topic Re: flojo's post: High Reported Utilization, But We PIF in Understanding FICO® Scoring

flojo's post: High Reported Utilization, But We PIF

Anonymous — Sat, 01 Oct 2011 22:57:55 GMT

Hi,

I am in my early 40s. Reasonably high income household with excellent and long credit history. I have a 1.1M mortgage that is 6 years old and 3-4 revolving CC with 0 balance month to month. No car loan. no HELOC. My score has been in the 750-795 range for the past 3 years. Never above 800. Now when I look at my credit report I see that my high CC balance are hurting my overall score and are probably the reason I have not joined the 800 club yet. However, seems FICO failed to recognize that 90% of my CC use is done through one Amex and one Visa card and although we have about $10k in charge monthly between these 2 accounts, we faithfully pay the balance every month and so really carry a 0 balance on these accounts!! . But FICO states I have $12k in revolving credit on my last statement which is not true !! I can't just start to move my life to a cash base just because of the FICO score limitations. First that would mean giving up on hundred of thousands of Amex points, second it is dangerous for your health to carry to much cash around (and third my wife would never gave up her platinum amex, lol). Seriously, we have enough assets we could get rid of all the credit we have but we would still be using our CC fairly heavily because we live in a high-cost environment (NYC) and we are a family with young kids with plenty of needs. Seems to me our FICO score really misses the mark. Any suggestion on how to raise my score are welcome.

edit: Hi, flojo, I split your post off from the original thread because it brings up a very valid point about FICO scoring that is surprising to those who are just learning about FICO scoring. Welcome to the forums!

Re: High Reported Utilization, But We PIF

69Shack69 — Sat, 01 Oct 2011 22:16:45 GMT

Hi Flojo ~ I have almost the identical situation. What I discovered is that immediately after an Amex statement comes out, that is when they report to the credit bureaus. Since the date of the statement if fairly predictable, I simply go online a few days before the statement date and pay off the balance. Thus, when the statement comes out, my balance is zero or very low if a charge or two comes through in the interim, but that will have little or no effect on your score. In essence, you are simply making your payment a few days early - no big deal. I put an automatic reminder on my calendar to be sure I don't miss. Hope that helps.

Re: High Reported Utilization, But We PIF

Anonymous — Sat, 01 Oct 2011 22:16:59 GMT

An interesting solution I had not considered!! Thanks very much for sharing that thought.

Re: High Reported Utilization, But We PIF

LilyBee — Sat, 01 Oct 2011 22:17:14 GMT

Flojo:

Don't forget the catch-22. If you don't carry a balance in any of your credit cards, your score will be downgraded for not using credit that is available. I too pay mine off if a bill comes in and thought with that practice my score would go up. Then it was downgraded for not evidencing credit worthiness, or some crap like that. So I use my debit card (credit union, no fees) and charge my AX when I purchase a book or dvd.

I haven't checked my scores lately, but will do so tomorrow. Hang in there; you'll learn the game.

Re: High Reported Utilization, But We PIF

haulingthescoreup — Sat, 01 Oct 2011 22:17:27 GMT

@LilyBee wrote:
Flojo:

Don't forget the catch-22. If you don't carry a balance in any of your credit cards, your score will be downgraded for not using credit that is available. I too pay mine off if a bill comes in and thought with that practice my score would go up. Then it was downgraded for not evidencing credit worthiness, or some crap like that. So I use my debit card (credit union, no fees) and charge my AX when I purchase a book or dvd.

I haven't checked my scores lately, but will do so tomorrow. Hang in there; you'll learn the game.

Surprising. I get an alert when I use my CC for the first time in a while, but it doesn't affect my scores.

I run everything (quite literally everything except my weekly offering at church, which is by check, and the occasional purchase of Girl Scout cookies) through credit cards, and I nearly always have all but one of them reporting $0. Whenever I let more balances report, my scores plummet. It's true that if they all report $0, my score drops a bit, so I just let one report a balance. Since I currently have a 0% BT on a Navy FCU card, that one does the job of reporting a balance.

