Is it true that zero credit utilization is bad?

I have a credit card solely for the purpose of establishing a credit history. I charge something small (maybe $30) often enough to keep the card active, and then I pay the bill in full. I understood that this was the best way to use a credit card, but lately I've heard that having a low credit card balance is... show more I have a credit card solely for the purpose of establishing a credit history. I charge something small (maybe $30) often enough to keep the card active, and then I pay the bill in full.

I understood that this was the best way to use a credit card, but lately I've heard that having a low credit card balance is better for your credit score than having a zero balance. Is that true? And if it is true, what's the reasoning for it?

I can see how credit card companies might not want to extend credit to someone who won't owe them any interest. But other people looking at your credit score (car dealers, landlords, etc) should prefer to see that you're not in debt at all.
Update: To clarify: I'm not talking about carrying a balance month to month and paying interest, but rather, charging something every month before paying off the previous month's charge.
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