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NoNonsense Simulation

Valued Contributor

Re: NoNonsense Simulation


lg8302ch wrote:

I have done this test when I had 8 cards (before my last app) and tried to challenge ScoreWatch Smiley Happy  My overal util is less than 10% in both of my tests so I can only answer for results with low util. First test was reporting 1 account with 70% util but overal util of 4% and my score was 802. The next month I made sure I let 8 accounts of 8 report a 1$ balance and my score dropped to 738. Reason for the drop according Fico - too many accounts with a balance. So for me it did not matter the high util on a single card at all as long as overal util stayed low. The total open debt on my 2nd test was 8$ (1$ on each account) and this resulted in an incredible drop of my Fico score. That was a very interesting experience and from this experience it would be better to let the 250$ report on 1 account instead of spreading it around.

 

But that is not what I am doing because I do not care about my score unless I want to app and much rather get the best rewards out of my cards Smiley Happy

 

(this is only in terms of score - no clue about CLIs)


+1...my results are identical to LG's. My score rises if only one card reports, and falls when more than one reports a balance. This is a good thread topic. Thanks to the OP for starting it.

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Message 41 of 51
Valued Contributor

Re: NoNonsense Simulation

One point here is that FICO scores are not the only scores that matter.

 

For example, I expect that CC companies have an internal score that measures your value to them, and someone with a 720 FICO and $5K balance may be ahead of someone with an 800 FICO who PIFs.

 

Such a score may flash up on the screen when you call the number on the back of the card, and talk to a CSR.

 

A score like this would be a complex tradeoff of risk and reward.  You need to have a FICO score high enough to reassure the company that you won't default.  Beyond that, I expect they're looking for people who either carry a balance or spend a lot.

 

Having a high FICO score is an obsession to many people, but I'm not sure how many doors it opens once you cross some threshold like 750.

 

Message 42 of 51
Super Contributor

Re: NoNonsense Simulation

+1
Message 43 of 51
Senior Contributor

Re: NoNonsense Simulation


Vegas247 wrote:

Well what is the consensus here? I have 4 cards myself....I'm taking this as: let one card show a small utilization like 3 to 5% utilization, and the other 3 cards or however you may have, show a zero balance, for highest possible FICO SCORES....is that correct? Anyone?

 

Has anyone done a test where all the cards show a zero balance?

 


Yes...lost 15 points. Was even expecting more ...Fico does not like 0 everywhere..LOL

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Message 44 of 51
Established Contributor

Re: NoNonsense Simulation


user5387 wrote:

One point here is that FICO scores are not the only scores that matter.

 

For example, I expect that CC companies have an internal score that measures your value to them, and someone with a 720 FICO and $5K balance may be ahead of someone with an 800 FICO who PIFs.

 

Such a score may flash up on the screen when you call the number on the back of the card, and talk to a CSR.

 

A score like this would be a complex tradeoff of risk and reward.  You need to have a FICO score high enough to reassure the company that you won't default.  Beyond that, I expect they're looking for people who either carry a balance or spend a lot.

 

Having a high FICO score is an obsession to many people, but I'm not sure how many doors it opens once you cross some threshold like 750.

 




 When it comes to large purchases like buying a house....you bet FICO scores matter.....or getting a loan/new credit card...I'd rather have the best FICO scores at all times and PIF on CC's even if my CCC favors another way...I figure CC companies make money everytime you swipe that card....and If I decide to PIF, they should be happy that not only I use thier card so they make money, they get PIF right away....I take care of myself 1st

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Message 45 of 51
Highlighted
Valued Contributor

Re: NoNonsense Simulation

I run a middle road. I just pif but don't prepay unless contemplating a credit app or experimenting. It would be very important for a mortgage when FICO points translate into real money over a lot of years.  But that isn't often and FICO scores adjust immediately as soon as each lender reports.


I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

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Message 46 of 51
Established Member

Re: NoNonsense Simulation


user5387 wrote:

One point here is that FICO scores are not the only scores that matter.

 

For example, I expect that CC companies have an internal score that measures your value to them, and someone with a 720 FICO and $5K balance may be ahead of someone with an 800 FICO who PIFs.

 

Such a score may flash up on the screen when you call the number on the back of the card, and talk to a CSR.

 

A score like this would be a complex tradeoff of risk and reward.  You need to have a FICO score high enough to reassure the company that you won't default.  Beyond that, I expect they're looking for people who either carry a balance or spend a lot.

