Understanding FICO® Scoring

[ilovepizza]

I think it is a good *new* question. Usually the negative hit for new credit (does not always happen) is 60 days.

Question:
1. If a card is dormant, does it take a hit next time it is used like new credit again?

2. Exactly how long does it take to become dormant?

[diggumsmacks]

Good question! I have one too. If you pay your balances off before your card statement comes out does the CRA see you as not using credit? How would they know if you charged 15,000 on your american express then paid it off the next day?

They wouldn't! But, for the best score, you want 1-9% util to actually post on your account each statement.

Message Edited by Tuscani on 06-21-2007 07:06 AM

[Tuscani]

---

ilovepizza wrote:
I think it is a good *new* question. Usually the negative hit for new credit (does not always happen) is 60 days.

Question:
1. If a card is dormant, does it take a hit next time it is used like new credit again?

2. Exactly how long does it take to become dormant?

---

1. Depends on how much you charged (util is key). In terms of anything other than util (i.e. age), no.

2. Every CCC has different policies. Some will close with three months of no activity, others could care less.

[ilovepizza]

When they stop reporting on our credit report, Large gap of no history due to no usage is that dormant?

[vfma1971]

I used a dormant card a few months back, and it raised my score by  few points.  Now I'll have to dig out all my dormant cards and put a tankful of gas on them, one by one

Maybe that will counteract my score dropping from the 'increase in balance' on another

  That drop showed me just how flawed the system is.   I have one card that gives 1 to 3 % rebate which can be used for gasoline !  Now who couldn't use a little free gas these days?  Soooo, I started putting every possible monthly expense on that card.  (which is paid in full every month).  Even though it is paid off every month, the cc company shows me carrying a monthly balance -  arrgghh.  That card balance varies from $1500 to $5000 a month, depending on the time of year (ie heating season, etc).    They need to change their formula for this and factor in monthly interest charges, which have been ZERO since I got the card.    Factoring in interest charges would help eliminate being penalized for carrying cc debt for those of us who pay off every card every month.

[MidnightVoice]

---

vfma1971 wrote:

:

  That drop showed me just how flawed the system is.   I have one card that gives 1 to 3 % rebate which can be used for gasoline !  Now who couldn't use a little free gas these days?  Soooo, I started putting every possible monthly expense on that card.  (which is paid in full every month).  Even though it is paid off every month, the cc company shows me carrying a monthly balance -  arrgghh.  That card balance varies from $1500 to $5000 a month, depending on the time of year (ie heating season, etc).    They need to change their formula for this and factor in monthly interest charges, which have been ZERO since I got the card.    Factoring in interest charges would help eliminate being penalized for carrying cc debt for those of us who pay off every card every month.

---

That is why I pay my cards twice a month  - most of it BEFORE the statement posts (ain't online CCs wonderful - you can see what your current balance is  ), the rest after the statement comes out.  So I have low utilization for FICO and have no finance charges

[Viking]

Two weeks ago I tested this question by:

1) charging a tank of gas on a dormant chase card with a zero balance

2) paying it off before the due date.

3) paying off a $19 balance on a second chase card with the same due date

On EQ this reported out as:

a) Sept, 2007 activity for both cards

b) $45 last payment for card one and $19 payment for card two

c) zero balance on both cards

My fico score went down 3 points.

Nothing else changed on my CR. So one would think moving a balance from $19 to zero would raise fico. And one would think taking a card out of dormant status would raise FICO. But not so.

My guess is there some kind of "pattern of use" algorithm in the formula.

[smallfry]

When you have all this figured out let me know.