Re: High Reported Utilization, But We PIF

haulingthescoreup — Sat, 01 Oct 2011 22:30:31 GMT

@Anonymous wrote:
Hi,

I am in my early 40s. Reasonably high income household with excellent and long credit history. I have a 1.1M mortgage that is 6 years old and 3-4 revolving CC with 0 balance month to month. No car loan. no HELOC. My score has been in the 750-795 range for the past 3 years. Never above 800. Now when I look at my credit report I see that my high CC balance are hurting my overall score and are probably the reason I have not joined the 800 club yet. However, seems FICO failed to recognize that 90% of my CC use is done through one Amex and one Visa card and although we have about $10k in charge monthly between these 2 accounts, we faithfully pay the balance every month and so really carry a 0 balance on these accounts!! . But FICO states I have $12k in revolving credit on my last statement which is not true !! I can't just start to move my life to a cash base just because of the FICO score limitations. First that would mean giving up on hundred of thousands of Amex points, second it is dangerous for your health to carry to much cash around (and third my wife would never gave up her platinum amex, lol). Seriously, we have enough assets we could get rid of all the credit we have but we would still be using our CC fairly heavily because we live in a high-cost environment (NYC) and we are a family with young kids with plenty of needs. Seems to me our FICO score really misses the mark. Any suggestion on how to raise my score are welcome.

edit: Hi, flojo, I split your post off from the original thread because it brings up a very valid point about FICO scoring that is surprising to those who are just learning about FICO scoring. Welcome to the forums!

This is an exasperating result of lenders' decision to use the balance as of the statement for reporting purposes. IMO, it would have made a lot more sense to use the balance showing as of the due date, but then no one asked me.

As posted, the trick is to PIF (pay in full) your balances right before the statement dates, so that the statements don't show the full balance. Oddly, most people do better to have just one card reporting a token balance than to have all reporting $0. However, I suspect that with low reported util, this might not really be a factor for you, and you can get away with all (or both) reporting $0 if you want.

You actually don't have to do this all the time, although it does get addictive to see the much higher scores. You can do this 4-6 weeks before you anticipate apping for new credit if you like. I generally do this on the regular basis though, because sometimes I get an interesting opportunity for a good deal, and I hate to wait for a full month of billing cycles for lower balances to report.

Anyway, this is often called "playing the util game." It's sort of annoying, I guess, but it's a pretty harmless entertainment.

Re: High Reported Utilization, But We PIF

GregB — Sat, 01 Oct 2011 23:55:29 GMT

I just don't see any problem here. A FICO of 800 is functionally the same as 760.

If you are showing $12K in Revolving Debt and have a FICO above 760, then there is really no advantage to doing anything to raise your score. That score gets you whatever credit you wish and if you do need a higher score you just pay a CC before statement date for that month. If you are PIFing anyway, you just pay one sooner.

Because of business CC showing on my personal reports my normal Revolving Balance that would report if I PIFed all CC would be about $40-45K. That is about four times more than yours. That gets me FICO around 740 or so. If I needed a higher FICO for something I would just get my balance lower temporarily. I can only remember one time that a 740 wouldn't get me the very best terms. Schwab told me on one item that they really wanted to see "close to 800s".

My current Revolving is $96K, down from a peak of $147K thanks to finishing off a divorce two years ago. $147K gave me a 696 EQ FICO, it went to 701 pretty quickly as my balance went down and I am still at 701 with $96K.

Haulings idea of reporting "at the due date" might make sense if they report AFTER the payment on the due date. Before the payment would mean that when I finally get to the point of PIFing all accounts my reported amounts would almost double.

Re: High Reported Utilization, But We PIF

LilyBee — Sun, 02 Oct 2011 02:33:25 GMT

Hauling said:

1. "Surprising. I get an alert when I use my CC for the first time in a while, but it doesn't affect my scores."

2. "I run everything (quite literally everything except my weekly offering at church, which is by check, and the occasional purchase of Girl Scout cookies) through credit cards, and I nearly always have all but one of them reporting $0.

It's true that if they all report $0, my score drops a bit,

3. so I just let one report a balance."

1a. What kind of alert?

2a. That doesn't make sense. How can you run 'everything' through credit cards and have nearly all but one of them report $0?

3a. That's why I said that I only charge a book or dvd to one token credit card, because I violently object if my scores are lowered without a valid reason.

