@Chris679 wrote:
@longtimelurker wrote:
Of course, doing this is cheating the system, just as much as say, oh, MS. The FICO score is meant to represent risk for the issuer, based on data from "normal" behavior, where people pay (either in full or in part) after the statement cuts. So reducing balance before the statement cuts (just for that purpose) is a deliberate attempt to misrepresent risk to current and potential issuers. I am shocked it is openly condoned.
How would there be any risk if the balance is already paid? To make any argument that people who pay down before the statement are doing something wrong or misleading is ridiculous.
Or actually correct. The FICO algorithms are based on data collected over time and comparing those that at some point defaulted from those that didn't. It doesn't need to make sense, just statistical correlation. So more points are given to those that have say one non-zero balance. Because the data is based on "normal" behavior, this is going to happen when people are using only one cc, or perhaps rotating which cc they use from time to time. Here, people can be spending abritrary amounts on all thier cards, and just paying htem down to 0 before the statement cuts.
We are not talking about risk THIS cycle, because as you say the money is paid. But when you apply for a new card (precisely the time people are told to do this trick) you are giving the creditor the impression that you are one of these low-risk type of people, when in fact your real behavior doesn't match that all.
Whichever way you view it, this is gaming the algorithm. Or being deliberately deceptive to gain an advantage. Which is OK by me, but people should understand what they are really doing, and is as "wrong" as most other things that are called wrong here.
