FICO impact of all CCs reporting

Question

In the last few months on the Forum, there’s been quite a deal of interest in this question: Suppose a person starts with all of his credit cards reporting at $0, except one, which reports a small positive balance.  That’s in theory ideal.  Then he allows all of his credit cards to show a positive balance, while keeping total CC utilization very low.  What FICO impact  is there? I did that last month.  My scores dropped 7 to 10 points, depending on the CRA.  It wasn’t perfectly scientific, since my total utilization went from 1% to 2%.  But if we assume the change in U had little or no impact, then the entire drop was due to the number of accounts showing a balance. I have four open credit cards.  Exactly one showed a balance at start and exactly 4 showed a balance at end.  Absolutely no other new events occurred: e.g. no new inquiries or new accounts, no old inquiries falling off, no accounts being closed, etc.  The shift was basically 836 to 826 at TU and 836 to 829 at EQ.  EX had not updated the data yet.

Answer 1

Revelate wrote:
Thomas_Thumb wrote:
The quick hit associated with one card reporting gets a lot of press and the 5 to 15 point boost many profiles see has been documented. No argument with that. However, minimal reporting actually inhibits ability to effectively build credit payment history over time. This holds true regardless of the profile being old/new, thick/thin or clean/dirty. Quite a few posters with no need for new credit short term have adopted the tactic of reporting a small balance on only one card every month as a hard rule. This is not wise. Many single card posters are actually using multiple cards each month and have significant charges which they PIF. If new credit is NOT needed short term it is best to allow these balances and subsequent payments to report. That is helpful in establishing a solid payment history and showing credit worthiness.  Optimize for score when needed for new credit but otherwise show credit use to build history. Sorry if I got a bit off topic.  How can you possibly make that assertion TT? . A report of $0 is still a reported payment and positive history.  There is no difference FICO wise whether you report $0 or some non-zero number when we're talking in the future.  Revolving utilization is instant in time only from exhaustive testing by a bunch of people and not a single credible source has said differently to my knowledge, FICO 04 or FICO 8. Most lenders to my understanding report high balance as highest balance during the statement period, not highest reported balance.  There are some exceptions, but it's not the rule.  Also, payments made are reported to all bureaus; yes not every lender does this, and FICO doesn't make use of it, but if it's on the credit report, it's a good bet lenders will absolutely use it for their purposes. You don't really have to go much beyond my Chase and Penfed approvals for 20K+ when my aggregate credit limit was only 34.6K with a high CL of 9K previously, and I've been at pretty minimal reported utilization for a more than a year while a mortgage was possibly in the wind.  The vast majority of my balances over time have reported $0: I know this is only a single anecdotal report, but there's plenty more if you look for them. I'm all for the theory of just let the balances fall where they will when you're not applying for something (because it's irrelevant in a future FICO score and it takes effort to maintain), and I'm absolutely a supporter of if you get a high balance, damn right let that report and show everyone who looks at your report that you can pay it; however, from a pure FICO perspective it doesn't matter one iota, and frankly lenders are smarter than that.  There are people posting in Credit Cards who had most all of their cards at zero balances, started letting some significant amount post and carry on some cards that were zero before because they had to, and certain bank algorithms tripped CLD on them. On calling the CSR, they often were able to get it worked out, with the CSR saying "I don't understand what happened", which I don't find surprising. Letting balances report builds up a tolerance by the algorithms at various banks to understand that the balances are a normal part of the profile, not a shock.
And, while it's been well proven that driving number of cards reporting to zero does pop the score, what I haven't heard is someone taking the low utilization and letting more cards report, letting the score ride with that and seeing if the score stabilizes, over several months. That takes too long, doesn't provide a quick topic for a new thread   Those who have done that, let more cards report, and see no change, get cut down in this thread because their file isn't dirty. pfft. Then, the shorthand response to a newbie "How can I improve my score" is boiled down to "all cards but one at zero" with no explanation of the consequences. Now that your mortgage is behind you, you would be in a good position to try letting more cards report small balances and either disprove or prove the theory that over time the file can absorb and perhaps improve with more activity on more cards.