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webhopper
Posts: 7,225
Registered: ‎09-16-2011
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Re: Real Time Balance Reporting is Hurting Consumers


Wolf3 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.

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. 

 

 

 

 

 


Yep :smileyhappy: many people will have their own take on the formula. I grew up in a family where my mom had a tendency to Max out cards. Oh they were paid off eventually and closed but I cant count on one hand the number of loans my dad took from his retirement to get them down to zero. So of course my view on carrying a balance is much different than the average persons. To me; carrying a balance represents living above your means. This is why I use my zync card the most out of all my cards. I feel guilty when a balance sits for more than 10 days on a card. It bothers me tremendously. I am very ocd when it comes to finances. My 3 bureau report is pulled daily and I check each deposit account and each credit card account daily to keep my eye on the balance. I don't want to have out of control spending like my mother :/ I also compulsively save money into retirement accounts. My account balances are on par with someone who is in their mid 40s instead of just 30 years old. After the fiasco that was my first marriage (see low scores) I promised myself I would always stay on top of things and live way below my means. It doesn't mean that I cant have nice things and use a credit card to pay... but I literally have the cash sitting in an account before I do that.

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Wolf3
Posts: 3,197
Registered: ‎01-24-2010
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Re: Real Time Balance Reporting is Hurting Consumers

I on the other hand, hate to pay interest for anything other than my mortgage.  To me "carrying a balance" means not PIF but paying interest.   Having to pay interest is a sign of credit risk IMO.    

 

I like to make use of the grace period and 0% deffered interest and rather use the money for other things.  For instance, I might pay on my IRA contribution early and then pay the other later. As long as I don't spend more than I have, I don't consider it debt. 

 

By the way,  when I am planning an application for credit , I pay early to maximize my credit score.  I think I am gaming they system.   I can see where others think, I am just getting my score to what I deserve.    Both opionions have merit.

 

    .

 

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jcstarkey8826
Posts: 708
Registered: ‎06-01-2012
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Re: Real Time Balance Reporting is Hurting Consumers

Every definition of the word I can find refers to a law or contract. That would be the most vague of descriptions. Avoiding a difficulty. Really? It's fair game. Sometimes things aren't fairytales and magic dust. You have to read and learn. My CC company welcomes the fact that I pay early. FICO doesn't mind either. So who does the loophole apply to? The consumer? I think not. I'm done beating this dead horse. You don't see things the way I do and that's fine. Pay your credit card a few days early next time and you'll be just fine. Or don't? That's what's great about your credit, it's your credit! Don't blame the consumer for working the system. Blame the system. Sorry for the delay, just enjoying the weekend :smileyhappy:
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DaveSignal
Posts: 2,111
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Re: Real Time Balance Reporting is Hurting Consumers

call it a loophole or not, it is one way of subverting the system as it is designed to work.

 

I pay some cards completely before the statement even comes out for the purpose of making it appear to FICO that I am not even using those cards.  If I was about to apply for credit, I would pay the card that I usually let report a balance to make sure I had left just the right amount so as to make the FICO algorithm think that I had kept that card under a certain utilization.  I would do this by paying just before the statement comes out, approx 30 days before the due date.  I can't imagine that FICO is designed to expect consumers to be doing this.  The vast majority of people wait to see the bill before they pay the bill.  But we, the people who spend a lot of time studying this FICO stuff, are going to use any ways available to take advantage of the system. 

 

The reason I pay early is not because it is easier, or because I am a better credit risk that anyone else, it is simply to trick FICO into giving me a better score.  I am not doing anything illegal, but for sure, I am taking advantage of a loophole.

 

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HenryJumbo
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Re: Real Time Balance Reporting is Hurting Consumers

[ Edited ]

No other members have come further to state that this pratice is happening.

 

 

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DaveSignal
Posts: 2,111
Registered: ‎07-29-2011
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Re: Real Time Balance Reporting is Hurting Consumers

[ Edited ]

HenryJumbo wrote:

No other members have come further to state that this pratice is happening.

