Reply
Mega Contributor
RobertEG
Posts: 17,456
Registered: ‎03-19-2007

Re: FICO doesn't understand the credit card game

[ Edited ]
Sherry, I love your posts!  But please do not become obsessed with reverence for FICO scores!
I proffer that quest for a high FICO score is not a prime goal of life.
Anything 740+, and particulary 760+, is just bragging rights.
The ONLY reason for having a high FICO score is to improve your ability to secure future credit under decent terms.  If you dont use it, it is absolutely meaningless.  Kinda like an ex-wife!  LOL!  But once you actually use your improved, and luxurious, FICO penthouse score, you are immediately cast down a few floors below the penthouse.  Just the act of simply inquiring about new credit zings your FICO immediately for around -10 FICO.  But who can get credit without asking for it?  Dah!  Then, if the inquirry leads you to actually  take on new credit, it mmediately increases your percent utiization.  So FICO goes down more.  But who gives a hoot if you now have the new home, the new car in the garage, or the new flat panel, LCD Hi-Def on the wall?  I would much prefer to have a new Lexus in my garage that I can use everyday for the next few years than to harvest an increasing FICO over those two years that is meaningless unless I use it to spend. I value FICO, but do not bow at its alter.  If you dont use it, you lose it.
I have never seen a gravestone chiseled with the epitaph.......
"Here lies John.  He died with a FICO of 820!"


Message Edited by RobertEG on 01-03-2008 05:03 PM
New Contributor
sherry
Posts: 96
Registered: ‎05-01-2007

Re: FICO doesn't understand the credit card game

[ Edited ]
Robert
thank you :smileyhappy:
I must admit prior to joining this forum I would slash anyone who spoke ill of FICO passionately. When I joined this forum I didn't have many expectations outside of the fact that I would be able to communicate in a forum with others that was as passionate as I about credit.
Maybe you're right. Perhaps I'm a little obsessed with FICO scores and information. Its kind of hard to not show that after being gung ho for all of my credit life from 19 to now 38. Over the past few weeks I have been challenged by reading posts and listening to the undertones of the information received. What i've gathered is that many of us are "scorewatchers" monitoring the ups and downs and trying to maintain or gain those few extra points. What good is a nice credit score with borrowed money and no room for financial growth. Robert for me there is an ultimate goal
Financial growth/business ventures/improved quality of life.
Robert.
that is why I play "the game" there are some that are born with the silver spoon
others have to make theirs and that is me.:smileywink:
 
 
Robert you said
I have never seen a gravestone chiseled with the epitaph.......
"Here lies John.  He died with a FICO of 820!" LOL
 
 


Message Edited by sherry on 01-03-2008 09:29 PM

Starting Score: EQ 730 TU 721
Current Score: EQ 730 TU 710
Goal Score: 800 to 850


Take the FICO Fitness Challenge
New Member
Score_Watcher
Posts: 4
Registered: ‎12-18-2007

Re: FICO doesn't understand the credit card game

I agree with Robert, to a point.  There really is no need to to have a FICO if you don't use it and when you do use it you loss it.  But, on the flip side when you do use it you get a better interest rate on that new Lexus in your garage.  So what if your score goes down at this point, you have the new car and don't have to pay too much interest (if any at all).  Over the next two years that you are using you Lexus your FICO will go back up to it's old level and you can trade in you car and get another new one with another good interest rate. 
While your FICO might drop for a year or so after you use it to get new credit, it should go back up unless you over use it, which is exactly the way the system was set up to work.
 
