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I probably had a few times where all balances were zero.. I suppose it dropped the score a little and is perhaps indicative of the inverse, AZEO bonus.
If I try AZEO again I will start by having all zeros report.
I may actually do this soon, for science. I'll be 3/24 in a couple months, 1/24 around July... but really haven't noticed if recent >24 mo accounts have enough score impact to stand out from my usual monthly up/down.
@DONZI wrote:I probably had a few times where all balances were zero.. I suppose it dropped the score a little and is perhaps indicative of the inverse, AZEO bonus.
I don't believe there's actually an AZEO "bonus."
There is a penalty for having all revolvers report a zero balance.
There is a penalty for having too many revolvers reporting a balance. (How many is too many apparently depends on scoring model, your scorecard, and maybe some other things. I'm just learning this part. There doesn't seem to be one right answer.)
AZEO is a technique that dodges both of those penalties (assuming you have at least three accounts).
@DONZI wrote:The way I see it, doing AZEO is a small score reward for doing a chore.
Given the float time from statement cuts I can collect almost all the statements and pay them all at one time before the due dates. Seems a bit more efficient to me... in reality I may pay some the day the paper arrives depending on schedule, etc.
- I like to borrow their money and pay them back in full as agreed. They give some ~25 days from statement cut, I see no reason to rush.
- T&C regarding disputes IIRC... goes something along the lines of a transaction which is to be disputed can't have been paid already.
In my case, I prefer to use the time granted to float the charges at least until I am certain it all checks out and sign off on it.
I don't see score changes big enough to worry about it one way or the other.
Maybe of no value, but I decided that I wanted balances to report so that my spending/payment shows... also it's a way to input more (meaningful?) data on my thin credit file faster.
^ Agreed. I never practiced AZEO. What a chore. Much prefer to have charges report on statements and then PIF statement amount a few days before due date. Good points about disputes and float time. I enjoy using the float and have disputed some charges due to issues with products purchased.
As mentioned Fico scores may fluctuate a few points when allowing charges to report naturally. However, those fluctuations are minimal if you have sufficient lines of credit. Again, if AG UT naturally stays under 9% and highest card UT stays under 29%, then scores will remain stable. The primary situation to avoid is more than 50% of cards reporting balances - Not a big deal for Fico 8 and Fico 9 but, this can trigger large score drops on the older Fico "mortgage" models.
Side note: There is some potential benefit to accumulating charges on a card to crank up reported high balance at some point. This shows ability to handle higher debt levels. It may be beneficial for increases in CL. HB is reported to the credit bureaus by the card issuer usually based on highest balance accumulated during a billing period - not necessarily statement balance. This may vary depending on the issuer.
As an example someone may have a card with a $10k CL. Let's say the current HB shows $800. The next month the card is heavily used and accumulates charges up to $5500 before a payment is made. Then a $3500 payment is made before statement closes resulting in a $2000 balance on the statement. The following month HB could be reported $5500 or as $2000. If the target issuer uses the former method, HB can be cranked up even if card is paid to zero before statement cuts.
In reality, if you are not planning to seek new credit, allowing score to drop substantially during a given month is a non issue. It can be useful to know how your specific profile reacts to changes in payment methodology. So, if you don't need new credit - test away! Just avoid suffering a late payment.
I believe AZEO is only beneficial when apping something where you're borderline on a rate change. I actually believe practicing AZEO regularly can be detrimental depending on who you have credit with and you're suddenly forced to carry a balance.
Lenders like Amex use sophisticated algorithms to track your history. Going 4 years without a balance and then suddenly carrying a significant balance for a couple of months could trigger AA, and we have data points here that show that. Two of the most common examples are financial review and putting a hard limit on charge cards.
Then you have other lenders that track your performance with other lenders, like Amex, Chase, CITI, and NFCU. All have been known to take AA because of increased balances showing up on credit report for another lender.
Obviously, it's all dependant on your profile. Some people never receive AA no matter what they report, but having received AA myself from both Amex and CITI, I'd rather not add fuel to the fire. So personally, I just let balances report. Like the above user stated, it can show other lenders there's nothing to worry about and that you can handle you limits and payments.
