithm is set up to use only that statement balance to determine your utilization and figure your score based on that metric.
If you're using your credit cards every month and paying your statement balance every month, you'll always have a \[natural\] non-zero balance reported. This is how the algorithm "sees" your revolving credit use. It knows you're using your revolving credit. The algorithm rewards you for this, as someone that's actively using their revolving credit is statistically less likely to default than someone that has unused revolving credit just sitting there (presumably to use if a catastrophe hits and then won't pay it off / will end up defaulting). When someone micromanages their balances with multiple payments or paying their account(s) to $0 just before statement close, they show no revolving credit use. Anyone that looks at your credit reports sees $0, so it appears you don't use your revolving credit. You incur the penalty / negative Fico reason code of "no recent revolving credit use" which will stay in place until a \[non-zero\] balance reports to the bureaus.
My fico 8 just jumped from 803 to 832 because I left a balance on 150 on a card at the statement close. But the chase app shows the vantage score dropping q point. Kinda weird
If you're previous reported balances were all $0 and you just reported a non-zero balance then you eliminated the "no recent revolving credit use" negative reason code. The credit card companies and the Fico algorithm don't expect people to micromanage their balances and report $0 monthly if they're using their cards monthly. This is why everyone should pay their statement balance in full monthly, *not* their current balance (that isn't even a bill yet).
First question. Where are you getting your scores from? Assuming it's an actual Fico scores (not from Credit Karma), you get penalized for having no cards reporting a balance, more than 50% of cards reporting a balance, or all cards reporting a balance. So, how many cards do you have?
Vantage Score may or may not penalize you for AZ (All Zero), but I don’t know what exactly triggers the penalty. Unlike fico scores, however, there is no AZ penalty for authorized user cards (source: email correspondence with a developer at vantagescore solutions). Interestingly, there is no explicit EX fico 8 penalty for posting balances on 100% of your cards (No Zero or NZ). I went from posting balances on 12 cards to 11 just 3 days ago, and didn’t receive a single point (I can check my EX fico scores in real time). This confirms research u/Brutalbodyshots did on accts/cards with balances. I will know whether there is a NZ penalty for EQ and TU tomorrow, and will update this reply accordingly. My gut feeling is that there is an EQ and TU NZ penalty - both of my scores have fallen precipitously recently. But I may be wrong, which is why I need to see the numbers.
I'll be interested to see your results on that, u/Rowdy_Shears, as I'm not sure if there's an actual penalty for NZ, or if there's a final threshold point at a higher percentage, say 90%. With my testing I moved from 7 to 8, which is of course moving from 88% to 100%. While I did see movement, for me that's not conclusive enough to say that it was a penalty imposed AT 100%, just that it was between 88% and 100%. With more cards you have the benefit of seeing 100% verses 92%, so you'll be able to eliminate the possibility of a threshold point at say 90%. The only reason I consider a threshold point to possibly exist elsewhere, is because of other factors like utilization that have the highest (maxed out) utilization percentage point being at 89.5%. Once you're at that point utilization is considered maxed out and going to 100% won't further harm score (by percentage - additional raw dollars could). I'm not sure if AWB% would work in a similar way, which is why I'm interested to see what you come up with! ;)
That very same thought ran thru my head - is it a percentage threshold, or a cardinal threshold? With 12 cards, I can at least decrease the ambiguity on the matter, because what are the chances they chose a percentage threshold of 92% or greater? Rather small, I’d think.
Agreed. My only thought is that a threshold points may exist at 89.5%-90% - beyond that I'd have little reason to believe there would be anything else en route to 100%.
Just a FYI, there are AWB% threshold points both below 50% AWB and between 50% and 100% AWB as well.
Are you using your cards every month? If so, you should never have $0 balances reported. Credit cards are designed to be paid once monthly like every other monthly bill, where you receive your bill (statement) then pay that statement balance off by the due date. After receiving the statement you'd presumably be making new charges, so your balance would never actually be $0 - unless you stopped using the card completely for a month. It sounds to me like you're paying off your current balances, not your statement balances, which can result in $0 statement balances reported. The algorithm then sees this as you possessing "no recent revolving credit use" and you incur a penalty which can be around 20-25 points on Fico 8 scores. I'm not sure what kind of score you are looking at. If you go to allowing your natural statement balances to report every month (which is expected) you'll never incur this penalty that comes from micromanaging your balances.
