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Senior Contributor
Wolf3
Posts: 3,198
Registered: ‎01-24-2010
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Re: Real Time Balance Reporting is Hurting Consumers


JonStur wrote:

I'm enjoying these hypothetical discussions!!  Now time for my 2 cents. I don't  think it's  accurate to say somehow we are gaming the system by PIF early to get high FICO scores. A high FICO score basically states that I'm less of a risk to default on the money that a lender has extended me, than someone with a lower score that carries a balance. If I PIF, it stands to reason, by FICO's standards, that I have the available resources to cover my debts. Right or wrong, it's the standard THEY choose to use to assess  us. And if they develop a different standard, those who desire the best credit scores will figure out a way using their guidelines to make that a reality.


If you think the people who PIF before statement closing, are less risk then those who PIF by due date, then they deserve a higher score.  No gaming involved.

 

I don't think there is any difference in risk, so I think they deserve the same score.    Hence, either the early payers are gaming the system, or the due date payers are getting an unfair disadvantage.

 

There are several ways to look at this.

 

.  

 

 

 

 

 

Senior Contributor
Wolf3
Posts: 3,198
Registered: ‎01-24-2010
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Re: Real Time Balance Reporting is Hurting Consumers

[ Edited ]

Webhopper

 

 

 

Do you also pay all your other bills, like utilities (gas, electric, water, phone) before they are due, even if you don't know the amount?

 

If you are only doing the credit cards this way, you are gaming the system.  It is still my opinion that people who PIF every month are the same credit risk as those who pay early. 

 

 

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webhopper
Posts: 7,230
Registered: ‎09-16-2011
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Re: Real Time Balance Reporting is Hurting Consumers


Wolf3 wrote:

Webhopper

 

 

 

Do you also pay all your other bills, like utilities (gas, electric, water, phone) before they are due, even if you don't know the amount?

 

If you are only doing the credit cards this way, you are gaming the system.  It is still my opinion that people who PIF every month are the same credit risk as those who pay early. 

 

 


 

Yes I do. My utilities are roughly the same each month so I estimate and pay. I got into this habit when I worked away from home. I never got my mail so I just estimated and paid way more so that by the time I got home I had a nice credit balance on all of my utility accounts. Its nice when you get the bill in the mail and don't owe any money :smileyhappy: Thinking back I did this with my car note from 2000 - 2005... my income wasn't stable so I always pre paid when I could. The only bills I do not do this with is my two mortgage accounts. I pay one on the first and one on the fifteenth.

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JonStur
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Registered: ‎12-25-2010
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Re: Real Time Balance Reporting is Hurting Consumers


Wolf3 wrote:

JonStur wrote:

I'm enjoying these hypothetical discussions!!  Now time for my 2 cents. I don't  think it's  accurate to say somehow we are gaming the system by PIF early to get high FICO scores. A high FICO score basically states that I'm less of a risk to default on the money that a lender has extended me, than someone with a lower score that carries a balance. If I PIF, it stands to reason, by FICO's standards, that I have the available resources to cover my debts. Right or wrong, it's the standard THEY choose to use to assess  us. And if they develop a different standard, those who desire the best credit scores will figure out a way using their guidelines to make that a reality.


If you think the people who PIF before statement closing, are less risk then those who PIF by due date, then they deserve a higher score.  No gaming involved.

 

I don't think there is any difference in risk, so I think they deserve the same score.    Hence, either the early payers are gaming the system, or the due date payers are getting an unfair disadvantage.

 

There are several ways to look at this.

 

.  

 

 I disagree that people who PIF early are given an unfair advantage. Someone is given an unfair advantage if others are not given the same opportunities that they are. Everyone is given the opportunity to PIF early. If they chose not to or are unable to, then they dont reap the benefits (i.e. a higher FICO score) that the person who PIF early does. Thats like saying its unfair ffor someone who spends years getting a higher education to get a higher paying job, than it is for someone that doesnt.

 

 

 


 

 


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frugalQ
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Re: Real Time Balance Reporting is Hurting Consumers

More likely than not, people pay their cc before the due date because brother FICO is watching and will tell everyone who has reason to see your credit report.

I have several friends who will PIF before statement cuts becsuse they don't want their score to be affected or don't want other lenders to see any balance at all. However, they have no problems with paying their utility bills after the due date (but before any late fee is assessed).....because its not visible to anyone. In their opinion they are trying to get the biggest bang for their buck by keeping their money in an interest bearing account for as long possible....even if it's only 5 cents.

It is all a game, but the rules were not made up by the avg person. We are all trying to put ourselves in the best position, and as long that is within the rules of the game, so be it.

Reminds me of the age old saying: don't hate the player, hate the game.
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JonStur
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Re: Real Time Balance Reporting is Hurting Consumers


webhopper wrote:

Wolf3 wrote:

Webhopper

 

 

 

Do you also pay all your other bills, like utilities (gas, electric, water, phone) before they are due, even if you don't know the amount?

 

If you are only doing the credit cards this way, you are gaming the system.  It is still my opinion that people who PIF every month are the same credit risk as those who pay early. 

 

 


 

Yes I do. My utilities are roughly the same each month so I estimate and pay. I got into this habit when I worked away from home. I never got my mail so I just estimated and paid way more so that by the time I got home I had a nice credit balance on all of my utility accounts. Its nice when you get the bill in the mail and don't owe any money :smileyhappy: Thinking back I did this with my car note from 2000 - 2005... my income wasn't stable so I always pre paid when I could. The only bills I do not do this with is my two mortgage accounts. I pay one on the first and one on the fifteenth.

