Manoj Pant
TF Premier
Does 0% credit utilisation results negative(or positive) effect on CIBIL score? Please share your experience.
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0% Credit Utilisation
- Thread starter Manoj Pant
- Start date
Why would 0% credit utilisation have negative effect? Positive effect, definitely.
rockyBalboa
TF Ace
While having a zero balance on your accounts is great for your utilization rate, it's also important to keep them open and active. That means you may have to use them for more than just emergencies. Using your credit card accounts periodically is the best way to ensure that your credit scores reflect your current credit management skills.
When you charge small amounts and pay your balance in full each month, your account history will demonstrate to potential lenders that you know how to manage credit responsibly. You also ensure that your credit card providers won't close your account due to lack of use.
Source
When you charge small amounts and pay your balance in full each month, your account history will demonstrate to potential lenders that you know how to manage credit responsibly. You also ensure that your credit card providers won't close your account due to lack of use.
Source
Is it OK to Keep Credit Cards Open If I’m Not Using Them? - Experian
If you make all payments on time and are careful not to over-extend yourself, your credit cards will likely have a positive impact on your credit scores.
www.experian.com
Negative.
Your credit score is calculated based on the credit repayment history of all the months of the last 3 or 5 years. If you had a good credit history for a while and now all the recent ones are zero utilization, it means you have zero credit. While that sounds like a good thing, it also means that the credit history for the last 3 or 5 years has reduced because the zero credit will not be taken into consideration. Now, if you have zero utilization for 3 or 5 years, it means there is no credit history for that long and so there is no data for the credit agencies to calculate a score on. So they'll put a low one.
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