A Reddit user with a nearly perfect 798 FICO score was stunned when Citi rejected their application for a personal loan. Despite never missing a payment and holding six open accounts with a 10-year credit history, the denial letter cited an unexpected reason: “Low balances on revolving accounts recorded on your credit bureau report.”
The person shared screenshots showing their Experian report, with just $233 in credit card debt out of a $72,000 credit limit and a 0% credit utilization. That might sound ideal, but it actually backfired.
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So why didn’t they get approved for a loan? According to them, it’s because they always pay off the balance before the statement comes out. As a result, their balances were always reported as zero.
Credit card issuers report balances to the credit bureaus on the statement closing date, not the due date. By paying off everything early, the person unintentionally erased any evidence of credit usage, making them look inactive in the eyes of lenders.
One top commenter summarized it clearly: “You don’t need to ‘carry’ a balance to show usage. All you need to do is pay your statement balances in full monthly as opposed to paying your card to $0 before statement generation. That’s where OP went wrong.”
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Another contributor added, “You should not be paying off your balance before your statement closing dates. That’s not how credit cards are designed to be paid. Treat them just like a utility bill. Once you receive your statement, THEN pay the statement balance off by the due date.”
Many in the thread agreed that letting a small balance post each month before paying it off is a better way to show responsible usage without accruing interest. One suggested, “Let 5-10% report then pay it off after the statement. Should fix the problem pretty quick.”
OP acknowledged the oversight: “I don’t like to see a big number, but it’s my fault. I’ll set auto-pay after the statement now.”
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Some also pointed out that lenders may get suspicious when someone applies for a personal loan but has zero visible debt.