I also often pay before utilities are due because I pay them all with my US Bank  card and earn rewards the 1st of every month.


Starting Score: TU 686 EX 641 EQ 690
Current Score: TU 779 EX 767 EQ 740
Goal Score: 800 Club

BCE $12.5K, 5/3 Sig $10K, Wally Discover 10K, Cash+ $9K Sam's Discover 10K, Freedom $6K, Zales $5.5K, More $5K, Cap one $5K, Barclay 2.5K, Household Plat $1.5K, Household Gold $1.5K, Credit One $1K, First Premier Plat $.675K First Premier Gold $.65K
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webhopper
Posts: 7,230
Registered: ‎09-16-2011
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Re: Real Time Balance Reporting is Hurting Consumers


JonStur wrote:

webhopper wrote:

Wolf3 wrote:

Webhopper

 

 

 

Do you also pay all your other bills, like utilities (gas, electric, water, phone) before they are due, even if you don't know the amount?

 

If you are only doing the credit cards this way, you are gaming the system.  It is still my opinion that people who PIF every month are the same credit risk as those who pay early. 

 

 


 

Yes I do. My utilities are roughly the same each month so I estimate and pay. I got into this habit when I worked away from home. I never got my mail so I just estimated and paid way more so that by the time I got home I had a nice credit balance on all of my utility accounts. Its nice when you get the bill in the mail and don't owe any money :smileyhappy: Thinking back I did this with my car note from 2000 - 2005... my income wasn't stable so I always pre paid when I could. The only bills I do not do this with is my two mortgage accounts. I pay one on the first and one on the fifteenth.

I also often pay before utilities are due because I pay them all with my US Bank  card and earn rewards the 1st of every month.


 

Our cell phones; Internet; turnpike charges; security system bill; and satellite are all on auto pay. Unfortunately our water company; trash provider; and electric provider do not take credit cards.

Starting Score: 08/29/2011 TU 671 EQ 674
Current Score: TU 754 EQ 694 EX 697
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Established Contributor
JonStur
Posts: 905
Registered: ‎12-25-2010
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Re: Real Time Balance Reporting is Hurting Consumers


frugalQ wrote:
More likely than not, people pay their cc before the due date because brother FICO is watching and will tell everyone who has reason to see your credit report.

I have several friends who will PIF before statement cuts becsuse they don't want their score to be affected or don't want other lenders to see any balance at all. However, they have no problems with paying their utility bills after the due date (but before any late fee is assessed).....because its not visible to anyone. In their opinion they are trying to get the biggest bang for their buck by keeping their money in an interest bearing account for as long possible....even if it's only 5 cents.

It is all a game, but the rules were not made up by the avg person. We are all trying to put ourselves in the best position, and as long that is within the rules of the game, so be it.

Reminds me of the age old saying: don't hate the player, hate the game.

+1000


Starting Score: TU 686 EX 641 EQ 690
Current Score: TU 779 EX 767 EQ 740
Goal Score: 800 Club

BCE $12.5K, 5/3 Sig $10K, Wally Discover 10K, Cash+ $9K Sam's Discover 10K, Freedom $6K, Zales $5.5K, More $5K, Cap one $5K, Barclay 2.5K, Household Plat $1.5K, Household Gold $1.5K, Credit One $1K, First Premier Plat $.675K First Premier Gold $.65K
Senior Contributor
Wolf3
Posts: 3,198
Registered: ‎01-24-2010
0

Re: Real Time Balance Reporting is Hurting Consumers


webhopper wrote:

Wolf3 wrote:

Webhopper

 

 

 

Do you also pay all your other bills, like utilities (gas, electric, water, phone) before they are due, even if you don't know the amount?

 

If you are only doing the credit cards this way, you are gaming the system.  It is still my opinion that people who PIF every month are the same credit risk as those who pay early. 

 

 


 

Yes I do. My utilities are roughly the same each month so I estimate and pay. I got into this habit when I worked away from home. I never got my mail so I just estimated and paid way more so that by the time I got home I had a nice credit balance on all of my utility accounts. Its nice when you get the bill in the mail and don't owe any money :smileyhappy: Thinking back I did this with my car note from 2000 - 2005... my income wasn't stable so I always pre paid when I could. The only bills I do not do this with is my two mortgage accounts. I pay one on the first and one on the fifteenth.

My compliments, you are not gaming, you are doing what you think is best financially..

 

If you believe you are a better credit risk than some one else (all else being equal) who pays all there bills in full by the due date, then you agree with the FICO scoring on utilization.

 

I believe both are the same credit risk, hence, I think the FICO system is terribly flawed in this respect and unfair.

 

That is what this discussion boils down to.   I don't think we can prove which point is more valid.  It is based on probability and statistics after all. 

 

 

 

 

 

Senior Contributor
Wolf3
Posts: 3,198
Registered: ‎01-24-2010
0

Re: Real Time Balance Reporting is Hurting Consumers


frugalQ wrote:
More likely than not, people pay their cc before the due date because brother FICO is watching and will tell everyone who has reason to see your credit report.

I have several friends who will PIF before statement cuts becsuse they don't want their score to be affected or don't want other lenders to see any balance at all. However, they have no problems with paying their utility bills after the due date (but before any late fee is assessed).....because its not visible to anyone. In their opinion they are trying to get the biggest bang for their buck by keeping their money in an interest bearing account for as long possible....even if it's only 5 cents.

It is all a game, but the rules were not made up by the avg person. We are all trying to put ourselves in the best position, and as long that is within the rules of the game, so be it.

Reminds me of the age old saying: don't hate the player, hate the game.

Exactly.

 


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