I paid down a card to zero and my score dropped 18 points

Question

Hi and welcome! You need to keep balances low (1-9% util) on credit cards and other revolving credit. High outstanding debt can affect a score.  Too much use of credit shows you may need more that you can handle, not good. Not enough use of credit does not demonstrate that you can use credit responsibly, also not good. It is a balance - show you can manage that balance and you will be rewarded. All revolving accounts reporting a 0 balance results in a Fico score decrease. Read up, take it all in, there are many answers in the following post, after that if you need calrification and/or still have questions, ask away! http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Credit-Scoring-101-START-HERE/m-p/8169

Answer 1

tufa4311 wrote:
Bostonia wrote:
WOW!! i did not know that little trick, thats wy, my scores has been so slow in rising up, is becouse i paid in full before the statement cus off,and always reported 0 balance, also recently closed a CC account with zero balance, and my scores dropped a lots points, so from now one i willlet report some small balance Hooray!!! i have learned so much from this forum, and each time i log in i learn somenthingnew and beneficial for my financial life!! thank you all for the greatest financial advices!!! you guys are awesome!!! Yes, ensure that not only you let report 1-9%, but also important, only let ONE of your credit lines report anything at all. No matter how many credit lines you have, only let one report a balance of 1-9%. You can and should rinse and repeat for your other credit lines. One billing cycle let Credit Card A report, next cycle let credit card B report. This is unnecessary and needlessly complicates things as cards seldom all report at the same time. Just pick one card and allow it to be your "reporter". By switching cards each month you can end up with periods between the cards reporting dates where either both are reporting a balance or neither is reporting a balance. That causes your scores to bounce around. So, wait until your statement cuts - when the statement is cut is when the reporting is done to the credit agencies, then before your due date pay in FULL so as not to incur any interest. Then start on your next credit line. Remember, it's not that you never want to pay in full, it's that you do not want to pay in full BEFORE the credit card reports. If you wait past the due date then you will incur interst. Also, note, you can use as many cards as you like with as high balance as you like during the billing cycle as long as when the reporting gets done you only have one line reporting 1-9%. Reporting to the credit agencies is not done daily, just once per billing cycle. If you know when your statement cuts, and you can ask them, then you know when you need to clean things up with your balances before it cuts/reports.