Most of us grew up with a fairly simple idea of what "being good with money" looks like. Don't borrow what you can't pay back. Clear your debts. Cut up the cards you don't need. It is sensible, cautious, thoroughly British advice. And if you have been following it, there is a decent chance it has been slowly damaging your credit score for years.

This is not a metaphor. It is arithmetic.

The Number That Is Not What It Looks Like

Your credit score is not really a measure of how responsible you are. It is a measure of how legible you are to lenders – how well they can predict your future behaviour based on your past. The model they use has a quirk baked into it that most people never discover: it is not impressed by £0.

One of the biggest factors in any credit score is something called credit utilisation. This is the ratio of what you currently owe on revolving credit (cards, overdrafts, that sort of thing) to what you could theoretically owe. If you have a credit card with a £1,000 limit and you owe nothing on it, your utilisation is 0%. Clean slate. Responsible adult. Zero marks.

Genuinely, that can score worse than owing £200 on the same card.

Why Owing a Little Beats Owing Nothing

The model is, in its own cold way, logical. A utilisation of around 20-30% tells a lender something useful: this person uses credit regularly, keeps it well within limits, and presumably pays it off without drama. It is a track record. Zero utilisation? That tells them almost nothing. You might be impeccably disciplined, or you might just have never touched the card. The score cannot tell the difference, so it gives you less credit for it (the irony is intentional).

This is why the advice is not "spend as little as possible" but something stranger: spend a modest, regular amount – groceries, a phone bill, whatever you would buy anyway – and then pay it off before interest kicks in. You are not spending more money. You are giving the model something to read.

The sweet spot most scoring systems seem to respond to is somewhere below 30% of your available limit. So on a £1,000 card, you want to be sitting somewhere under £300 at the point your statement is produced. Not £0. Not £900. Somewhere in between, calm and deliberate, like you do this in your sleep.

The Trap Hidden in Doing the Responsible Thing

Here is where it gets genuinely counterintuitive. Say you have two credit cards. You paid one of them off completely – well done, frankly – and you decide to close it because you do not need the temptation sitting around. Sensible. Prudent. Your score drops.

What happened? You reduced your total available credit limit, which shrinks the denominator in the utilisation calculation. Any balance you still carry on the remaining card now represents a higher percentage of your total limit, even though you owe exactly the same number of pounds as before. The closed card – the one with nothing on it – was actually doing structural work just by existing.

This does not mean you should hoard cards you hate. But it does mean closing accounts is worth thinking about before you do it, particularly if the card has a decent limit and you have had it a while. Length of credit history matters too, though that is a whole other rabbit hole.

The Permanent Performance

What the credit scoring model is ultimately rewarding is a kind of ongoing, controlled performance of indebtedness. Not real debt, not the kind that costs you money, but the appearance of being someone who comfortably manages a revolving relationship with credit. You are not supposed to sprint to zero and stop. Keep running the loop: use a little, repay it, use a little, repay it, indefinitely.

It feels odd because it is odd. The behaviour that feels most responsible – spend nothing, owe nothing, need no one – is also the behaviour that makes you hardest to read. And to a lender trying to decide whether to trust you with a mortgage, unreadable and risky look a lot the same.

The goal is not to be debt-free in any given month. It is to be the kind of borrower whose debt is boring – predictable, moderate, and clearly going nowhere interesting.

FAQ

Can a zero balance on my credit card hurt my credit score?

Having a zero balance on a credit card account can have a negative impact on your credit score as opposed to having a small amount of credit used. Having a zero balance on a £1,000 credit card account can be viewed by credit scoring models as 0% utilisation on your credit report, which can score worse than having some outstanding debt on your credit card, i.e. £200.

What is a good credit utilisation percentage?

Try to keep your utilisation below 30% of your available limit. Aim for around 20-30%, which shows that you are using your credit card regularly and managing it well. For a £1,000 credit card this would mean keeping your balance below £300 when your credit card statement is produced. This means not £0 and not £900, but somewhere in between, paid off calmly.

Can closing a credit card lower my credit score?

Yes, it can, even for cards with zero balances. Closing a credit account with zero balances can be detrimental as it reduces your overall available credit limit, causing any balances on other cards to increase as a percentage of your overall credit limit even though the amount you owe has remained the same.

How do I use a credit card to build my credit score without paying interest?

You put modest, regular expenditure on the card, such as weekly food shopping or phone bills you would pay anyway, which get paid off before interest is charged. This goes on and on. The intention is not to spend more money, just to give the credit scoring model evidence of regular usage.