topic Re: This Is a New One in Understanding FICO® Scoring

This Is a New One

fused — Sat, 05 May 2007 21:10:30 GMT

On my EX report, I losing a few points because all of my revolving accounts are showing zero balances. EX says I lack experience with revolving accounts. Before I small balances like.0005% utilization, then they would too many accounts with balances. Boy is this a catch 22! Has anyone seen this?

Re: This Is a New One

Anonymous — Sat, 05 May 2007 23:25:54 GMT

No, I haven't seen that before but the more I read these boards the more faith I am losing in FICO. I have read a few times that lenders are pulling completely different scores that what people are seeing here. The simulators are giving incorrect information, based on some posts I have read. I've seen some strange things happening and will be highly upset if I'm basing everything on these scores only to find out when I go to get a mortgage that a completely different score is being reported.

Have your accounts reported balances before?

Re: This Is a New One

MercyMe — Sun, 06 May 2007 00:24:14 GMT

Take heart, Househunter. I've done this a few times, as aforementioned, so have had my credit pulled by countless possible agencies, in searching for a mortgage. The scores generated by such as CBInnovis weren't but a handful of points off Equifax, and wouldn't have made much of a difference in the interest rate or points. CredStar did me a favor by pulling all three and pouring over everything possible -- past charge off, past 30 days late, etc., and came up with a formula that actually helped me to qualify with Indymac. MOST lenders, however, as has been my experience, pull the FICO, and rely heavilly on that, and though the score you see when you pull from MyFi may be different than their pull, it won't be by much. One lender's Ficos, from Equifax, were even higher than what I could pull. Imagine that! Boy, was I surprised!

Anyway, a number of brokers I talked to, in shopping for a mortgage, recommended pulling Fico before applying. And if that happens to be your middle score, you're in luck! If you're anywhere near 700 when you apply, you'll be more than alright, though 648 recently got me a 6% fixed in spite of the chargeoff and past lates. That seems to be key. No (or very few) lates for at least 18 months to 2 years, and most certainly, since you're talking 30 year mortgage, watch your debt to income ratio. Get and keep your balances down, but not nil. You have to show an ability to pay, and if you don't owe something to someone, you can't do that -- that much I've learned. Everytime I pay my balances down to near zero, my score drops. It's backwards, huh? And confusing ... to say the least. Like when I paid near all our debt down to around 15%, but for one tiny little CC that had a $500 limit, 438 of which was being used. I still got dropped for that one little card that was close to the limit. Never mind the three others that were almost paid off! I've come to conclude then, never owe more than 30%, on any card, but always owe more than 10% on a few, to support a substantial history of being able manage your credit/pay your debt on time. Sigh.

Any comments, Brammy? For surely you know better than I do!

Re: This Is a New One

Anonymous — Sun, 06 May 2007 15:24:26 GMT

fused111 wrote:
On my EX report, I losing a few points because all of my revolving accounts are showing zero balances. EX says I lack experience with revolving accounts. Before I small balances like.0005% utilization, then they would too many accounts with balances. Boy is this a catch 22! Has anyone seen this?

Don't worry about the few points. The scoring system compares averages. How old are your accounts. The score will also ding you for small balances on every account. I usually use store cards only to keep them actively reporting. The month I used all my store cards at once, I got the same 'too many cards with balances'. Are you using TU by chance? I've never seen that as an issue with FICO. The thing is to rotate your cards with about 10-30% max utilization at one time on any one card, never have balances on more than half your cards just to be safe Yep crazy!

I'm talking and now have a store card at 70% due to a 0% for six months, That balance will stay there and I'll just take the hit until other factors balance it out. HJave another one accidently reporting more than 30% due to my kid's trip to Myrtle beach last weekend and didn't catch it in time to pay it down before reporting date. And another bank card just under 50% halfway through paying off a 0%.

You have to keep a balance of whats good for your pocket and whats good for FICO. My pocket comes first. The only times I would concentrate so hard on the details is if I were in the process of making a large purchase such as a home, plannig to apply for new credit, or so borderline that I might be in danger of being ratejacked none of which are on my agenda today

BTW I'm getting dinged left, right and center due to the higher utilization on those three cards though my overall is still 20%

Message Edited by Brammy on 05-06-2007 11:24 AM

Re: This Is a New One

Tuscani — Mon, 07 May 2007 00:24:09 GMT

IMO, 1-9% util is better for your scores than zero balance.

Re: This Is a New One

Anonymous — Mon, 07 May 2007 00:31:19 GMT

Tuscani wrote:
IMO, 1-9% util is better for your scores than zero balance.

Absolutely right Mr T, or is that Ms T?

Re: This Is a New One

Tuscani — Mon, 07 May 2007 00:31:59 GMT

Mr.

Re: This Is a New One

fused — Mon, 07 May 2007 02:37:34 GMT

I have three cc's that I can revolve. Maybe I should keep a very small balance on the one with the highest CL which happens to be the one with the lowest APR.

Re: This Is a New One

Anonymous — Mon, 07 May 2007 10:53:48 GMT

fused111 wrote:
I have three cc's that I can revolve. Maybe I should keep a very small balance on the one with the highest CL which happens to be the one with the lowest APR.

Don't forget you will have to use all of your cards occassionally to keep them reporting as active Just make a smal purchase and PIF.

Re: This Is a New One

Anonymous — Tue, 08 May 2007 02:00:48 GMT

I have 5 CC, 3 with $0 balance for the last 4 moths, 2 under 30%. We are planing to buy a house next month. Should I charged like 30$ on unused cardsm just to show some activity? Thank you!

Message Edited by cinoeye on 05-07-2007 07:00 PM

Re: This Is a New One

Anonymous — Tue, 08 May 2007 04:30:37 GMT

We currently are refinancing our home and paid off all credit card balances and in turn our score droped 12 points. Is this because of the inquires or because of the 0 balances on our credit cards?

We have worked so hard to improve to see it drop was very dissapointing, is this normal and how soon will it raise again?

Re: This Is a New One

Tuscani — Tue, 08 May 2007 11:04:14 GMT

dennis3 wrote:
We currently are refinancing our home and paid off all credit card balances and in turn our score droped 12 points. Is this because of the inquires or because of the 0 balances on our credit cards?

We have worked so hard to improve to see it drop was very dissapointing, is this normal and how soon will it raise again?

Recent inquiries will drop your score. But paying off cards should increase your score. What was your util prior to your last payment?

Re: This Is a New One

Anonymous — Tue, 08 May 2007 11:35:14 GMT

I have found that paying off your cards entirely all at one shot will in fact hurt your score initially. If you pay down like 75% or so is better. I believe they say that 7 to 10% utilization is the average.

Re: This Is a New One

Tuscani — Tue, 08 May 2007 11:44:10 GMT

Bull32 wrote:
I have found that paying off your cards entirely all at one shot will in fact hurt your score initially. If you pay down like 75% or so is better. I believe they say that 7 to 10% utilization is the average.

1-9% seems to be "the sweet spot".

Re: This Is a New One

smallfry — Tue, 08 May 2007 21:30:50 GMT

@Tuscani wrote:

@Anonymous wrote:
I have found that paying off your cards entirely all at one shot will in fact hurt your score initially. If you pay down like 75% or so is better. I believe they say that 7 to 10% utilization is the average.

1-9% seems to be "the sweet spot".

I better hurry up and charge something quick then.