Utilization - per card or overall?

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

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Exactly. In order to be a Transactor there must be positive payments. "$0" is not positive payments. Its not rocket science guys - this is pretty basic programming/boolean logic. If you're paying off all of your charges each and every month, regardless of whether a statement balance shows or not, you are a Transactor - and its not difficult to discern as long as payment data is reported.

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Hi Norman.  That's fine.   But that's a new condition that you are adding.  Your initial language was this:

The method of detecting Transactor behavior is to compare the difference between payments reported and previous months statement balance (Payments - Balance). If the value of payments minus previous balance is zero or any positive number then you are a "full transactor"

The example I gave of Bob was a guy who's value of payments - previous balance was zero.  $0 - $0.

The fair thing to have said on your end might have been "Good catch.  I should have added that the payments must have been positive."  That way we get to help each other think through this stuff together.

I am very open to the possibility -- indeed likelihood -- that the future T-R models might work as you and TT described.  I'm still less certain than you are, but I am much more convinced that you guys would be right than I would have been a few days ago say.

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It just seemed obvious to me. Thats why I didn't include it. My bad.

[Anonymous]

Interesting.  I have never heard of that but I believe it must have been real in your case.  So sorry to hear that!  But I have no problem with people manually paying either, of course.  With PTZ, you do have a window of time between when you pay the card to $0 and when you can use it again (beginning of next cycle) and that for many of us is aggravating to micromanage.

The rebuilding forum has had a boatload of people with this issue. I prefer manual payment as well just from seeing that.

[Anonymous]

Hi Norman.  It's not obvious.  One way to define transactor is "not a revolver."  That's what you would have been doing and it's one way to go.  A person with a string of zeroes is certainly not revolving.

When you chimed in about what was obvious, you weren't considering the complexity of what real statisticians and modelers have to think about.  You begin to get a sense of what that might be when you read TT's posts, which you dismiss as being unnecessarily complex "rocket science."

Again, a better response is: "Hey, good point, I wrote that too quickly or without thinking fully.  Thanks."  Rather than "I didn't mention that because it's obvious, you moron."

[Thomas_Thumb]

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@Anonymous wrote:

Interesting.  I have never heard of that but I believe it must have been real in your case.  So sorry to hear that!  But I have no problem with people manually paying either, of course.  With PTZ, you do have a window of time between when you pay the card to $0 and when you can use it again (beginning of next cycle) and that for many of us is aggravating to micromanage.

@ NormanFH wrote:

The rebuilding forum has had a boatload of people with this issue. I prefer manual payment as well just from seeing that.

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I also prefer manual pay and have a strong adversion to micromanaging.

The level of payment manipulation some people go through is astounding. Sure hope new models eliminate the need/value for such tactics. Unfortunately, low credit limits for rebuilders or those starting out force some into multiple monthly payments each month.

Strongly suspect value of low reported utilization will be discounted for true transactors. Who cares what you put on a card if you always PIF all statements every month. 

[Aahz]

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@Thomas_Thumb wrote:
Who cares what you put on a card if you always PIF all statements every month. 

The credit card companies certainly do if they want to increase profits! 

From page 7 of the Experian White Paper you linked upthread-

Low risk, low spending segments generate only minimal revenue. However, as spend increases, interchange revenue increases as well. Thus, knowing spend allows lenders to optimize line for expected return more efficiently, adding a new dimension in underwriting and complementing risk-based line assignment strategies.

Never forget that FICO scores are created for and marketed to lenders, not consumers. If there is a demand for scores that reflect profitability as well as risk then FICO will surely move to reflect that information in their scoring models.

[Anonymous]

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@Thomas_Thumb wrote:

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The level of payment manipulation some people go through is astounding. Sure hope new models eliminate the need/value for such tactics. Unfortunately, low credit limits for rebuilders or those starting out force some into multiple monthly payments each month.

Strongly suspect value of low reported utilization will be discounted for true transactors. Who cares what you put on a card if you always PIF all statements every month. 

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Hello TT!  I absolutely share your hope that the future models will eventually do that.

I am on record as saying that FICO and Vantage's models are nuts, the way they encourage people to game the system by preposterous and intensely artificial manipulation of their credit profile (chiefly CC balances but not limited to them).  I of course am one of the people who play just these sorts of games, but only because FICO encourages me!

A commenter on another thread just observed that FICO lowered his score a significant amount because one card went from $0 to $7.77.  He wryly observed that All Knowing FICO decided that he was at significantly greater risk of defaulting on all his debts because he bought a Happy Meal (or something like that).