@Brian_Earl_Spilner wrote:I believe AZEO is only beneficial when apping something where you're borderline on a rate change. I actually believe practicing AZEO regularly can be detrimental depending on who you have credit with and you're suddenly forced to carry a balance.
Lenders like Amex use sophisticated algorithms to track your history. Going 4 years without a balance and then suddenly carrying a significant balance for a couple of months could trigger AA, and we have data points here that show that.
I agree.
If I were mortgage/car shopping I'd go for AZEO if it meant getting a better rate... but I'm not.
I've carried 75% of my cards with a $0 balance and then let most of them post a balance the next month and score didn't move. I've had cards go from 0 to 90% for a BT promo and my score either didn't move or dropped 1-3 pts.
It's just not something I'm going to stress over... or lose sleep over. I have less than a year till all my Ch 13 baddies are gone... when they quit tanking my score (and I pay down the 0% debt I'm carrying) I'll see my biggest increases.
For the most part I've had cards go from $0 to a balance and vice versa and saw no change. I honestly don't get why some people OCD about it.
@TRC_WA wrote:
@Brian_Earl_Spilner wrote:I believe AZEO is only beneficial when apping something where you're borderline on a rate change. I actually believe practicing AZEO regularly can be detrimental depending on who you have credit with and you're suddenly forced to carry a balance.
Lenders like Amex use sophisticated algorithms to track your history. Going 4 years without a balance and then suddenly carrying a significant balance for a couple of months could trigger AA, and we have data points here that show that.
I agree.
If I were mortgage/car shopping I'd go for AZEO if it meant getting a better rate... but I'm not.
I've carried 75% of my cards with a $0 balance and then let most of them post a balance the next month and score didn't move. I've had cards go from 0 to 90% for a BT promo and my score either didn't move or dropped 1-3 pts.
It's just not something I'm going to stress over... or lose sleep over. I have less than a year till all my Ch 13 baddies are gone... when they quit tanking my score (and I pay down the 0% debt I'm carrying) I'll see my biggest increases.
For the most part I've had cards go from $0 to a balance and vice versa and saw no change. I honestly don't get why some people OCD about it.
It's just a part of the credit culture. The main argument appears to be that people want to keep their credit at its best at all times if they need to app for something. While I can respect that, for most people a score difference of 10 points isn't going to make or break an app. For others, they've had bad credit so long, they pride themselves on having the best score they can get. Again, I can respect that. But I think it's just too much work to be bothered with for what little you gain. I think organic handling of ones credit will be more important now that trended data is becoming the norm. Again, 4 years of AZEO and then all of a sudden you have a 7k balance to change your car's engine could raise flags with some lenders.
@Brian_Earl_Spilner wrote:It's just a part of the credit culture. The main argument appears to be that people want to keep their credit at its best at all times if they need to app for something. While I can respect that, for most people a score difference of 10 points isn't going to make or break an app. For others, they've had bad credit so long, they pride themselves on having the best score they can get. Again, I can respect that. But I think it's just too much work to be bothered with for what little you gain. I think organic handling of ones credit will be more important now that trended data is becoming the norm. Again, 4 years of AZEO and then all of a sudden you have a 7k balance to change your car's engine could raise flags with some lenders.
Yeah it makes sense... and I can respect it.
Totally agree though... I also think it's too much work for such small gains. I have too much else going on in my life to worry about my TU score dropping 2 points because I let a balance post.
Ironically I just got notification that my EQ just dropped from 671 to 670 because I let a $0 balance card report a $670 balance. EX and TU didn't move.
The sky is falling!
I learned of the AZEO around the same time I read here about how an active installment loan helped.
Before I knew any of that, my bank's rep set me up with an installment loan, I didn't know it was also a score booster too at the time. I only heard about the 3 tradelines being good to kick off my credit... but then she apparently neglected that I had the paypal credit, or maybe that wasn't reporting at that time, dunno.
I got anxious about the installment loan and paying the relatively trivial interest, so paid it off some months after I got it. lol
Now THAT was obvious benefit -- when I saw my scores drop around 50 points I got interested in the NFCU share backed loan gig to regain the score...
In the mean time I just kept up with the cards, did some AZEO and then age kicked in, what little I have of it in my profile.. Dropped the AZEO and more or less forgot about the installment loan. It's gonna be a-ok without any of that I think.