 


Yes, we determined that.  This thread no longer has to do with any real practice by any banks.  It is merely a discussion about the definition of "loophole" and whether paying before the bill even comes out is taking advantage of a loophole.  Personally, I think it is.  I worked hard studying FICO here to find the loopholes that I have found.  Of course I will take advantage of any easy tricks I can find to quickly and beneficially alter the outcome of a FICO calculation. 

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HenryJumbo
Posts: 143
Registered: ‎07-21-2012
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Re: Real Time Balance Reporting is Hurting Consumers

[ Edited ]

DaveSignal wrote:

HenryJumbo wrote:

No other members have come further to state that this pratice is happening.

 


Yes, we determined that.  This thread no longer has to do with any real practice by any banks.  It is merely a discussion about the definition of "loophole" and whether paying before the bill even comes out is taking advantage of a loophole.  Personally, I think it is.  I worked hard studying FICO here to find the loopholes that I have found.  Of course I will take advantage of any easy tricks I can find to quickly and beneficially alter the outcome of a FICO calculation. 


Yes it is a 'loophole' in so far as it takes advantage of the lapse in time it takes from gathering to reporting data (which originally was given due to limitations in technology). By using this loophole you can max out your card yet still show a zero balance without a creditor knowing that you maxed out your card that same month. I can imagine how it would of been many years ago before computers. However with new technology reporting can now become instantaneous.

 

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jordanmedical
Posts: 1,011
Registered: ‎04-08-2012
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Re: Real Time Balance Reporting is Hurting Consumers

Lenders still know if you max out as highest cl is still reported on CRs.

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HenryJumbo
Posts: 143
Registered: ‎07-21-2012
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Re: Real Time Balance Reporting is Hurting Consumers

[ Edited ]

Interesting. I always thought It was hidden after the statement close off date. As you can tell I've never maxed out a card ever, not even close to maxing one out.

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Revelate
Posts: 9,731
Registered: ‎12-30-2011
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Re: Real Time Balance Reporting is Hurting Consumers

[ Edited ]

DaveSignal wrote:

call it a loophole or not, it is one way of subverting the system as it is designed to work.

 

I pay some cards completely before the statement even comes out for the purpose of making it appear to FICO that I am not even using those cards.  If I was about to apply for credit, I would pay the card that I usually let report a balance to make sure I had left just the right amount so as to make the FICO algorithm think that I had kept that card under a certain utilization.  I would do this by paying just before the statement comes out, approx 30 days before the due date.  I can't imagine that FICO is designed to expect consumers to be doing this.  The vast majority of people wait to see the bill before they pay the bill.  But we, the people who spend a lot of time studying this FICO stuff, are going to use any ways available to take advantage of the system. 

 

The reason I pay early is not because it is easier, or because I am a better credit risk that anyone else, it is simply to trick FICO into giving me a better score.  I am not doing anything illegal, but for sure, I am taking advantage of a loophole.

 


I don't think that's the case Dave; otherwise, they wouldn't have made the change to Amex charge card reporting (term 1-month) as not reflecting in the FICO '04 and '08 revolving utilization.

 

PIFing before the statement date is no different than the charge scenario, you're floating cash for less than a month... and in this case, since with Amex you pay between 4-8 weeks after the charge hits, you're really on a shorter term, but you simply don't have the requirement to PIF on or before the due date in Amex's case.  Because of that, we should be "penalized" for what we do here in terms of paying early to avoid FICO's second most potential negative factor, revolving utilization?  

 

I just don't see that or anyone else considering that as either gaming or subverting the system as it's intended to work, or using a loophole given that FICO has already decreed charge cards moot.  We're living within our means, nothing to see Mr. FICO, please move along :smileyhappy:.

 

Edit: I think the "gaming the system" things I occasionally see in the news regarding FICO had more to do with various abuses of AU's and "credit fracking" and other forms of paying for positive tradelines.   Not simply paying one's credit cards early.  No lender cares about that, arguably they *like* that, and since the lender is the customer for FICO, I don't see FICO's changing.  To wit, the earlier the bank gets the money, the more money they make on their own fractional interest instead of us.

 

 

 

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