I quick example based on my personal credit usage.  Over the last year I have gotten not one, but two new CC's.  I am playing the 0% for a year game that I am sure many of us use.  The first card I got I transfered a large balance unto and took that money and put it into a fairly high savings account.  The money stayed liquid to pay the CC if I couldn't make the payments off my normal income, plus I am earning a good amount of interest each month on the balance of that cards.  The second card was opened only because of the great discounts and rebates I got when I opened to buy a new fridge for my parents.  I saved over $300 in discounts and rebates plus the cash I would have used to buy the fridge with stayed in my bank account for 6 months earning 5% while the CC charged me 0%.
I was just playing the CC game.
Long story short (too late) it has only been about 7 months since I opened the first on these 2 cards and my score is already 15 points higher then it was before I opened the first card.  While it was down about 20 after the 2nd CC was opened once I paid of the balance on one of them my over all score went higher.
New Visitor
Fico_Frustrated
Posts: 1
Registered: ‎01-04-2008

Re: FICO doesn't understand the credit card game

I have the same problem as just_curious and am really frustrated! I have 9 ccards, some with no limit and some with $40k and higher available. I'm a business owner and there are times when I may have  thousands of dollars outstanding at one time. For the most part, these balances are paid off in full, but there are times when I carry balances when there's a fixed 0% rate on a particular card. I can pull my credit report and they show up as revolving  balances, even when the entire balances are paid  before they are due. I've never had a deliquent payment and have the income to support the charges. It really frustrates me that because of this my score varies from the low 700s to the upper 600s. The only reasons listed are that the % of cc debt to the limits is too high. I understand that each report can't be tailored to each individual, but there has got to be a better way! My score was always in the 800s before starting my business. It seems unfair to be punished b/c the "norm" seems to be people who get in over their heads with cc debt!
Moderator Emeritus
Timothy
Posts: 9,252
Registered: ‎03-19-2007

Re: FICO doesn't understand the credit card game

Perfect reason to seperate business and personal credit-
 
Not only this- but when CL and/or balances go over a certain $ amount they get taken out of UTL for scoring.
No limit cards should be put into "other" or they will use the high balance for the CL.

Fico_Frustrated wrote:
I have the same problem as just_curious and am really frustrated! I have 9 ccards, some with no limit and some with $40k and higher available. I'm a business owner and there are times when I may have  thousands of dollars outstanding at one time. For the most part, these balances are paid off in full, but there are times when I carry balances when there's a fixed 0% rate on a particular card. I can pull my credit report and they show up as revolving  balances, even when the entire balances are paid  before they are due. I've never had a deliquent payment and have the income to support the charges. It really frustrates me that because of this my score varies from the low 700s to the upper 600s. The only reasons listed are that the % of cc debt to the limits is too high. I understand that each report can't be tailored to each individual, but there has got to be a better way! My score was always in the 800s before starting my business. It seems unfair to be punished b/c the "norm" seems to be people who get in over their heads with cc debt!



Senior Contributor
smallfry
Posts: 4,831
Registered: ‎04-20-2007

Re: FICO doesn't understand the credit card game

I think credit cards with a limit of 40K are still counted in the utilization. Mine is.
New Visitor
vess1
Posts: 1
Registered: ‎01-04-2008

Re: FICO doesn't understand the credit card game

 
   Ok, I had to sign up and respond to the OP.    First off, congratulations on your financial position and being able to leave the rat race. 
 
With that said, people keep giving you your answer over and over!   I hate the FICO scoring system.  It's rigged against the consumer entirely in a vast, catch 22.  Yeah, there's problems with it.  BUT IT DOES WHAT IT'S INTENDED TO DO.    It is a general model for scoring the AVERAGE, middle class person (numbering in the MILLIONS) on their probability to repay a loan.  It's not going to be perfect.  I don't want them to have anymore personal information.    You have to play their game.
 
 Bottom line:  FICO works for the banking industry.  It is not designed to properly rate people at your end of the spectrum and probably never will be because you're not only in the minority but you aren't making the banks any money!  What would be the point of adding additional elements to it to rate a minority that COSTS them money?
 
   If you're over 720, it doesn't matter.  You're going to get the best rates once banks see your income and assets anyway!
 
