topic Re: Playing the cards right in Understanding FICO® Scoring

Playing the cards right

vanillabean — Sat, 05 Jun 2010 03:22:22 GMT

I have a plan.

Let's say you have a Visa card, a MasterCard and two Amex, all with a $0 balance. To let them report once every half a year, but never more than one at a time, I first take the two non-Amex because they report more quickly.

Of these two I first take the one whose statement cycle is earliest in the month. Let's say the Visa is the 12th and the Mastercard the 26th. I let the Visa report a small amount in January and the MasterCard a small amount in February.

I do likewise with the two Amex cards, whose statement cycle date may be the 5th and the 19th. The first Amex in March and the second in April.

The following month should be left alone to let Amex run its course. (There's room for one more card per half a year.)

And over all again come July.

Will this obsessive behaviour satisfy the FICO scoring system?

Re: Playing the cards right

RobertEG — Sat, 05 Jun 2010 04:13:21 GMT

In my opinion, it may do more harm than good.

You have somehow apparently fixated on the number of cards reporting balances as a major FICO scoring factor. It is not major, and more importantly, what your util was last month has no historical memory in FICO. No. of cards with balances is a minor component of util scoring, and goes away, month to month.

And, above all, your prior quest on this plan becomes totally immaterial until the month or two before you actually apply for new credit. In revolving credit util, FICO looks only at current status, not months of FICO fluctuations in balances and util.

Letting any account usage with any creditor go dormant for six months may result in their closure of the account. Then you could lose its CL.

Your plan, in my opinion, is OK for very short term, but should be rethought before pulling of the trigger until around two months from the date you are actually going to apply for new credit. Otherwise, it is just an academic monthly pain in the butt that only yields memories, not FICO results.

Re: Playing the cards right

vanillabean — Sat, 05 Jun 2010 04:40:53 GMT

RobertEG wrote:

"You have somehow apparently fixated on the number of cards reporting balances as a major FICO scoring factor."

smallfry wrote (in the "Our Forums' FICO High Achievers: Who has at least one FICO Score of 760 or above?" thread):

"I bought the EQ SW 2 months ago to test number of accounts with balances and the effect on my EQ score. I can now say with relative certainty that EQ likes 1 credit card reporting better than 2. With 1 score is 781 with 2 score is 773."

Who's right?

RobertEG wrote:

"Letting any account usage with any creditor go dormant for six months may result in their closure of the account. Then you could lose its CL."

My plan doesn't include not using every card every month. I will do so. It's just that I'll pay each balance before the statement cycle date.

Re: Playing the cards right

haulingthescoreup — Sat, 05 Jun 2010 17:08:26 GMT

I always let one report, and then pay it off before the due date. EQ likes this; in my score range, TU prefers that no cards report, but no one uses TU in my neck of the woods, even for softing, so oh well. EQ always drops when all my cards report $0. Back when we could pull our EX FICO's, EX seemed to be like EQ, but then, my scores were a lot lower then.

Every now and again an extra card balance sneaks in, and my scores drop. They come back up when I'm back to just one reporting.

I would add for anyone reading this that this micro-management is useful if you're getting ready to apply for credit for some FICO-score-driven product, like mortgages. And it takes a full month or more to get most lines to report $0, so keep this in mind if you might need to fine-tune your scores. Otherwise, it's a relatively harmless entertainment for those of us with nothing else to do in credit land other than wait for history to increase and lates to fall off. Sort of the credit management equivalent of feeding squirrels in the park.

Re: Playing the cards right

smallfry — Sun, 06 Jun 2010 03:08:53 GMT

@haulingthescoreup wrote:
I always let one report, and then pay it off before the due date. EQ likes this; in my score range, TU prefers that no cards report, but no one uses TU in my neck of the woods, even for softing, so oh well. EQ always drops when all my cards report $0. Back when we could pull our EX FICO's, EX seemed to be like EQ, but then, my scores were a lot lower then.