Re: High Reported Utilization, But We PIF

Anonymous — Sun, 02 Oct 2011 03:56:43 GMT

@LilyBee wrote:
Hauling said:

1. "Surprising. I get an alert when I use my CC for the first time in a while, but it doesn't affect my scores."

2. "I run everything (quite literally everything except my weekly offering at church, which is by check, and the occasional purchase of Girl Scout cookies) through credit cards, and I nearly always have all but one of them reporting $0.

It's true that if they all report $0, my score drops a bit,
3. so I just let one report a balance."

1a. What kind of alert?

2a. That doesn't make sense. How can you run 'everything' through credit cards and have nearly all but one of them report $0?

3a. That's why I said that I only charge a book or dvd to one token credit card, because I violently object if my scores are lowered without a valid reason.

I'll answer 2a. You pay the balance on all but one card before the statements post so that a zero balance is what is reported.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Re: High Reported Utilization, But We PIF

haulingthescoreup — Sun, 02 Oct 2011 05:15:36 GMT

@Anonymous wrote:
@LilyBee wrote:
Hauling said:

1. "Surprising. I get an alert when I use my CC for the first time in a while, but it doesn't affect my scores."

2. "I run everything (quite literally everything except my weekly offering at church, which is by check, and the occasional purchase of Girl Scout cookies) through credit cards, and I nearly always have all but one of them reporting $0.

It's true that if they all report $0, my score drops a bit,
3. so I just let one report a balance."

1a. What kind of alert?

2a. That doesn't make sense. How can you run 'everything' through credit cards and have nearly all but one of them report $0?

3a. That's why I said that I only charge a book or dvd to one token credit card, because I violently object if my scores are lowered without a valid reason.
I'll answer 2a. You pay the balance on all but one card before the statements post so that a zero balance is what is reported.

Yup. The name of the game is control your reported util. You can use your cards as much as you want. Just figure out when they report, and what figure they report. In almost all cases nowadays, CCC's report the night that your statement drops, and the amount that they report is the amount that shows as due. If you pay it off before the statement drops (= posts), then the amount due on the statement is $0, and that's what gets sent to the credit bureaus.

1. "Surprising. I get an alert when I use my CC for the first time in a while, but it doesn't affect my scores."

1a. What kind of alert?

A Scorewatch alert. One of the flags that you can choose for alerts is activity on a card that hasn't been used in a while. It's actually a security alert, in case someone has gotten access to your card and started using it. I used to think when I got these alerts that the usage had caused a score change, but there wasn't one, or it was coincidental. The alert was merely to say, Hey, this card is getting used again for the first time in a good while, and were you aware of it?

2a. That doesn't make sense. How can you run 'everything' through credit cards and have nearly all but one of them report $0?

As MVV summarized above, and as I then blathered about above. I regard my CC's as slightly slow debit cards. I don't use them unless I have the money in the bank to pay them off, or money coming in the next paycheck that's already budgeted for that purchase. That's how I can run a ton of money through rewards cards and get cash back. I love my 6% cash back on groceries and 5% cash back on gas, and I do NOT pay interest, and the cards report $0 every month, because I pay them off the day before the next statement drops.

3. It's true that if they all report $0, my score drops a bit, so I just let one report a balance.

3a. That's why I said that I only charge a book or dvd to one token credit card, because I violently object if my scores are lowered without a valid reason.

And that does work when you allow cards to report a balance, but it certainly cripples your use of credit. Try paying before the statement drops, instead of after, if you'd like to use your cards as much as you like without score penalties. Since for most people, having all cards report $0 results in a score drop, I do let one report a balance, and then I pay it off before the due date. (It's scary-easy to forget to pay it off, btw, so you do have to be alert about that.)

I started a new job recently, and with all the accompanying doo-dah and distractions, I let quite a few cards report balances. I never got anywhere close to being late, but just from having the balances report, my scores plummeted. Now that the dust has settled, I'm back into my routine of paying the day before the statement date.

Again, I will stress that this isn't necessary, unless you've gotten hooked on maximizing your scores. I can think of worse vices, though.