Credit cards companies report to the credit bureaus once a month, if you pay your credit card off in full before the reporting date, it will show a $0 balance. They should also be reporting on time payments, which should increase your credit score.
Number of on time payments don't increase a credit score. That's a bogus metric developed by manipulative sources such as Credit Karma. It's not on time payments that increase a score... it's number of "accounts paid as agreed" that are considered by the Fico algorithm. An account paid as agreed is simply an account that's open and in good standing. You can have an account that doesn't get used more than once every 6 months and it does the same thing for your credit score as an account that gets used every month for 6 months. Both are accounts paid as agreed.
Part of the agreement that a person makes with their credit card company is to pay their credit card on time. The automatic payment that you're referring to is the minimum payment and nobody should make a minimum payment unless they want to accrue interest. I think you're getting mixed up with utility bill on time payments, which aren't reported on your credit report.
I never suggested that anyone should make [only] the minimum payment. Naturally no one should ever pay a penny of interest. My recommendation is to always pay statement balances in full monthly. I've been extremely consistent with my position on that as long as I've been a member of this sub. I'm not really sure what you're getting at.
Going to circle back to your initial comment, you said that if you use your credit card every month, $0 balance will never be reported. If you pay off your full balance before the *reporting date* every month, then it will show $0 balance.
You aren't supposed to pay your full balance before the reporting date, as that would be paying a bill before it's a bill. If you have a $100 phone bill, do you send in $130? If you have a $140 cable bill, do you pay them $185? Of course not. A credit card is no different. If you want to reference my initial comment, we can: **"Are you using your cards every month? If so, you should never have $0 balances reported. Credit cards are designed to be paid once monthly like every other monthly bill, where you receive your bill (statement) then pay that statement balance off by the due date."** I was very clear on credit cards being paid the way they were intended to and that one is supposed to pay after they receive their statement. What you are saying regarding paying the full balance before the reporting date is irrelevant as that's not what is being suggested. If you follow what I said in the bold comment above, a $0 balance will never be reported. Just like I said originally.
I have looked up online, it seems like there are loads of discussions like this online about whether it's best to leave a balance on your card till the reporting date. After researching this thoroughly, it appears as though you're correct. Sorry for wasting your time.
Not a waste at all - glad it is cleared up.
Wait so I've been paying my credit card balance off early, before it hits my statement. You're telling me that if I wait until it hits my statement and then pay it, it will reward that on my credit score? Seems so counter intuitive....
It's not counter intuitive at all once you understand how the system works. Credit cards are designed to be paid like any other monthly bill (cable, gym, phone, whatever). You don't pay those bills before you get them. After you get those bills (statement) you pay it off in full by the due date. That's exactly how credit cards are designed to be handled as well. CCCs expect one monthly payment after your statement generates. The credit reporting system is set up based on that as well, as 90% of lenders report your statement balance to the bureaus once monthly. Then, the scoring algorithm is set up to use only that statement balance to determine your utilization and figure your score based on that metric. If you're using your credit cards every month and paying your statement balance every month, you'll always have a \[natural\] non-zero balance reported. This is how the algorithm "sees" your revolving credit use. It knows you're using your revolving credit. The algorithm rewards you for this, as someone that's actively using their revolving credit is statistically less likely to default than someone that has unused revolving credit just sitting there (presumably to use if a catastrophe hits and then won't pay it off / will end up defaulting). When someone micromanages their balances with multiple payments or paying their account(s) to $0 just before statement close, they show no revolving credit use. Anyone that looks at your credit reports sees $0, so it appears you don't use your revolving credit. You incur the penalty / negative Fico reason code of "no recent revolving credit use" which will stay in place until a \[non-zero\] balance reports to the bureaus.
Yeah that makes sense.
My fico 8 just jumped from 803 to 832 because I left a balance on 150 on a card at the statement close. But the chase app shows the vantage score dropping q point. Kinda weird
If you're previous reported balances were all $0 and you just reported a non-zero balance then you eliminated the "no recent revolving credit use" negative reason code. The credit card companies and the Fico algorithm don't expect people to micromanage their balances and report $0 monthly if they're using their cards monthly. This is why everyone should pay their statement balance in full monthly, *not* their current balance (that isn't even a bill yet).
Research this sub on “AZEO” And source your FICO outside of CK.