Much of the information I stumbled accross (including a short article written by an esteemed member of this site) around the internet indicates that having a credit card utilization of 0% is a significant negative impact on one's FICO score. While having a small utilization number (>0%) is viewed positively (or possibly 'less negatively') relative to 0% utilization. I seek to understand why.
My question is, do the FICO algorithms believe that people with 0% credit card utilization represent an increased risk based on something specific about people in this category? Or, did they simply take a statisticaly large sample of people with a credit rating, put them into bins based on credit card utilization (one of which is 0%), and look at the relative risk of default with each bin?
I can wrap my head around how someone with high utilization is a credit risk relative to someone with less than high utilization, but, I cannot wrap my head around how having 0% utilization signifies the rating algorithms that someone is a significant risk relative to 1% utilization. The only thing I can think of is that people with 0% utilization fall into the category of never use the card and never will and do not use the card now, but will max it out soon thus attaching a large standard deviation to the 0% bin, and, thus, statistically, someone in that bin is a risk.