topic Re: Another AZEO question? in General Credit Topics

Another AZEO question?

Yeliaba1 — Sun, 28 Apr 2019 14:05:06 GMT

I understand that optimally AZEO requires 1 of 3 revolvers reporting a balance less than 8.99% and one open installment loan doing the same. My question is in general questions regarding AZEO does everyone carry an installment loan less than the threshold. If so, I need to alter my expectations as my installment loan is above that and will be for some time.

Re: Another AZEO question?

Anonymous — Sun, 28 Apr 2019 14:38:59 GMT

Carrying the loan at or below 8.9% for as long as possible will maximize your score potential. Even with it above the ideal usage, AZEO will still benefit you, just to a lesser extent. Just be sure to carefully maintain your card usage at the ideal levels to compensate as much as possible.

Re: Another AZEO question?

Yeliaba1 — Sun, 28 Apr 2019 15:03:04 GMT

I’ll have 1 of 6 cards reporting a balance of $10 and all others at zero. My installment loan is at 46% so is this really not considered AZEO?

Re: Another AZEO question?

Anonymous — Sun, 28 Apr 2019 15:46:32 GMT

AZEO your cards and whittle your installment loan down as soon as you can to a threshold preferably below 30% for as long as possible.
If you have 6 cards, I'm assuming $10 is way below 8.9%. It may make more sense to shoot for 8.9% on the cards using AZEO instead of the arbitrary $10 and focus on paying your installment loan down.

What are your current card limits? Someone a bit more eloquent may come along and explain this better.

Re: Another AZEO question?

Yeliaba1 — Sun, 28 Apr 2019 16:08:47 GMT

Thank you for the reply. I don’t think I’ve made myself clear though. My question is do most consider this AZEO? I can’t expect my scores to change in the same manner as someone with an installment loan balance below 8.9% and one revolver the same.

Re: Another AZEO question?

Anonymous — Sun, 28 Apr 2019 16:12:52 GMT

AZEO - all zero except one. This is regarding your cards (revolvers).

Your installment loan is just gravy but is helpful under 30%.

Re: Another AZEO question?

CreditInspired — Sun, 28 Apr 2019 16:28:03 GMT

@Yeliaba1 wrote:
I understand that optimally AZEO requires 1 of 3 revolvers reporting a balance less than 8.99% and one open installment loan doing the same. My question is in general questions regarding AZEO does everyone carry an installment loan less than the threshold. If so, I need to alter my expectations as my installment loan is above that and will be for some time.

If the installment loan is your mortgage, that won’t be less than 8.9% for ~25 years (assuming a 30-yr mortgage).

So the less than 8.9% is basically for CCs and secured loans where the goal is to get the loan for 5 years and pay down to 1-5% of balance (this only if you have no other installment loans).

Re: Another AZEO question?

Anonymous — Sun, 28 Apr 2019 16:48:00 GMT

It is used imo when people are talking about just cc.
Obviously it would help score to bring installment loans down as much as can. I have 3 cc and 3 sc I've noticed in past it didn't matter if I let one or two cards report small balances. But this month to be sure since I might apply for a cc. I'm using azeo method. Plus brought utilization down to under 8.9 total.
Plus crossed other possible threshold s bringing individual card from 54% to 25 or so.
Best advice I've seen so far is let cc report 8.9% instead of 1% or 2% and pay as much as you can on installment loan

Re: Another AZEO question?

Yeliaba1 — Sun, 28 Apr 2019 17:51:11 GMT

@dtk6802 thank you. My real question is if you say you are using the AZEO method is your installment loan below 8.9??I’m more curious about how people are communicating they are using this method; with 1 reporting revolver below 8.9% and any installment loan or an installment loan reporting below 8.9%?

Re: Another AZEO question?

Anonymous — Sun, 28 Apr 2019 18:00:29 GMT

With specific respect to AZEO, it applies only to your revolving accounts. As mentioned above, the loan is gravy. People always mention the loan because of the points you gain in credit diversity by having both revolvers and an installment account, but AZEO is specifically a revolving account method.

Re: Another AZEO question?

HeavenOhio — Sun, 28 Apr 2019 18:09:16 GMT

AZEO applies to cards only.

For loans, it’s the total balances on all loans compared to the total of the original loan amounts that matters — with the exception that some feel that there might be an earlier scoring break on mortgages.

I’d suggest AZEO on your cards if you deem it to be necessary or if you think a stop at AZEO is useful for testing.