Every now and again an extra card balance sneaks in, and my scores drop. They come back up when I'm back to just one reporting.

I would add for anyone reading this that this micro-management is useful if you're getting ready to apply for credit for some FICO-score-driven product, like mortgages. And it takes a full month or more to get most lines to report $0, so keep this in mind if you might need to fine-tune your scores. Otherwise, it's a relatively harmless entertainment for those of us with nothing else to do in credit land other than wait for history to increase and lates to fall off. Sort of the credit management equivalent of feeding squirrels in the park.

Re: Playing the cards right

vanillabean — Sun, 06 Jun 2010 18:46:33 GMT

haulingthescoreup a.k.a. Moderator Emerita wrote:

"I always let one report"

That sounds simple. But unless it's the same card every month, a small part of any month is bound to have either none or two cards listed with a reported balance. Not that it necessarily matters much, I take it.

"Otherwise, it's a relatively harmless entertainment for those of us with nothing else to do in credit land other than wait for history to increase and lates to fall off. Sort of the credit management equivalent of feeding squirrels in the park. "

That brings up a topic such as which no annual fee cards are the most sought after. If one, like you it would appear, is safely above 760 and, well not you being in the business and all, doesn't want to squander it by letting it get stagnant, such a goal might be suitable. Sort of a sharpening your credit scoring understanding and/or reminder exercise, I suppose.

I hear the Sapphire and Freedom cards are popular.

Re: Playing the cards right

Anonymous — Mon, 07 Jun 2010 03:36:44 GMT

Why not just let (the same) one card report a balance each month, and for your other cards, if you use them, pay them off before their statement close date? That way you get the benefit of 'using the account', but a zero balance is reported for those cards. You can assign them to recurring monthly costs (netflix, ScoreWatchm etc), if it's easier.

Re: Playing the cards right

vanillabean — Mon, 07 Jun 2010 05:41:26 GMT

writemikep wrote:

"Why not just let (the same) one card report a balance each month, and for your other cards, if you use them, pay them off before their statement close date? That way you get the benefit of 'using the account', but a zero balance is reported for those cards."

If the CRAs don't mind a card reporting a zero balance forever, then I'll certainly go for that!

Re: Playing the cards right

marty56 — Mon, 07 Jun 2010 18:30:21 GMT

@Anonymous-own-fico wrote:
If the CRAs don't mind a card reporting a zero balance forever, then I'll certainly go for that!

The CCCs don't care about reported balances in terms of activity. Only one of my 4 CCs is supposed to report a balance yet I use all of them at least every other month.

Knowing the reporting date is key to playing the FICO score game.

Re: Playing the cards right

vanillabean — Mon, 07 Jun 2010 19:38:23 GMT

marty56 wrote:

"The CCCs don't care about reported balances in terms of activity. Only one of my 4 CCs is supposed to report a balance yet I use all of them at least every other month.

Knowing the reporting date is key to playing the FICO score game."

Thanks. I'm now ready to play the game.

One card reports with $0. Another with $15. The third and last is scheduled to report with $0 in about a month.

Those squirrels in the park will be so fattened up they'll think winter is upon them.

Re: Playing the cards right

haulingthescoreup — Mon, 07 Jun 2010 20:05:38 GMT

lol, I always feel obliged to mention that excruciating fine-tuning of scores is mostly a game, because otherwise, I can guarantee that there will be replies saying that it's pointless, etc. etc. Which is sort of true.

But once you get in the habit of seeing your scores increase, it's painful to act like normal people by not paying balances until statements post. That 20-point drop, whether meaningful or not, is a real kick in the gut. And it can be maddening waiting for all the cards to cycle through to get them back where you want them.

Another advantage for me of playing the FICO scoring game is that I have a pretty massive case of ADHD, and my only negatives have been lates, due to simply spacing on paying balances, even when I had the money. Having this early artificial deadline occuring several weeks before the actual due date is sort of a belt-and-suspenders tactic for those of us who have sworn never to be late again.

