Question about Fico score and updates...

[krazy]

Hi Everyone,

Just got my credit score and i have a 725.  The only recommendation that i could do right now is pay off some of my balances. I have 2 questions regarding this. First, how long does it take to affect my score? I plan on paying  about 75% -95% of my debt.I found that it will show my last balance on my statement, is this correct? Second, it also said that i should carry a blance on fewer cards... I am  a little confused becasue i thought if you don't use it companies might close your account or lower your CL. Is having 3 out of 5 cards with balances a better way to get a higher score. Thanks for the help.

2/22/10 Equifax 725  

[haulingthescoreup]

OK, first of all, here's how the timing works. For almost all cards (not including HSBC/ Orchard bank cards + US Bank cards), the balance showing on your statement is what is reported, even if you pay it the very next day. Pretty much all of them, now including AmEx for most of their cards, send this info on the statement date. But then you have to wait for all three bureaus to post the new balances. EX is generally right away, but TU and EQ can take a week or more. HSBC/ Orchard bank cards and US Bank cards report the balance showing on the last business day of each month. US Bank updates right away. HSBC/ Orchard bank cards take a week or two (or more) to send in the numbers.

So basically, figure that whatever balance shows on your statements should be on all three reports within 2 weeks.

It's not a question of "carrying a balance", it's showing a balance. You don't ever want to carry a balance. If that bugs a bank, my attitude is "tough." They make money off of us whenever we swipe a card. As far as I'm concerned, they can make interest money off of others. You do want to use them on a regular basis, though. Think of everything that you pay for with cash, a check, or a debit card, and see if you can put it on a CC instead. Warning: don't do this unless you are self-disciplined, or things can get out of control fast. I think of CC's as very slow debit cards. For the most part, I don't use one unless i have money in the bank to pay it off immediately if necessary, or at least, have money available in the next paycheck.

I think of it as the modern-day version of how household finances used to be managed, where people carried a tab, so to speak, and at the end of the month, they settled up their accounts with the grocer, the butcher, and so forth.

You can control how many cards report a balance by paying them off online several days before the statement is due to drop. The fewer CC's with balances, the better for your scores in most cases, as long as one does show a balance. (Then don't forget to pay it off before the due date!)

Your best bet for FICO scoring is to allow one card to display a balance, and then pay it off. Keep that displayed amount at 9% or less of that card's credit limit. Except in a few cases, this should give you the best score results.


eta: updated for the eternally annoying HSBC/ Orchard bank cards and US Bank cards exceptions

Message Edited by haulingthescoreup on 02-22-2010 05:18 PM

[Anonymous]

In rural south Georgia as a kid I used to fill my car with gas, walk into the store and grab a candy bar and wave at the store owner on the way out. Sometimes one of us would say Friday? or Friday! and sometimes we'd just nod. Sigh.

[RobertEG]

That is cool in old, rural Georgia, but a CCC will probably track you, wait until you cross a state line, and then call in the FBI for investigation of interstate transportation of stolen goods!

[krazy]

Thanks, for the great info. When you stated to only use about 9% are you refering to one card or total over credit line? 

[haulingthescoreup]

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krazy wrote:
Thanks, for the great info. When you stated to only use about 9% are you refering to one card or total over credit line? 

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Well, I was saying that in the context of only allowing one card to report a balance. 9% on one card will naturally be less overall.

For those who are still digging out from CC debt, 9% overall is a good goal. Once you essentially have no debt, and you are using cards for convenience and to tweak your FICO scores, you would want to keep any card that was reporting (the fewer the better) at 9% or less.

FICO scoring looks at both overall util and individual card util.

And a handy side effect of deliberately limiting yourself to 9% util on just one or maybe two cards is that you should be able to stay on top of your balances.

[MidnightVoice]

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@Anonymous wrote:
Remember that credit bureaus use different methods to receive and process good versus bad credit information.

Information that would negatively affect your credit rating--like a late pay or charge-off--is instantly beamed from the creditor to the agency via Department of Defense 256-megabit fiber optic lines and written to their servers in 8.6 milliseconds.

Information that would positively affect your credit rating is scribed onto scrolls in special ink by Gregorian monks, which are then painstakingly illuminated. The Credit Scrolls are then placed onto camel caravans which wind their way to the credit bureau headquarters by way of Marrakesh, Dubai, and Tripoli. Once the caravan reaches Equifax, Experian or TransUnion, the scrolls are then laid out in the sun for a week so that the special ink can be read. (Note that the weather around the credit bureau headquarters is notoriously gloomy, like FICO itself, so finding seven consecutive days of sunshine can be quite an ordeal in and of itself.) Only then can the information finally be encoded into your credit files...

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[woozy]

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@MidnightVoice wrote:

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@Anonymous wrote:
Remember that credit bureaus use different methods to receive and process good versus bad credit information.

Information that would negatively affect your credit rating--like a late pay or charge-off--is instantly beamed from the creditor to the agency via Department of Defense 256-megabit fiber optic lines and written to their servers in 8.6 milliseconds.

Information that would positively affect your credit rating is scribed onto scrolls in special ink by Gregorian monks, which are then painstakingly illuminated. The Credit Scrolls are then placed onto camel caravans which wind their way to the credit bureau headquarters by way of Marrakesh, Dubai, and Tripoli. Once the caravan reaches Equifax, Experian or TransUnion, the scrolls are then laid out in the sun for a week so that the special ink can be read. (Note that the weather around the credit bureau headquarters is notoriously gloomy, like FICO itself, so finding seven consecutive days of sunshine can be quite an ordeal in and of itself.) Only then can the information finally be encoded into your credit files...

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OMG. That is hysterical.

[Anonymous]

RFLMAO!!!!!

[MidnightVoice]

An oldie but goldie from the late, lamented, TheNewWorldMan

I like to bring it back every now and again