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Question By
brtwigger

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Better to have low balances than zero balances on CC's when rebuilding credit?
My FICO 8 score per Experian dropped 18 points this month, and as far as I can tell the only change since last month is that I paid off each of my CC balances prior to the statement date (producing statement balances of $0) - whereas I normally have low statement balances (relative to my credit limits) and pay them in full each month. In other words, reducing my credit utilization % to 0 for a single month seems to have caused my FICO 8 score to drop fairly significantly - compared to when my credit utilization is 2-5%. Also worth noting, I used my cards during the statement period (just paid the balances prior to the statement date) - but apparently the zero balances caused FICO to think I hadn't used the cards at all during the month. I was surprised by all of this, thought it would be worth posting (a) to see if anyone has insight and (b) to give people a heads-up!

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You paid before the closing date, which is not the same as the due date.  That can hurt your score, as is covered in the articles.  Pay in full when you receive the bill.  Do not let anything from that bill carry over, or you pay interest on it. When you learn how to play the credit game, you benefit greatly and the articles here teach the game very well.

Reply by
brtwigger

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Thanks, I'm normally doing exactly what you suggested - but this particular month I experimented with paying everything before the closing date and was surprised by the negative impact (I would have guessed that the reduction in my debt/income would have offset any "hit" I took for having zero balances)!

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You should let one card report a small balance each month and then pay it off in full before the due date. There is no need to carry a balance from month to month.

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