With loans, I’d simply go with the flow unless you have the luxury to keep a loan around with a low balance for a while.

Re: Another AZEO question?

Yeliaba1 — Sun, 28 Apr 2019 18:17:22 GMT

Thanks!! I misinterpreted that everyone at AZEO had installment loans reporting below 8.9% as well.

@ Heaven thanks!! While I could pay the loan off, I’ve got a thin file so I’ll let that loan go to term for the age.

Re: Another AZEO question?

Anonymous — Sun, 28 Apr 2019 18:22:14 GMT

AZEO refers to cards. All Zero Except One.

Re: Another AZEO question?

Revelate — Sun, 28 Apr 2019 18:55:05 GMT

Yeah just CC’s only but it sadly appears that some older models (before FICO 8) work on accounts rather than revolvers... that we seem to recently be finding out is a lot harder to fully optimize but the premise is the same since most people can’t play reindeer games with their loans.

Also the bottom breakpoint for installment utilization is explicitly 8.9%; there is a higher one but it is around 70%... I know from my original testing there was nothing between 50 and 18% for installment: aggregate revolving has a lot more breakpoints.

Re: Another AZEO question?

Anonymous — Sun, 28 Apr 2019 22:36:19 GMT

Aren’t there different percentages for optimization at each bureau on classic eight? Do we know what those percentages are?

Re: Another AZEO question?

Revelate — Mon, 29 Apr 2019 00:16:31 GMT

@Anonymous wrote:
Aren’t there different percentages for optimization at each bureau on classic eight? Do we know what those percentages are?

EX / TU FICO 8: 1/2

EQ FICO 8: 1/3 and 1/2

Tested that twice, believe it holds for all scorecards but there's been some dissenting data on it. I haven't walked my balances up to 100% reporting, may do that between the AAOA 5 years and 5.5 years on Experian, probably about time I charged something on my SD'd cards anyway.

But yeah for EQ FICO 8 minimum would be 4 revolvers if you really want to be hardcore about it but EQ at 1/2 matched the point loss as EX/TU at 1/2, and frankly the point values were so small it really wasn't much even on a clean file I lost like -8 points.

Matters when your credit score really matters like mortgage application or maybe auto loan but won't hurt otherwise when we're talking credit card underwriting.

Speaking of mortgages, I'm a little worried the models used in a mortgage might be 20% (1/5) accounts with balances as that's when I managed to push the reason code off EX FICO 2, and given the mortgage scores are truly the ones worth optimizing for people may need to pick up a lot more to optimize that, which would suck incidently. Need to run the experiment again once my auto loan is paid off sometime after finding the top installment breakpoint... too many things to test, too little time.

Re: Another AZEO question?

Anonymous — Mon, 29 Apr 2019 00:46:42 GMT

Yes, I read the thread where you were questioning the 20% line on EX2. Definitely maters more there!

Forgive me, but I don't quite understand. I'm assuming your answer means to optimize at EX/TU, one needs to have less than 1/2 of their open accounts with a positive balance? But I don't understand 1/3 and 1/2 at EQ. Please explain.

Re: Another AZEO question?

Revelate — Mon, 29 Apr 2019 01:24:54 GMT

@Anonymous wrote:
Yes, I read the thread where you were questioning the 20% line on EX2. Definitely maters more there!

Forgive me, but I don't quite understand. I'm assuming your answer means to optimize at EX/TU, one needs to have less than 1/2 of their open accounts with a positive balance? But I don't understand 1/3 and 1/2 at EQ. Please explain.

FICO 8 from all my testing is on revolvers.

Sorry, 1/2 = 50%, 1/3 = 33.3%, I just short-handed with fractions and didn't explain all that well.

On EQ there are lines at both 33.3% and 50% revolvers reporting a balance. On EX/TU there is only one line at 50%, but the 50% line on all three were virtually identical score drops for me (EQ was same with 2 drops, others just 1). I lost about half the total drop at the first breakpoint on EQ.

Re: Another AZEO question?

Anonymous — Mon, 29 Apr 2019 10:08:33 GMT

No my installment loan is only 30 percent paid off.

Re: Another AZEO question?

Anonymous — Mon, 29 Apr 2019 10:33:32 GMT

Yes I understood the fractions, just was puzzled at 2 lines. and doesn't it count include installment loans? For example if I had 2 loans, wouldn't I need 5 CCs to optimize? 3/7 accounts with a balance, therefore being under the 50% demarcation line? Or do I misunderstand?