topic Re: Whats a better plan for a better score in 10 months in Understanding FICO® Scoring

Whats a better plan for a better score in 10 months

Anonymous — Thu, 02 Apr 2020 18:12:13 GMT

What is a wiser move? Pay of my $10K credit card debt which is 23% utilization rate today or PAY IT OFF slowly throught the next 9 months. What would result in a higher score in 10 months?

Re: Whats a better plan for a better score in 10 months

AllZero — Thu, 02 Apr 2020 18:24:45 GMT

Finances over FICO.

With that in mind, either method will yield the same results score wise if all else remains the same.

Re: Whats a better plan for a better score in 10 months

dragontears — Thu, 02 Apr 2020 19:01:19 GMT

@AllZero wrote:
Finances over FICO.

With that in mind, either method will yield the same results score wise if all else remains the same.

+100

Score wise it doesn't matter if you pay it off all at once or over months so best to figure out what is best for your finances

Re: Whats a better plan for a better score in 10 months

Nomad3 — Thu, 02 Apr 2020 19:08:21 GMT

As far as score goes there are two things to consider:

1. On Fico8 (and most models) utilization is just a snapshot, so according to the algorithm you will get the same amount of points in the end. Every threshold you cross will give more points.

2. On Fico10 they arr using trended data and whether you are PIF or carrying balances will factor into the score (correct me if I'm wrong), so not carrying the balances will probably give you a better score on this model.

That said, most lenders still use older models (2/4/5/8), but who knows if they will start using 10 or when.

As always though: finances first, fico second

Re: Whats a better plan for a better score in 10 months

dragontears — Thu, 02 Apr 2020 19:13:08 GMT

@Nomad3 wrote:
As far as score goes there are two things to consider:

1. On Fico8 (and most models) utilization is just a snapshot, so according to the algorithm you will get the same amount of points in the end. Every threshold you cross will give more points.

2. On Fico10 they arr using trended data and whether you are PIF or carrying balances will factor into the score (correct me if I'm wrong), so not carrying the balances will probably give you a better score on this model.

That said, most lenders still use older models (2/4/5/8), but who knows if they will start using 10 or when.

As always though: finances first, fico second

FICO 10 hasn't even been released yet so no one knows how it will look at this type of situation plus it is always a while after a new scoring model is released before lenders start using it.

Re: Whats a better plan for a better score in 10 months

FireMedic1 — Thu, 02 Apr 2020 19:29:28 GMT

@dragontears wrote:
@Nomad3 wrote:
As far as score goes there are two things to consider:

1. On Fico8 (and most models) utilization is just a snapshot, so according to the algorithm you will get the same amount of points in the end. Every threshold you cross will give more points.

2. On Fico10 they arr using trended data and whether you are PIF or carrying balances will factor into the score (correct me if I'm wrong), so not carrying the balances will probably give you a better score on this model.

That said, most lenders still use older models (2/4/5/8), but who knows if they will start using 10 or when.

As always though: finances first, fico second

FICO 10 hasn't even been released yet so no one knows how it will look at this type of situation plus it is always a while after a new scoring model is released before lenders start using it.

+1. FICO 9 isnt even used by all creditors yet. 10 will be 10 yrs away probably.

Re: Whats a better plan for a better score in 10 months

Anonymous — Thu, 02 Apr 2020 20:23:34 GMT

One thing to consider if you're a Synchrony customer is that they use VS4.0, which does incorporate trended data. For that, a one-shot payoff would be better because you more rapidly achieve low usage.

Re: Whats a better plan for a better score in 10 months

SouthJamaica — Thu, 02 Apr 2020 20:30:10 GMT

@Anonymous wrote:
What is a wiser move? Pay of my $10K credit card debt which is 23% utilization rate today or PAY IT OFF slowly throught the next 9 months. What would result in a higher score in 10 months?

The sooner you pay it down the sooner your score will rise.

There's no premium for paying it off slowly.

Re: Whats a better plan for a better score in 10 months

Anonymous — Thu, 02 Apr 2020 20:32:47 GMT

I just figured credit will see i'm making 10 more months of payments versus not making anymore payments for 10 months becasue I do not have a balance.

Re: Whats a better plan for a better score in 10 months

SouthJamaica — Thu, 02 Apr 2020 20:34:13 GMT

@Anonymous wrote:
I just figured credit will see i'm making 10 more months of payments versus not making anymore payments for 10 months becasue I do not have a balance.

It doesn't work that way.

Re: Whats a better plan for a better score in 10 months

FireMedic1 — Thu, 02 Apr 2020 21:59:31 GMT

Dont believe in the payments "made on time percentages" seen on free Vantage websights. Faster util %'s go down, the faster the scores go up.

Re: Whats a better plan for a better score in 10 months

Girlzilla88 — Thu, 02 Apr 2020 22:06:10 GMT

@Anonymous wrote:
I just figured credit will see i'm making 10 more months of payments versus not making anymore payments for 10 months becasue I do not have a balance.

Think of it like this some people want to see history of you making payments but everyone loves to see them get their money back faster LOL. If you can of course pay it back faster then add something new to it if you want to add length and just pay that lol you can do that route for 10 months ^^ I know Chase especially loves to see large payments faster

Re: Whats a better plan for a better score in 10 months

Nomad3 — Thu, 02 Apr 2020 22:26:32 GMT

@Anonymous wrote:
I just figured credit will see i'm making 10 more months of payments versus not making anymore payments for 10 months becasue I do not have a balance.

