30 point drop in Experian Fico score due to not "Using two credit cards"

[redbeard]

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@Anonymous wrote:

I took about a 30 pt hit on my scores for reporting at $0 - my bad - I timed it wrong and paid off Discover before something else reported - which should happen this week....I expect to see some bounce when the new Util reports.  (I also have new account that should report so I can't tell the full effect of one or the other).

I think it seems silly too - use it and pay it off and you get dinged.  Use it too much, dinged, use it not enough - yep dinged.....pay off a car loan (I thought that was a good thing) get dinged.    It seems you have to show some balances to maximize score.....

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See, you think your credit score is about you.  Once you realize that your credit score is more of an indication of how creditors make money off of you, then the rules make more sense.

Pay everything off:  Creditors don't make money, score goes down

Get a new card:  You might want more credit so lets lower your score so we can charge more

Run credit cards up:  Red flag, might not pay.  Lower score

Keep a balance every month, at a reasonable level, pay regularly:  We make money, now we have to compete to keep you.

See, rules make sense when you look at it from the creditor side.

Dan

[Anonymous]

I'm going to just make a small purchase on the cards. Funny thing is, just now both of the cards gave me a $500 credit limit increase each.  

[Anonymous]

Everyone on here says let all of them report 0% and let one report a small balance

[Anonymous]

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@Anonymous wrote:

I'm going to just make a small purchase on the cards. Funny thing is, just now both of the cards gave me a $500 credit limit increase each.  

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You SHOULD use your cards - thats why the CC company issued them to you. If you use them and PIF before the statement closes, you pay NO interest, but the CC company makes money from the vendor fees. As long as you let one card show a small balance, you still pay no interest as long as that balance is paid within the grace period, and you maximize your scores - its a Win/Win.

[Anonymous]

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@redbeard wrote:

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@Anonymous wrote:

I took about a 30 pt hit on my scores for reporting at $0 - my bad - I timed it wrong and paid off Discover before something else reported - which should happen this week....I expect to see some bounce when the new Util reports.  (I also have new account that should report so I can't tell the full effect of one or the other).

I think it seems silly too - use it and pay it off and you get dinged.  Use it too much, dinged, use it not enough - yep dinged.....pay off a car loan (I thought that was a good thing) get dinged.    It seems you have to show some balances to maximize score.....

---

See, you think your credit score is about you.  Once you realize that your credit score is more of an indication of how creditors make money off of you, then the rules make more sense.

Pay everything off:  Creditors don't make money, score goes down - Actually they DO make money from the vendor fees.

Get a new card:  You might want more credit so lets lower your score so we can charge more

Run credit cards up:  Red flag, might not pay.  Lower score

Keep a balance every month, at a reasonable level, pay regularly:  We make money, now we have to compete to keep you.

See, rules make sense when you look at it from the creditor side.

Dan

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Credit card companies do not control the scoring algorithm. Fair Isaac corporation does that.

[redbeard]

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@Anonymous wrote:

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Credit card companies do not control the scoring algorithm. Fair Isaac corporation does that.

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Correct, but.... Fair Isaac sells its services to creditors not to individuals.  Their algorithm is designed to assess risk of an individual based on behaviour of large numbers.  This in turn is used by creditors on how to maximize profits.  While my initial post here was done half as humor, the other half really is about a credit score isn't done for consumers, its done for creditors.

Now, an informed consumer can use knowledge to help balance the 'credit game' in their favor, by getting to understand pieces of the algorithm and manipulating them the best you can.  

Dan

[Anonymous]

Yes, that is all very true. I often liken it to playing a ball game where only the other team is given the rule book.

Another analogy is that its like playing Kreigspeil.

[Anonymous]

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You SHOULD use your cards - thats why the CC company issued them to you. If you use them and PIF before the statement closes, you pay NO interest, but the CC company makes money from the vendor fees. As long as you let one card show a small balance, you still pay no interest as long as that balance is paid within the grace period, and you maximize your scores - its a Win/Win.

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I'm VERY new to credit cards. I am receiving my first secured card in the mail within a few days and this is what I'm trying to figure out. How do you know when they report and WHEN to pay off your balances? I get that you want to have a small balance on it, but should you pay it a few days before it's "due"?

Sorry for being such a NOOB lol

[taxi818]

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@Anonymous wrote:

Yesterday , my Experian Fico score took a 30 point drop due to "Not using credit cards" .  This drop seems very excessive. I have 5 credit cards now, I don't have a need to use every single one of them. So I take a big hit because of this? Seems like bs to me.

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Not really Bs as credit cards account for 30%. It never say you have to use all of them. But even if you left just 2 dollars on 1 card it would round up to 1% usage giving your score a huge boost. Good luck.