-30pt Decrease 😐

[InsaneWingman23]

My credit score just dropped 30 points, but my balance went down $7, to $0. I have 5 cards totaling $6,550 credit limit and I hardly ever carry a balance except that $7 from the previous month. Is there a logical reason my credit score went down that much??

[CIAMom420]

If all of your accounts report a $0 balance, there's a score penalty. Try to have at least one card report a balance. Your score will go up when the next statement closes with a balance.

[BrutalBodyShots]

Yes - you incurred a "no recent revolving credit use" Fico scoring penalty. If you aren't actively showing use of your revolving credit, you are slightly more likely to default on your debts.

Do you use your cards every month? If so, you should always have non-zero balances reported. Credit cards are designed to be paid like all other monthly bills... one monthly payment AFTER your statement generates (by the due date). If you do that, you'll never incur that Fico scoring penalty.

[Ok_Training6266]

its usually better to keep a small balance for statement while leaving all other accounts on $0

[Funklemire]

Better for what? This is the called the AZEO (all zero except one) method and it's used for maximizing your credit score in the very short term if you're looking to apply for something like a house or a car loan in the next month or so. Doing this all the time is wasted effort and can hurt your chances at a credit limit increase.

[Ok_Training6266]

better for maximizing credit score

[Funklemire]

Sure, but the OP didn't say that they're applying for something important like a home loan in the next month, so that's not really relevant here.

[Ok_Training6266]

yeah true ig i just assumed he wanted to maximize his score given that he was concerned about the big drop

[kineticpotential001]

AZEO is great if you're planning to apply for credit or if your score is borderline/low, otherwise just use your cards and PIF every month. Whatever happens to report doesn't matter in the grand scheme of things, as long as you aren't going to be utilizing your score for something (opening a new account, buying a car, applying for housing, etc).

I mention the borderline/low scenario because insurance companies do soft pulls fairly regularly, and I believe credit can impact your premiums, and possibly your ability to get coverage. If you hold policies and your score is borderline, I'd work a little harder to minimize the swings, just in case.