I have an idea. Yesterday someone mentioned that our statement balance is probably what's reported. I'm going to pay off my balance online about a week before the statement closing date. It may mean making 2 payments a month (if I charge stuff in between paying & closing), but that will be worth it to me. That way I can use up my cards, but my usage % will be low on reports.
Great habit, but you must not ever pay down to a $0 balance even though you'll pay a little interest. Always pay down to $1 or $1.50. That'll be best for rapid score growth. FICO will punish you if you go to $0.
Superadman... Don't take this as a challenge, but how do you know? What do they say about it? I don't see how it can be bad to have zero balances when they penalize you for too high balances.
From what lenders have told me, they want to see active payment and active usage. Having a zero balance appears to them as if you are not proving you can properly use credit and (right or wrong) could suddenly use it all if faced with financial trouble. Hope that helps.
LOL Nursie, a challenge is OK. That weirdo numerical monstrosity we call the FICO score will absolutely penalize you for any $0 balance you ever have reporting to any of your CRA reports. Don't take my word for it, many of the seasoned people on this board know about this. It is in your best interest to keep your balances low, that's why I pay mine down to $1 or $1.50. For rapid score growth your balances on any and all revolving accounts must not be lower than $1 nor higher than 35% of your available credit line.
Naaaaaah FICO is a static point in time calculation...it has no information on the number of times you paid your balance down to a dollar without paying off the balance in the past, so it can not punish you for past payments that bring your balance down to zero...now if what you suggest is true, then it would be stated like this: "Having a balance of $1 on your revolving accounts has a higher positive effect on your FICO score than having a balance of $0" ... to that I say pish posh. It may be true...the formulas are so secretive but I would not tout it as a definite thing. Now you MAY have better feedback from the CREDIT CARD's by leaving a balance...but not from Mr. Fair and Mr. Isaac. -Pish posh, Dave
FICO sucks man... I LOST 8 points after 17 5 month old inquiries and a 5 1/2 year old collection came off EQ.
Thanks, guys! I do understand it now. I'll just pay twice a month. I'm kinda like George. Now that I've got things under control, I actually look forward to paying my bills now (they used to give me stomach aches).
A friend of mine is trying to get a business loan, but she is having a hard time getting a decent rate cause she has always paid in full on her credit cards and she has paid off her car loans after 1 year of payments, even with a 5 year loan. Banks are looking at her as though they aren't gonna make any money off her at a low rate cause she'll pay off early, so every bank is giving her high rates for offers.
I know what I'm talking about with that score thing. The score is designed to dock you some points whenever your balance is $0 for sure. Absolutely for sure. And it will dock you if your balance is higher than 35% of your credit limit. For sure. And this is why so many of us are pissed when companies like Cap1 and Amex don't report credit limits.
KHM, A business loan is a much different animal. There more factors than just wether she carries a balance or not. How much is she trying to borrow, how will it be secired, who will secure it, what sort of business {does it have a high failure rate}, lease or real estate involved, how complete is the business plan, etc. The bank is not concerned how fast they get money back. They're concerned about getting it back period. I'm will ing to bet there is a glitch or 2 here your friend isn't disclosing.
There has got to be something else in there getting her lower than prime rates...it is all risk vs. reward. If she pays on time they make their money on the loan. They may be "less" happy because they did not make the "full" interest, but a reasonable return on an investment is what they are after, not usuary on one hand, and not delinquency on the other. On a business loan if she pays early...they get their money back to loan out again, and may even get a pre-payment penalty. If the banks she is looking at treat that as a bad thing she needs to look elsewhere for the loan...tell her to try a Credit Union or contact the small business development resources she has at her access (in her state/local govt) to find cheaper money. Being a woman, if she is the primary owner, she may have minority business status that can get her GREAT rates on loans and offer her help with management and clientelle. -Peace, Dave
Why bother with you Erica? I don't appreciate some of what you've posted about me here and elsewhere in the last 24 hours. Ask your fiend Doc or somebody else, what I am saying (as usual) is fact. For the benefit of those who are just innocently seeking the information, I first learned of this from an employee of the Fair Isaac company. I and many friends of mine have tested and used that and several other score building techniques successfully over the last 6 months.
Ok NOW I believe it...thanks for the 100% relaible info and bona-fide test results. I find no way to doubt you on this so I will just trust your Fico friend and your 6 months of impartial blind tests and use the control group. That puts a nail in the coffin of doubt and certainly sheds light on the scoring system that no one from this board has been able to get a handle on yet. Oh yeah and lay off Erica! -Peace, Dave
Erica's management status at Target proves that she has a sense of humor so I'm sure she'll be alright. We all seem to get animated on this board when we're passionate about a subject. But you honestly can put that $1-$1.50 balance thing in your pipe and smoke it.
superadman, Based on my experience, GEORGE's posts, and articles I've referenced in other posts, I think you're right. I paid off a private education loan in 2 years instead of 5 years; the car insurance paid off my 1st car loan less than 6 months after I bought it due to a hit & run accident; I paid off my 2nd car loan a few months early. TU now tells me that I don't have "enough installment debt experience." It then explains "The most owed on these accounts has a negative impact on your credit score." Although this makes me much better off financially, score-wise, I still take a hit.
It has been posted here before, but I don't remember the link. It is a chart that shows what gets you the most points. It shows the number of cards, the time at one address, the time at 1 job, the balance ratios, etc. It was from a fair isaac presentation I believe. Sorry I don't know the link.
