Poor Company Policy and antiquated algorithms

[nanrod98]

I pay my credit card immediately before I receive a statement - occasionally a charge will hit at the end of the month and the CC company can't process my payment until the 3rd of a month - although I have until 24th to pay anything at all - I always pay off my card in full immedietly. But why do these CREDIT (understand the word) score companies penalize for excellent credit and deduct 10 points arbitrarily - their algorithms need updating so that they can assess CREDIT worthiness - not monitor an end of the month anomaly - I have lost 30 points off my credit score because I installed internet and an alarm system and I had a purchase posted on 31st and paid off by the 3rd - simply ridiculous. I have no debt whatsoever and I don't consider securing my home or installing internet for my business - debt - why do we take these companies seriously they are the companies that got the US in the mess in the first place. My score is now 788 - yes good but that's not the point - it's the shoddy behaviour of companies that decide the fate of US citizens erroneously - they need a complete make over.

[llecs]

Welcome!

FICO will only score on what is on your report. It doesn't know if you pay your CCs in full monthly or if you max out your cards month. FICO will only score what is on your report at that moment. An increasing balance or adding multiple accounts with a balance is seen as a credit risk by creditors and hence FICO (and other scoring companies) will ding for that. FICO is a predictor of risk and carrying balances is seen as risky by lenders.

Thankfully though FICO has no memory that you ever carried a balance. Most all CCs report only once per month and will report the balance you had on the statement date. The key to a $0 balance is to make sure they credit your account before the statement date and that'll insure a $0 balance. There are a couple of ways around this. First you can pay off the balance early and not use the card until the statement generates. That'll result in a $0 balance. If you don't want to curtail your CC usage, you can try to make multiple payments online on your CC's website to make sure they have the funds to report $0 or even issue a statement balance of a credit. Or you can try pushing a payment through with your bank's billpay service but give yourself enough time for the CC to receive the money. This latter method is handy because some CCs won't let you pay more than what you owe, even if you know you have charges pending.

[nanrod98]

Just look at what you have advised - anticipate and pay in advance - forego the air mile point award. You're advising not to use the CREDIT (notice the word) facility that good standing provides. In which case the CREDIT score companies should change their name to Advance Pay Score. How can anyone get around this world without a CC - you're advocating pay as you go and/or cash - incredible - this is 2013!

It's rediculous - I have been paying off before the statement but ocassionally it's not possible - take for instance a company that forces the employee to use his own CC when travelling - in Asia I could rack up $10K easilly and can't claim until the month following - if I travel back at the end of a month - I'm blasted - and I don't advise anyone to pay their CC on line in China. The company gets the CREDIT and the emplyee is penalized by the empowered CREDIT score company - it's unfair and disgusting.

I'm retiring in a few months and all this  score scam can go where it belongs - in the trash.

James

[llecs]

---

@nanrod98 wrote:

Just look at what you have advised - anticipate and pay in advance - forego the air mile point award. You're advising not to use the CREDIT (notice the word) facility that good standing provides. In which case the CREDIT score companies should change their name to Advance Pay Score. How can anyone get around this world without a CC - you're advocating pay as you go and/or cash - incredible - this is 2013!

It's rediculous - I have been paying off before the statement but ocassionally it's not possible - take for instance a company that forces the employee to use his own CC when travelling - in Asia I could rack up $10K easilly and can't claim until the month following - if I travel back at the end of a month - I'm blasted - and I don't advise anyone to pay their CC on line in China. The company gets the CREDIT and the emplyee is penalized by the empowered CREDIT score company - it's unfair and disgusting.

I'm retiring in a few months and all this  score scam can go where it belongs - in the trash.

James

---

You get the points regardless of the reported balance. Let's say you have a CC at a $10,000 limit. You obviously can charge up to $10,000 w/out having to pay it mid-statement. Let's say your statement date is on the 5th with a due date on the 30th. Between the 5th and the 30th you charge up $7000 as an example. You get full points through the $7,000 spent. You aren't foregoing points. You don't have to let $7,000 report to get those points. Just simply pay the minimum by the due date, or the 30th in this example, and pay again before the 5th of the following month if you want $0 to report.

My words also never said that CC use is bad. I put about $10k/mo on CCs, mostly for biz use, and pay it in full. I'm not down on CCs. And if you want to carry debt on CCs that's OK too. IMO, there's nothing wrong with CC debt provided the debtor has the ability to pay it off. All I was saying before was that creditors don't like to see balances and FICO created a score around the input of lenders. For max points, get all of your CCs to $0 except for one and get the remaining to report a balance of under 9% of the credit limit. Anything beyond that, especially with your high scores, you stand to see points chiseled away as reported balances increase.

Are you applying for anything major, like a mortgage or car, within the next few months? If not, I wouldn't worry. Remember, FICO has zero memory of your balances. So in a few months that CC will report $0 and your score will fully rebound provided your other CCs are in check. I too use my personal card for business purposes and only can pay myself when I can pay everyone else first. A couple of imes out of the year my cards do report as maxed out and it takes a toll on my FICO score, but that isn't FICO's fault. Creditors and FICO have no idea that I can't pay off the balances due to a delay from the biz coffers. Creditors would only see that I maxed out my cards.

[bettercreditguy1]

Scores only matter when You need to apply for credit. Otherwise, daily monitoring/maximizing is a moot excercise. Since the alogrithms factor Risk it is accurate to reduce your score when carrying balance(s). This is why when applying for a mortage, some underwriters want to see certain obligations paid. It shows your resolve and ability to budget and access to  funds. Credit when used with respect is a great tool and wonderful asset. Imagine how difficult it would be to carry enough cash to pay all of your bills daily on demand as needed.

[nanrod98]

 I have a 20K credit limit and I have only one credit card - my highest balance on a few occasions over the last 3 years is $2000 - CHASE doesn't allow prepay on their site - and I can only make one transaction payment every three days - hence it's impossible to anticipate and avoid the posting of an amount - (I have an Audi so it's always at least $2000 for anything done in a shop and they take a week to do anything where I live) within a week after the amount hits the CC account it's back to zero - I never pay a minimum because I clear the entire account as I go (immediately when possible).

I have no intention of borrowing - EVER - I'm just OCD about this crazy system - where it's just a dumb program that needs drastic updating - and the spin-off business at the expense of the American consumer is shocking - why doesn't some activist break the CCC lobbyist in the pocket of congress and correct this system?

Look at myfico.com - why should we need them if government body protected the good name of the citizen and sent updates to consumers - no the fox is guarding the hen house and making a killing - with consumers having to pay more interest on their loans if they can get them and incompetent commercial enterprises playing havoc with the good name of many consumers who have to fight to get penalties taken off.

I moved house and my new internet provider made two inquiries on my account - "Oh what great credit" they retorted and then the score scammers deducted 20 points - ridiculous. I have no control how many inquiries are made and to penalize for internet! Are they kidding? What house can't exist without connection? I don't even have cable - another cartel IMHO.

One should exercise good and and profitable credit control of their finances for their own benefit - not the credit card companies and have to be very cautious in anticipating the Score companies capricious out-of-date rules.

What really irritates me is that no one connected to these companies were ever held accountable for pass irregularities  and then turn round and penilize their customers - it would be amusing if it wasn't so tragic.

The consumer is just a resource to be manipulated and no longer treated as a citizen with inate rights. Obviously compared to Iraq we're a lot better off - but do we need to make comparisons like that?

Have a great day

James