Re: High Reported Utilization, But We PIF

LilyBee — Sun, 02 Oct 2011 15:12:48 GMT

Hauling:

Thanks for the explanation of the previous 'blathering.' Pay when it drops; you'd think I'd have figured that out by now, since I'm addicted to maximizing.

Also, I've never received an alert and I have at least 25 old cards on my reports which apparently I shouldn't close, according to the rules of the game.

Oh well, I guess my scores are good enough. Thank goodness for little favors. I'll never get to 850, since myfico reports that I haven't had them long enough.

Re: High Reported Utilization, But We PIF

LilyBee — Sun, 02 Oct 2011 15:20:15 GMT

Duh. I mean BEFORE it drops.

Re: High Reported Utilization, But We PIF

Booner72 — Sun, 02 Oct 2011 15:36:13 GMT

LilyBee: You probably don't have your settings set to notify you of new activity every 3 months (It can go as high as 24 months). I have all my settings set so that any small activity or change will give me an alert. I do this bc when you get an alert, you get to see your score.

Re: High Reported Utilization, But We PIF

vanillabean — Sun, 02 Oct 2011 16:35:51 GMT

@haulingthescoreup wrote:
I nearly always have all but one of them reporting $0. Whenever I let more balances report, my scores plummet.

Sorry, I'm a bit rusty, didn't log in during the last quarter, but it's my experience too that a drop takes place, although I can't be sure at this time. DW and I each presently have two positive card balances reporting, and yet she's at 817. I don't believe I have ever seen anyone in these forums with an EQ FICO equal to or greater than this.

Re: flojo's post: High Reported Utilization, But We PIF

Anonymous — Thu, 06 Oct 2011 17:54:39 GMT

You can actually contact each credit card company and ask when they report to the credit bureaus. Once you have that information, simple pay your account in full a few days before, then they will report 0 balance with your high credit. I have been doing this for almost a year and my score improved by over fifty points.

Re: flojo's post: High Reported Utilization, But We PIF

Anonymous — Thu, 06 Oct 2011 22:19:07 GMT

I find that if I pay in full ahead of time and then rotate which cards I am using I can keep all but one reporting $0. Most of my cards report either near the 1st or the 15th. If I would like to continue using a card like my AMEX 2% cash back card and still have it report $0 then I can simply pay more than what is due(so that there is a credit of how ever much I will need until it reports) and continue to use the card. I usualy choose a card that I do not use frequently and allow that one to report balance of $20 which I imediatly pay of after it posts to my credit report.

Re: flojo's post: High Reported Utilization, But We PIF

lloyd1981 — Thu, 06 Oct 2011 23:22:25 GMT

My companion has paid her regular American Express card on time, every month, since her registered start date: 1974. I have had a Business AmEx since 1980. I made the progression from green through to platinum. Many times my account was well above $10k, always paid immediately upon receiving my statement, now handled online. No credit report I have seen, and I have purchased all reports at least on a quarterly basis, has ever shown that either of us even HAVE AmEx accounts. I am the business owner and solely responsible for any and all charges made to the Business account. My current limit is "No set limit."

Add me to the list of those frustrated with the process.

Re: flojo's post: High Reported Utilization, But We PIF

vanillabean — Thu, 06 Oct 2011 23:49:03 GMT

Business cards often do not appear on credit reports. If you get a backdated personal amex card whose limit reports to the credit agencies, your frustration will likely be alleviated by a comfortable score increase.

Re: flojo's post: High Reported Utilization, But We PIF

lloyd1981 — Fri, 07 Oct 2011 01:01:50 GMT

RE: Business cards not showing up on credit reports.

1. I have one VISA and one MasterCard business card. Both show, with the notation that I am the primary for those accounts.

2. AmEx uses TransUnion each year to check my personal credit.

Once again... being checked by but not allowed to use... Well, I hope you get the picture.

Re: flojo's post: High Reported Utilization, But We PIF

Anonymous — Fri, 07 Oct 2011 02:30:47 GMT

I did the same thing until I realized that the cc company was taking about a week or a bit longer to report. The trick is to wait until you received your cc bill. This way it will report that you have a zero balance. Then you can go ahead and charge what you wish showing still a zero balance until you pay in full again. But always wait until you get you new statement before you charge again. It will always show a zero balance after that. It worked for me! Hope this helps!