You'll still have 10 months of "payments" regardless. You don't have to carry a balance, you can pay in full every month or even not use the card and report $0 and still have 10 months of being in good standing.

Re: Whats a better plan for a better score in 10 months

FireMedic1 — Thu, 02 Apr 2020 22:48:03 GMT

@Nomad3 wrote:
@Anonymous wrote:
I just figured credit will see i'm making 10 more months of payments versus not making anymore payments for 10 months becasue I do not have a balance.
You'll still have 10 months of "payments" regardless. You don't have to carry a balance, you can pay in full every month or even not use the card and report $0 and still have 10 months of being in good standing.

+1. To fan it out in a way like @Nomad3 stated. You Pay it off. Then Charge $100 for 10 months. Let $10 report. Pay before due date. There's your 10 months of payments. Best part. You didnt pay a red cent in interest. Case closed. No difference.

Re: Whats a better plan for a better score in 10 months

Girlzilla88 — Thu, 02 Apr 2020 23:02:27 GMT

I wouldn't recommend not using your card for 10 months or over 5 months for that matter even if you put something small on it don't NOT NOT use it lol

Re: Whats a better plan for a better score in 10 months

Anonymous — Fri, 03 Apr 2020 20:36:46 GMT

Hey! Also consider the longer you take to pay it off the more you will be paying back in interest (unless you have 0% APR of course).

1. Here's a video that may help you understand how the FICO score works: https://youtu.be/ip_A7ulLl-M

2. No debt is the best debt! If you can pay off the entire $10K balance right now, without burning through any emergency funds, then do so. But don't close the card/account, leave it open to keep your average length of credit higher (unless you are paying a annual fee). Closed accounts reflect negatively in FICO.

3. FICO 10 updates aren't slated until the end of 2020, so no telling when (nor if) they will be implemented. There are FICO 9 standards that exist now that aren't really used currently. But FICO 10t will offer a trending two year look at you data which will include payment amounts, including if you pay more than the minimum (which it sounds like you are looking to do). This could potentially prove beneficial because it could show how long you've been fiscally responsible, and not that you just don't use your card (having a $0 balance month after month). Yet this is risky because you don't know if 10 and 10t will be utilized.

I hope this helps!

Re: Whats a better plan for a better score in 10 months

Anonymous — Fri, 03 Apr 2020 20:41:26 GMT

@Anonymous wrote:
Hey! Also consider the longer you take to pay it off the more you will be paying back in interest (unless you have 0% APR of course).
1. Here's a video that may help you understand how the FICO score works: https://youtu.be/ip_A7ulLl-M

2. No debt is the best debt! If you can pay off the entire $10K balance right now, without burning through any emergency funds, then do so. But don't close the card/account, leave it open to keep your average length of credit higher (unless you are paying a annual fee). Closed accounts reflect negatively in FICO.

3. FICO 10 updates aren't slated until the end of 2020, so no telling when (nor if) they will be implemented. There are FICO 9 standards that exist now that aren't really used currently. But FICO 10t will offer a trending two year look at you data which will include payment amounts, including if you pay more than the minimum (which it sounds like you are looking to do). This could potentially prove beneficial because it could show how long you've been fiscally responsible, and not that you just don't use your card (having a $0 balance month after month). Yet this is risky because you don't know if 10 and 10t will be utilized.

I hope this helps!

Closed accounts in good standing do not reflect poorly. They remain as closed positive accounts on your reports for up to ten years, and continue to contribute to your account age factors. Accounts closed by credit grantors with a negative status can hurt, but otherwise they're beneficial, or at the least, do no harm.

Re: Whats a better plan for a better score in 10 months

Anonymous — Wed, 08 Apr 2020 15:29:06 GMT

No debt will result in the no revolving balance penalty to the tune of 10 to 20 points. You always want to report a small nominal balance.

As @Anonymous points out, FICO does NOT look at closed accounts negatively. I don’t know where this stuff comes from, maybe YouTube?

Fico 10 updates? It’s got to be released first and then put in use by lenders, which hasn’t even been done much with fico 9 yet. And since when do they update fico algorithms unless an error or bug is discovered? Instead they design and put out a new one, so the lender has to pay for a new one. If they regularly updated the algorithms, there would be no need for new versions.

Re: Whats a better plan for a better score in 10 months

Anonymous — Fri, 17 Apr 2020 18:28:27 GMT

@Anonymous wrote:
What is a wiser move? Pay of my $10K credit card debt which is 23% utilization rate today or PAY IT OFF slowly throught the next 9 months. What would result in a higher score in 10 months?

What is special about 10 months?

What does the rest of your credit profile look like?

No debt is best as others have stated. If your goal is higher score and low debt (you could eliminate the debt but you choose not to), pay it down to 5% utilization (below 8.99% and below 6%). Perhaps use the difference to reduce balances on other cards if you have any.

Knowing more about your situation will help folks here give you better advice.

Re: Whats a better plan for a better score in 10 months

Anonymous — Fri, 17 Apr 2020 19:19:11 GMT

There would be no difference in score 10 months from now if you pay the debt off immediately or slowly.