College essay on interest rates

[snowangel]

Sorry, but having an account backdated is manipulation.  As is gaining someone else's history for being an authorized user.  FICO isn't rewarding you, it's making a prediction of your creditworthiness based on the information that's given.

[Wolf3]

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@snowangel wrote:

Sorry, but having an account backdated is manipulation.  As is gaining someone else's history for being an authorized user.  FICO isn't rewarding you, it's making a prediction of your creditworthiness based on the information that's given.

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Backdating can be a manipulation, especially if you get a extra CC's just to get a better AAoA.  On the flip side, if I get a new date because I product change a card, that is a negative impacting me, which is not accurate either.  If would be fairer is everyone did it or no one did it.

I don't consider AU between spouses a manipulation, presuming both use and share household income to pay for it.    I would agree the other cases are a manipulation, especially those who credit history is older than they are.  The practice of buying or selling AU for score purposes is just plain fraud.

[Anonymous]

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@Wolf3 wrote:

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@Anonymous wrote:

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@Wolf3 wrote:

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@snowangel wrote:

Another point that you can add to your essays is that scores can  be manipulated - being added as an authorized user on someone else's account, having new accounts backdated (amex), pay for deletes, and such.

The other point to consider is that a credit score is just a snapshot of someone's credit at one point in time.  Since utilization is factored into a credit score, when a CC company reports can vary someone's score.  Did they make a large purchase 3 days before their statement cut but  paid it off a few days later?  Their score could be lower for the 30 day period while that balance reported.    

Credit inquiries also affect a person't score and tend to be looked at negatively, but what is someone is shopping around for credit cards like they would car loans?  

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Might be a better topic.

Manipulation of Credit Score via utilization is constantly promoted on this site.  

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I never saw it as manipulation. I always saw it as Fico rewarding you for both 1) doing what's best financially, and 2) knowing the rules.

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It does become a reward for knowing the rules.    Saying it is doing whats best financially is a stretch. 

If I PIF every month (which I usually do) by the due date, my utilization is usually over 60% and varies a lot depending on the day of the month.  Let us assume that is an accurate FICO score for me.

If I take a month and pay early so I end up with a 9% utilization, I get a big boost in FICO score for that period.  I can use that period of time for applications.   Next month I go back to my normal practice and my score settles back to normal.  Since nothing substantial has changed to make me a better or worse credit risk, I have manipulated the FICO score to my advantage.

I do this, I advacate this.   It is not illegal.   I don't consider it unethical.   I do maintain it is a manipulation of the FICO system.

Now many people on this forum strongly recommend doing this every month.   I maintain it is a manipulation, albeit a constant one.

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I completely agree.  I try to keep my uutilization low just to avoid paying interest, but I definitely get it down before apping.

[Anonymous]

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@Wolf3 wrote:

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@Anonymous wrote:

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@Wolf3 wrote:

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@snowangel wrote:

Another point that you can add to your essays is that scores can  be manipulated - being added as an authorized user on someone else's account, having new accounts backdated (amex), pay for deletes, and such.

The other point to consider is that a credit score is just a snapshot of someone's credit at one point in time.  Since utilization is factored into a credit score, when a CC company reports can vary someone's score.  Did they make a large purchase 3 days before their statement cut but  paid it off a few days later?  Their score could be lower for the 30 day period while that balance reported.    

Credit inquiries also affect a person't score and tend to be looked at negatively, but what is someone is shopping around for credit cards like they would car loans?  

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Might be a better topic.

Manipulation of Credit Score via utilization is constantly promoted on this site.  

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I never saw it as manipulation. I always saw it as Fico rewarding you for both 1) doing what's best financially, and 2) knowing the rules.

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It does become a reward for knowing the rules.    Saying it is doing whats best financially is a stretch. 

If I PIF every month (which I usually do) by the due date, my utilization is usually over 60% and varies a lot depending on the day of the month.  Let us assume that is an accurate FICO score for me.