Re: Playing the cards right

vanillabean — Sat, 15 Dec 2012 18:05:07 GMT

It's no wonder that people living from paycheck to paycheck have a difficult time building up an emergency fund, because as important as this reserve is, it may look like a hopeless uphill journey with no lasting benefit in sight.

But if instead of putting such money in the bank, you move towards paying your balances before the statement cycle date, you free up credit on your cards for emergencies, with the carrot bonus of a higher and lasting credit score!

I'm reminded of personal finance columnist Liz Weston taking on Suze Orman (see also Michelle Singletary, Farnoosh Torabi, Elisabeth Leamy). The latter wrote:

"If you have an unpaid credit card balance and not much saved up in emergency savings I need you to listen up. My advice has changed.

I want you to only pay the minimum due on your credit card balance and instead make it your top priority to build as much of an emergency cash fund as you can."

Needless to say Suze Orman got really hammered.

The traditional due date and grace period thing is less compelling in this day and age with instant online access to all your money stuff. If credit users could position themselves to a debit card mindset, halfway inbetween would seem very attractive.

The recent credit card reform brought along a fixed due date. Maybe next time we'll get a fixed statement cycle date, not to mention a fixed reported balance date.

Re: Playing the cards right

Anonymous — Wed, 09 Jun 2010 04:30:00 GMT

Newbie here... so forgive me if these are dumb questions....

I know where to find my statement date, but how do I find out when a creditor reports to the CRAs?

When is the optimal time to pay your cc - 5 days before your statement cuts, one day? 10 days?

And 3rd... I don't understand the grace period? Is that the period of time between when you charge something and when they can charge you interest?

Thank you.

Re: Playing the cards right

vanillabean — Wed, 09 Jun 2010 05:04:42 GMT

LostinSeattle wrote:

"I know where to find my statement date, but how do I find out when a creditor reports to the CRAs?"

It took me many purchased credit reports to find that out.

"When is the optimal time to pay your cc - 5 days before your statement cuts, one day? 10 days?"

I would say no later than the day prior to the statement cycle date.

"And 3rd... I don't understand the grace period? Is that the period of time between when you charge something and when they can charge you interest?"

The grace period is the time, typically 25 days, between the statement cycle date and the payment due date. If you pay in full before the end of the due date's business day, you don't pay any interest (except for cash).

Also, if a monthly cycle is 31 days and the grace period is 25 days, the total number of days is 56 days. Halfway is 27 days, 4 days before the statement cycle date. This is approximately the day following the due date of the prior cycle, which is how I remember to pay the present cycle's outstanding balance.

27 days, almost a month, seems to be a pretty good credit deal to me!

Re: Playing the cards right

haulingthescoreup — Wed, 09 Jun 2010 15:42:07 GMT

Most, not all, CC's update on the evening of their statement date or the next day, reporting the balance due as shown on the statement. (Of course, then you have to wait for the CRA's to actually post the info.)

Known exceptions:

HSBC and Orchard bank cards (as opposed to store cards like the HSBC Best Buy store card) report the balance as of the last business day of each month, and they actually send in the figures a week or two or four later. Best advice is to keep those things at $0 at the end of the month, because they're notorious for forgetting to update your accounts, especially when you pay them off.
US Bank cards report the balance as of the last day of the month, and they report the same day.
Some American Express cards still have a built-in delay: They report the balance on your statement, but they don't send it in until 4 weeks later, a few days before the next statement drops. They recently have started updating on the statement date on many/ most of their cards for many/ most customers, but there are still some laggards. (I just read a thread about this the other day.)
eta: There are doubtless some local banks and credit unions that we don't hear about here who use the end of the month or maybe something completely different. The ones listed above are the big variants.

I stop using a card 5 days or so beforehand, sometimes sooner, pay online 2-3 days before the statement date, and then I keep checking to see if anything sneaks on at the last minute. Many CCC's will let you update on the actual statement date and have it credited, but it's not something that you want to count on.