   The score is for people who NEED to borrow money.  Not for those who don't need to and can pay off anything every month.  I know you may feel a little left out and neglected over this but just order yourself up a new Ferrari and you should feel better in the morning.   Seriously, why keep worrying about this?  Just bored?
 
  You may as well argue over how big the universe is.   There's no point in hashing over it anymore. 
 
  I would much rather figure out why the credit bureaus should be allowed to profit on your personal information while doing very little to nothing, to make sure it's accessible and accurate.  It's a total scam!
 
  They know that anything that requires effort, or money from people, they're likely not going to do.  Put the combination together and it's almost a guarantee they won't do it.  Nobody checks their credit report!   It's too inaccessible.  To some it's complicated and really, it's not that cheap.  Most don't even realize how much that score costs them because we aren't even given the courtesy of knowledge from our schools to begin with.    Complete scam from start to finish.
 
 
 
New Contributor
sherry
Posts: 96
Registered: ‎05-01-2007

Re: FICO doesn't understand the credit card game

[ Edited ]

Let me pick this one apart and Timothy will have to correct me because.I will use his explanation.

1. Small fry you opened a business 2. Your credit before the business was in the 800’s 3. Since your business your credit score is high 600’s to low 700’s Timothy is in essence saying: Separate your business credit from your personal credit.You spend or need more money to operate your business than what you would for your personal expenditures. How does fico know...? Before we ponder this one…..

Timothy do you remember that just curious was telling us how he spends a lot of money each month on his credit cards, he also indicated that he benefits by spending on these cards because he takes advantage of the cash back features. He also made it a point to let us know that he has cc’s that have no limits…..He is also suffering a lower credit score despite his excellent payment history….now can we put this together….

Timothy could it be that when frustrated gets a reason of % of cc debt to the limits is too high it is because the credit cards that have specific limits total combined is just say 10000 dollar cl and frustrated is using her cc that are unlimited that will show beyond 10000 or close to it.  This may indicate that in essence the percent of her cc debt to the limits is really too high and why timothy states that the unlimited amounts get taken out of the utilization....(not your exact words but similar)

So this sort of explains it to me…if it is in fact a truth…….that is why that other guy suffers. And perhaps why she is suffering too.

So can anyone agree or refute this or make better sense…

 

 



Message Edited by sherry on 01-04-2008 08:49 PM

Starting Score: EQ 730 TU 721
Current Score: EQ 730 TU 710
Goal Score: 800 to 850


Take the FICO Fitness Challenge
Moderator Emeritus
Timothy
Posts: 9,252
Registered: ‎03-19-2007

Re: FICO doesn't understand the credit card game

sherry you giving me easy ones (starting to worry about a set up)
 
I recommended seperating biz from personal credit for 3 reasons-
1. It is smart business- don't put your self to lose everything if $hit hits the fan.
2. The business need to built it's credit  
3. Why hurt your personal credit score -
 
Open limit cards SHOULD BE  treated different in scoring - but if the creditor is not reporting it perfectly it will be treated as a regular CC and use the high balance to subsitute the CL-  so even if you ran this card upto 50K once and then put 40K and PIF each month- FICO looks at this as 80% UTL.
 
I individual and overall UTL is counted almost the SAME in scoring.
One TL at 80% will/can tank your score- for high achievers, even more.
 
Also the number of CL with balances to number of TL's comes into play- another score beater
 
I use the crap out of my cards each month for the benefits- my score is not affected by it at all- UTL is under 5%- my score is down because of a few lates 1.5 years ago.
 
I think I answered all of those questions-
Moderator Emeritus
fused
Posts: 16,194
Registered: ‎03-12-2007

Re: FICO doesn't understand the credit card game



smallfry wrote:
I think credit cards with a limit of 40K are still counted in the utilization. Mine is.


It depends on the CRA and which FICO scoring version a potential lender is using. FICO scores yanked by some banks, lenders, CUs and CCCs are not necessarily the same as the ones we yank here.

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+