If I take a month and pay early so I end up with a 9% utilization, I get a big boost in FICO score for that period.  I can use that period of time for applications.   Next month I go back to my normal practice and my score settles back to normal.  Since nothing substantial has changed to make me a better or worse credit risk, I have manipulated the FICO score to my advantage.

I do this, I advacate this.   It is not illegal.   I don't consider it unethical.   I do maintain it is a manipulation of the FICO system.

Now many people on this forum strongly recommend doing this every month.   I maintain it is a manipulation, albeit a constant one.

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Paying off your debt is a financial best practice. I agree that the difference between PIF before your statement posts and after it posts isn't substantial, but that's just how the game works.

There is one thing paying in full before your statement cuts does prove though. If you're doing it regularlyh, you really can't be laddering your payments so that you are robbing Peter to pay Paul.

[snowangel]

It seems like FICO could do a better job representing utilization on revolving accounts  for those who pay in full monthly like one would do on a charge card - maybe using carryover balance, instead of statement balance.

off the topic - how do you get the post you're responding to included in your response when you reply?

[haulingthescoreup]

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@snowangel wrote:

It seems like FICO could do a better job representing utilization on revolving accounts  for those who pay in full monthly like one would do on a charge card - maybe using carryover balance, instead of statement balance.

Unfortunately, FICO doesn't get to choose on this one. Back before FICO scoring, when there were just credit reports, lenders decided to report statement balance, and not (for instance) the remaining balance due on the due date. It's pretty much the only number they have to work with. Some lenders (HSBC/ Orchard bank cards; US Bank cards; a few others) elected to report the outstanding balance as of the last business day of the month, but recently HSBC/ Orchard appears to be changing to the usual practice. 

off the topic - how do you get the post you're responding to included in your response when you reply?

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To quote a reply, hit "Reply" at the bottom of the post that you're replying to. When the text box opens up, you'll see a button called "Quote" above on the right. Hit that, and the post will pop up. Make sure that your cursor is below the line under the quoted post, so that your reply doesn't wind up inside the quote box, and start typing. Or if it's a post with lots of individual points, you can reply within the quote box, but it helps to make your reply a different color, as I did up above.

If it's a crazy-long post (like my typical ones, for instance), you can hit quote to make the full post come up and then delete the part you're not replying to. Or you can highlight a portion of it and bold it and/or make it a different color, so it will show what you're replying to.

It's great to do this, especially on a thread that's rocking and rolling. Much less confusion!

[snowangel]

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@haulingthescoreup wrote:

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To quote a reply, hit "Reply" at the bottom of the post that you're replying to. When the text box opens up, you'll see a button called "Quote" above on the right. Hit that, and the post will pop up. Make sure that your cursor is below the line under the quoted post, so that your reply doesn't wind up inside the quote box, and start typing. Or if it's a post with lots of individual points, you can reply within the quote box, but it helps to make your reply a different color, as I did up above.

If it's a crazy-long post (like my typical ones, for instance), you can hit quote to make the full post come up and then delete the part you're not replying to. Or you can highlight a portion of it and bold it and/or make it a different color, so it will show what you're replying to.

It's great to do this, especially on a thread that's rocking and rolling. Much less confusion!

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Thanks for clarifying this one.

[haulingthescoreup]

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@snowangel wrote:

Thanks for clarifying this one.

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Nice job on the quote.

[Wolf3]

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@snowangel wrote:

It seems like FICO could do a better job representing utilization on revolving accounts  for those who pay in full monthly like one would do on a charge card - maybe using carryover balance, instead of statement balance.

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 I would think the carrying balande or the interest you are paying each month would be much better statistical indicators of your credit risk.

But that would be a massive change to collect the data.    All the CB and the instituions that report would have to change their reporting systems.

[clocktick]

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@Anonymous wrote:

Your last sentence, according to my finance class, is only half correct though.  If the credit inquiries are initiate by the consumer it will affect the credit rating but all those junk offers you receive in the mail for credit cards?  They also checked your score (well, most of the time) but it has no effect on your score.  I never did figure out how they knew the difference.

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 No, if you check your own credit reports it will NOT affect your rating.  Your own inquiries will not affect your scores at all.