Re: Playing the cards right

MarineVietVet — Wed, 09 Jun 2010 16:52:52 GMT

@haulingthescoreup wrote:
Most, not all, CC's update on the evening of their statement date or the next day, reporting the balance due as shown on the statement. (Of course, then you have to wait for the CRA's to actually post the info.)

Known exceptions:
HSBC and Orchard bank cards (as opposed to store cards like the HSBC Best Buy store card) report the balance as of the last business day of each month, and they actually send in the figures a week or two or four later. Best advice is to keep those things at $0 at the end of the month, because they're notorious for forgetting to update your accounts, especially when you pay them off.
US Bank cards report the balance as of the last day of the month, and they report the same day.
Some American Express cards still have a built-in delay: They report the balance on your statement, but they don't send it in until 4 weeks later, a few days before the next statement drops. They recently have started updating on the statement date on many/ most of their cards for many/ most customers, but there are still some laggards. (I just read a thread about this the other day.)
eta: There are doubtless some local banks and credit unions that we don't hear about here who use the end of the month or maybe something completely different. The ones listed above are the big variants.
I stop using a card 5 days or so beforehand, sometimes sooner, pay online 2-3 days before the statement date, and then I keep checking to see if anything sneaks on at the last minute. Many CCC's will let you update on the actual statement date and have it credited, but it's not something that you want to count on.

That goes for unexpected charges and anticipated payments. Never assume that the payment was made. Always make sure yourself. I've paid everything online for many years and have not had a problem with any payments but I still check every account every day for my own peace of mind.

From a BK years ago to:
9/09 EX pulled by lender 802
3/10 EQ- 800
4/10 TU -772

You can do the same thing with hard work

Credit Scoring 101
Common Abbreviations
Frequently Requested Threads
Whats In Your FICO Score

Re: Playing the cards right

Anonymous — Thu, 10 Jun 2010 03:08:53 GMT

@MarineVietVet wrote:

That goes for unexpected charges and anticipated payments. Never assume that the payment was made. Always make sure yourself. I've paid everything online for many years and have not had a problem with any payments but I still check every account every day for my own peace of mind.

Ah, peace of mind. I've converted to all-electronic bill paying over the last couple of years. I do a couple of things that have really helped me keep track of everything quickly and easily. Of course, everyone has their own methods.

- I have bookmarks for the login page for all my accounts, including banks, credit cards, utilities, everything. That saves several steps. I find I'm more likely to keep up with something if it's fast to check it. I keep all the passwords in an encrypted password saving program.

- I use personal finance software to keep track of accounts and balances.

- I use a simple spreadsheet for the month that lists bills, when the the bill date is, and when they're due.

- I log major transactions into a file, including the confirmation or reference number.

The difference between the way I used to do it and the way I do it now is like the difference between stumbling around in the dark and turning the light on.

That seems to work for me. I always know when the statement is going to get cut and when the due dates are. I've found that for me, I don't really care when they report to the CRAs because I'm able to keep utilization below 10% using this method.

Re: Playing the cards right

vanillabean — Wed, 12 Dec 2012 23:30:54 GMT

JackBeNimble, it was very interesting for me to read your post.

But where do you keep your password for the encrypted password saving program? Just kidding

I too have bookmarks for login pages and use a simple spreadsheet, in which all our regular income and expenses are lined up nine months into the future. There's a graph, which shows the checking balance at all times.

For many years we had only one joint card (Visa Signature NPSL), during which we paid the bill the old-fashioned way with a stamp. Then all hell broke loose when we in and around September last year got two new cards and a refinance. We were clueless, but our scores actually went up because of it!

It was at this time that I soon shifted everything to online. The winter came and went, and now we are once again back to a simple life. Near $0 on the credit balances and watching the inquiries drift outside the one year window this coming fall.