Does Having a Zero Credit Card Balance Affect My Credit Score?


All of us know how essential credit card balance is to credit score. We have also discussed that ideally, you should not be having a balance of more 30% on your credit card.  Any balance above 30% impacts your score. Having huge balances can injure your credit score because it raises your credit utilisation. In other words, we can also mention that the ratio of credit balance and the credit limit is high.

At the same time, many are concerned that having a zero balance on your credit card will affect the credit score negatively. This is not true. Zero balance does not bring down your credit score. You will need to be careful only if the zero balance is due to non-usage of the credit card.  If you are not using your credit, it so happens that this accounts turns inactive and does not feature anywhere the credit score calculation. In such cases, this might affect your credit score.

Having a zero balance on your card, if it is due to the reason that you pay off your balances completely each month, does not mean that this zero balance will be used to calculate your credit score. Credit card companies report the credit details to the bureau at various times during the month. It can so happen that during one of these days you would spend the maximum on your card. In such a case, your balance will not be shown zero as you repay on a later date.

Your credit card account will show a zero balance, only if you have a nil balance at all times during the month.  It does not matter whether you have a zero balance on not. This does not hurt your credit balance. The main fact you need to keep in mind is that your usage does not exceed 30% your allotted limit.

You will have to pay your balances soon if you intend to apply for a major loan very soon. Ensure does not make many major or huge purchases for some time. This will help you keep a low or zero credit card balance and thus a better credit score.

Maintaining zero balance helps you manage your finances better. It helps you keep your expenses in line with your income and other credits which you have availed.  You are saving your precious earnings from paying interest too.

Follow the dos and don’t which are advised on credit card usage. Help yourself not to fall prey of plastic money. This will help you move towards the most desirable credit score of 800 plus. Avail yourself better credit deals and enjoy better terms of repayment. Enjoy being credit healthily.

Updated: November 28, 2016 — 5:24 pm

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