But of course, as I have also mentioned before, FICO set its models up like this in the past (with the absurd top heavy emphasis on ultralow utilization and lots of zeroes) because the CRAs could not supply it with the much more revealing information about whether people tended to pay in full each month.  I hope that now they are getting this they will drop the emphasis on the other silliness, but I imagine it will take time.

I know that FICO has had the fields necessary to see whether people are using their cards but paying to zero for a while.  (E.g I think there is a Date Last Used field.)  That's been around quite some time.  And yet FICO 8 still assumes that if a person has all zeroes on his credit cards (at a given point in time), that he is not using his cards at all and punishes him accordingly.  So I share your hope but the transition to sanity may not happen overnight.

PS.  Your last post atributed a quote to Norman that you probably meant to attribute to me.  ("With PTZ, you do have a window of time....")  Doesn't matter to me, but I know you like to keep that stuff right.

[Thomas_Thumb]

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@Aahz wrote:

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@Thomas_Thumb wrote:
Who cares what you put on a card if you always PIF all statements every month. 

The credit card companies certainly do if they want to increase profits! 

From page 7 of the Experian White Paper you linked upthread-

Low risk, low spending segments generate only minimal revenue. However, as spend increases, interchange revenue increases as well. Thus, knowing spend allows lenders to optimize line for expected return more efficiently, adding a new dimension in underwriting and complementing risk-based line assignment strategies.

Never forget that FICO scores are created for and marketed to lenders, not consumers. If there is a demand for scores that reflect profitability as well as risk then FICO will surely move to reflect that information in their scoring models.

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Yes, that's what I was referring to when I speak to utilization being discounted (not overlooked completely) for pure play transactors. Credit card issuers want transactors to spend more - more merchant fees - so why would they complain if you are near max - you are low risk and they want to encourage your spending

This also is a reason for tweaking the Fico model to "overlook" high utilization as a negative for transactors.

[Aahz]

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@Anonymous wrote:

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@Thomas_Thumb wrote:

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The level of payment manipulation some people go through is astounding. Sure hope new models eliminate the need/value for such tactics. Unfortunately, low credit limits for rebuilders or those starting out force some into multiple monthly payments each month.

Strongly suspect value of low reported utilization will be discounted for true transactors. Who cares what you put on a card if you always PIF all statements every month. 

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I am on record as saying that FICO and Vantage's models are nuts, the way they encourage people to game the system by preposterous and intensely artificial manipulation of their credit profile (chiefly CC balances but not limited to them).  I of course am one of the people who play just these sorts of games, but only because FICO encourages me!

A commenter on another thread just observed that FICO lowered his score a significant amount because one card went from $0 to $7.77.  He wryly observed that All Knowing FICO decided that he was at significantly greater risk of defaulting on all his debts because he bought a Happy Meal (or something like that).

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Speaking of Vantage Scores....

I paid off a $5500 0% BT last week bringing that card's utilization to $0 of $12,000 and overall utility down to $18,000 of $213,700.  

My VantagScore 3.0 changes (checked via USAA CreditCheck)-

Day before payoff - EQ 746 EX 744 TU 743

Day after payoff - EQ 725 EX 718 TU 720

Apparently Vantage is already taking spending into account and rewarding high utility.

[Thomas_Thumb]

VantageScore does like to see activity on multiple accounts AND appears to favor those with a "boatload" of accounts. Nonetheless, to the best of my knowledge you still will see points deduct on VS above 10% aggregate utilization.

Can't speak to the over 10% level personally - never been there. However, VS has punished my score a couple points for dropping below 11 accounts on file.

[Anonymous]

Tom I have a scenario for you.

I recently paid off a Credit Account that was a 600.00 Credit Line. They tripled my credit line to 1800.00 (One year of perfect payments this was a auto increase) . I used 511.00 on the account to by a gift. They reported the with a 0 balance. My score rose a measly 9 points. 18 days later they reported that I used account (Bill not even due yet) and my credit score alert on MYFICO went off. MyFICO said my EQUIFAX score dropped 33 points! Also the alert said my balance increased 500%! I called them immediately and asked them why did it report since the bill is not due. They could not give me a answer why the score dropped so low. I asked them what i should do to fix problem. He said pay it off. HAHAHA 

what do you think about this? I would like your input. 

BTW before anyone asks Experian hit me for 9 points and Transunion hit me for 22 points

All of this was over a 511.00 Charge. Honestly I was trying to just use the card and keep a solid payment history. I have the money to pay it off and I really have no reason to need credit for anything I just find it very strange that such a minimal charge would cause such a drop in scores.