Understanding FICO® Scoring

[Aim720]

The most upsetting thing about FICO scoring is that you actually lose points for not carrying a small balance. That's the stupidest thing I've ever heard! If staying out of debt means losing 7 points (which I did today) so be it!

[OhioCPA]

You don't lose points for not carrying a balance, you lose points for not using your card.

To maximize your FICO score you need to let at least one credit card report a balance on the statement date. You can pay the balance as soon as the statement cuts and still maximize your score.

People with who don't use credit cards are statistically not as credit worthy as those who use credit cards responsibly. FICO is just reflecting this in the scoring. 

[Gunnar419]

It really is insane (even though I understand the reasoning) that people who get out of debt are punished, rather than rewarded, in this system that so heavily influences our lives.

[guiness56]

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OhioCPA wrote:

You don't lose points for not carrying a balance, you lose points for not using your card.

To maximize your FICO score you need to let at least one credit card report a balance on the statement date. You can pay the balance as soon as the statement cuts and still maximize your score.

People with who don't use credit cards are statistically not as credit worthy as those who use credit cards responsibly. FICO is just reflecting this in the scoring. 

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I have to disagree with this statement.  There are many consumers that reach 800+ scores without the use of CC or even have one.

[OhioCPA]

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guiness56 wrote:

I have to disagree with this statement.  There are many consumers that reach 800+ scores without the use of CC or even have one.

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I don’t see where your statement disproves my statement. There are several anecdotal reports of drops in FICO scores with zero credit cards reporting. Whether that is a drop from 720 to 710 or 830 to 825, it is still a drop in score.

[Shogun]

I took a 9 point drop this morning from EQ due to $0 CC balances.  I'd had a $183 showing on my Walmart GE card last month, but paid it off and didn't let anything else post.

[guiness56]

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OhioCPA wrote:

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guiness56 wrote:

I have to disagree with this statement.  There are many consumers that reach 800+ scores without the use of CC or even have one.

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I don’t see where your statement disproves my statement. There are several anecdotal reports of drops in FICO scores with zero credit cards reporting. Whether that is a drop from 720 to 710 or 830 to 825, it is still a drop in score.

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The part about not being as credit worthy was my point, not the drops in score.  And I didn't say I was trying to disprove you, I simply said I disagreed.  My option of opinion.

[scenery_guy]

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Shogun wrote:

I took a 9 point drop this morning from EQ due to $0 CC balances.  I'd had a $183 showing on my Walmart GE card last month, but paid it off and didn't let anything else post.

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Yep, I got a 5 point bump for letting $180 show on a card before paying it off AFTER the statement posted. Pretty simple concept. 

[RobertEG]

FICO is not a measure of overall consumer credit-worthiness.  It is a measure of risk of becoming delinquent on repayment of debt in the near future.

Without a showing of debt and its repayment, it cant do its thing.

[rlx01]

FWIW, the "balance" reported differs.

My CU reports my outstanding balance 14 days after the statement cut date. It has 0 to do with the actual balance at the cut, or what I paid.

It's easy to play with the util % because of this without actually ever revolving a balance.