 

Having a high FICO score is an obsession to many people, but I'm not sure how many doors it opens once you cross some threshold like 750.


 

All very true, and I am no FICO obsessed myself, although I am "very interested," but you can understand the obsession when in the world of credit everything looks so deliberately hidden and secretive, the FICO score is a number that gives the illusion that we may be in more control that maybe we are.  It's something.

Message 47 of 51
Frequent Contributor

Re: NoNonsense Simulation


NoNonsense wrote:

 

 

All very true, and I am no FICO obsessed myself, although I am "very interested," but you can understand the obsession when in the world of credit everything looks so deliberately hidden and secretive, the FICO score is a number that gives the illusion that we may be in more control that maybe we are.  It's something.


It's important to remember that FICO scores measure the likelihood of default. Nothing more, nothing less.

 

They do not measure how profitable you'll be to CCC as a cardholder, although that is partially related to

default risk. Presumably, CCC use internal scoring to predict how profitable you'll be as a cardholder and

adjust their offerings accordingly. With credit cards in particular, there may well be a FICO score that if exceeded

actually reduces the offerings from CCC. I know I get far fewer preapproved mailings and have never had an auto

CLI with my +800 PIF score than my GF does with her low 700's and $6k~$10k revolving balance. I would guess that

having a long perfect payment history of carrying a moderate balance with a resulting mid 700's score is a CCC's

ultimate dream cardholder. Not an +800's PIF person.

 

And most important, FICO scores do not measure how well you manage your accounts  for the maximum benefit

to you.  Unless you have an upcoming app, the most benefit to you, the CC holder, is to PIF on the due

date (always) and get the benefit of the free loan during the grace period. Don't let chasing a number like

a FICO get you to do things that aren't in your best interest.

Message 48 of 51
Established Contributor

Re: NoNonsense Simulation


bada_bing wrote:

NoNonsense wrote:

 

 

All very true, and I am no FICO obsessed myself, although I am "very interested," but you can understand the obsession when in the world of credit everything looks so deliberately hidden and secretive, the FICO score is a number that gives the illusion that we may be in more control that maybe we are.  It's something.


It's important to remember that FICO scores measure the likelihood of default. Nothing more, nothing less.

 

They do not measure how profitable you'll be to CCC as a cardholder, although that is partially related to

default risk. Presumably, CCC use internal scoring to predict how profitable you'll be as a cardholder and

adjust their offerings accordingly. With credit cards in particular, there may well be a FICO score that if exceeded

actually reduces the offerings from CCC. I know I get far fewer preapproved mailings and have never had an auto

CLI with my +800 PIF score than my GF does with her low 700's and $6k~$10k revolving balance. I would guess that

having a long perfect payment history of carrying a moderate balance with a resulting mid 700's score is a CCC's

ultimate dream cardholder. Not an +800's PIF person.

 

And most important, FICO scores do not measure how well you manage your accounts  for the maximum benefit

to you.  Unless you have an upcoming app, the most benefit to you, the CC holder, is to PIF on the due

date (always) and get the benefit of the free loan during the grace period. Don't let chasing a number like

a FICO get you to do things that aren't in your best interest.


 

Very well said. 

 

After slicing and dicing 10,000 posts or so I've basically come to this conclusion:

 

1:  Follow UNO right before you begin APPing.

2:  Follow SPREAD when the objective is high CLs on future APPS....LET THOSE BALANCES REPORT THE HIGHER THE BETTER.   

3:  CLIs shouldn't be a major concern if balances report or not since each CC issuer will have internal scoring systems based on the individual's spending behavior.

 

I second Longtimelurker's approach about maximizing use of the float.

 

The caveat here is never to follow SPREAD to the point where cumulative UTIL becomes greater than 50% whereby certain creditors could begin to initiate CLDs or account closures. 

 

 

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Message 49 of 51
Regular Contributor

Re: NoNonsense Simulation


longtimelurker wrote:

user5387 wrote:

For scoring, yes.

 

For other purposes like auto CLIs, maybe not.

 


And just a reminder that all this micromanaging can have a real cost.  One of the attractive features of a credit card, outside any rewards, is the float, you are getting an interest free loan of the money for about 21 days after the statement closes.   You lose that benefit (and thus any interest you may have made on the money) by paying early.   If you aren't apping for something where your score really needs to be optimized, its not worth the potential loss.


Wait, what benefits are lost by paying in full before due date..? Can a member who is a credit analyst chime in preferably?

Message 50 of 51