[Tidybuoy]

I have a somewhat low fico score at 732 as of today.

I paid off my mortgage 1 year ago and after that, my credit score dropped by about 40+ points. When I applied for a loan, I was semi-declined (would only approve $20k vs the $30k I wanted). At the time, I was told that my credit score was low because I did not have any real estate loans. I explained to the loan officer that I had paid off my mortgage and I most definitely had a mortgage history. Unfortunately, it is no longer counted as part of my credit score because the account is closed.

Since that time, I took the advice of the loan officer and opened some credit cards (I previously closed my last credit card in 2005 and have been a debit card guy ever since).

I currently have 4 credit cards which I use every month but pay in full and keep the balance at zero. A friend of mine at work tells me that the only way to improve my score is to keep a small balance on each of these cards. I really don't want to do that. I was under the impression that as long as I use the cards, they remain active on my credit file and hence, affect the fico score.

Reasoning: I'm looking to purchase rental property and this will require a new mortgage. I'm trying to improve my score to the best possible which may affect my borrowing capacity as well as getting the best rate.

Any advice or answer to my friend's statement (keep a balance or not)?

Thanks!