An interesting thing happened to me today that I thought I'd pass along. I was playing with the FICO simulator on EQ when my balances on all CC's was about 3,500. My score was 633 and FICO said that if I paid it all off, my score would run between 683 and 713. Yesterday, some of my TL's updated and I had run up my balances to about $7,000 because of some business travel (the company will reimburse). My score dropped to 628 but FICO says if I pay it off, my score will leap to 698-738. With all that said, it might make sense to "buy" things on your credit cards up to the limit and then return everything once your statement cycles. For one month your score will stink but when the balance plummets, it appears that it might help your score.
Interesting. Demonstrating an ability to readily pay back large sums of money must suggest an element of creditworthiness. Manipulating this every other billing cycle for 4 or 6 months might well be a way to pump up the score a notch or two! Doc
FYI Chase dosn't accept returns as payments to their credit cards anymore,if someone charges the card and then let it cycle then tries to return the stuff to where they have bought it from after the statement closing date,chase will not i repeat will not count it as a payment to the credit card account.In order words you have to still pay a minimum due amount.Telling people this kind of stuff is catching one with chase but watch out for the other ccc's as well because they will one day soon put a stop to this.I don't think that you can really beat the FICO credit scoring system by doing this kind of thing.Chase amended their cardholder agreement about 2 months ago about making returns.So i just tought to pass this information along to all of you so that nothing goes wrong with late payments with your creditors.
ble103.... I don't think anyone is saying it is counted as a payment. What this tactic does is alter your balance. By showing a drastic balance reduction from one month to the next, it generally will positively affect your credit score.
You know what... I didn't even notice that HoustonGuy was talking about buying and then returning merchandise. Good call, ble103. That's what I get for reading too fast. My contribution to this thread was simply to note that paying back substantial amounts of debt can raise your score. Then I wondered if doing that month after month would pump up your score a bit. (Again, I'm talking about actually PAYING for the stuff -- groceries, etc. -- and not returning the merchandise.) Then of course, Rina's observation about George may provide the ultimate answer. Anyway, thanks for pointing out the critical piece I missed there, ble103! Doc
The effect of a big payment won't last for more than a month. Equifax & TU don't report past balances. George's case is different. While utilizing low BT rates, his ratios stay high, even if he makes some payments. Which is probably why his tagline suggests he's lost 800 (or 700) club membership Saar
One minor point: Even though EQ and TU don't show prior months balances doesn't mean that they don't keep them hidden away somewhere. I would suspect that prior balances must be retained or else my score would actually go down from the peak once time had passed. Regardless, my balances will get paid down over the next two months and we shall see what ultimately happens to my score. While we're on this topic, has anyone ever consolidated all of their debts onto one single card (and all other balances show zero) and seen their score rise, even with the same total balance? One of the things they allude to in the FICO simulator is that they look at amount of balance and number of accounts with balances. Consolidating into one card might be a minor way to boost your score.
When I worked at FUSA I always noticed that Kiters had the top score on our system (It went up to 900 but I'm not sure what method they used to determine it. Just knew that anything over 600 was ok, 650+ was good, 700+ was great). For those not familiar with Kiting. Assume you have a FUSA card and an MBNA, both with a credit line of $10,000 and you have a balance of $10,000 on MBNA's card. You would do a BT (Either by check or over the phone) and transfer the balance to FUSA. Then next month, repeat the steps back. Continue going back and forth. Basically you're bumping your score up and avoiding interest (And CC companies totally hate this!) Of course, CC companies have closed the loopholes by charging for BT's. Not sure why I posted this, just thought it would help Doc's thoughts about charging a card up then paying off the balance... GT
You can avoid BT transaction fees if you do it right. I've BTed to Amex, Citi, Chase, B of A, Capital One, Discover; and have never paid a fee. Saar
While we're on this topic, has anyone ever consolidated all of their debts onto one single card (and all other balances show zero) and seen their score rise, even with the same total balance? One of the things they allude to in the FICO simulator is that they look at amount of balance and number of accounts with balances. Consolidating into one card might be a minor way to boost your score. [/B][/QUOTE] I just did that last month Of course I can only get fake scores (CE, TU, and Privista) My file is too large for Credit Watch :-( Currently, the only card that has updated is the card to which I transferred everything.
