A question about having 1 card at 9% or lower and 0 on others...

[Anonymous]

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@Anonymous wrote:

Well bear in mind that the scoring advantage for both utilization and number of cards showing a positive balance is something you can get at the drop of a hat.

In other words, suppose Bob does this All Zero Except One thing every month for 24 months in a row. 

Fred, in contrast, doesn't worry about it.  Fred doesn't even worry about his utilization.  Some months his total util is 35 or even 45%.  Most months all of his cards report a balance.  But then at Month 23 he switches to the All Zero Except One approach.

If Bob and Fred have identical profiles, they will both have the same score at month 25.  Bob got no scoring advantage from doing the AZEO approach every single month -- unless that is, he needed to apply for credit in that time.

So many people just use their cards naturally and then do AZEO 45 days before they need their score to be at its best.

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Hmm... got me thinking...

Are you sure Bob would get NO scoring advantage? Lets say Bob has a score of 700. He's all dialed in. Fred has a score of 680 due to not following AZEO. At month 25, Bob will not be at 700, he'll be over that due to good paying habits over the last 24 months. 710 perhaps. If Fred gets himself on track with AZEO at month 23. will he also be at 710 or will he just be restored from the loss he took by not following AZEO?  

We're talking minor points and algorithms and junk but isn't there some advantage to maintaining the highest score possible for the longest amount of time? I'd like to think that there is more involved that just a sum of the parts.

[Anonymous]

No.  Utilitization and number of cards showing a balance are not based on historical data at all in FICO 8, only on the most recent snapshot.  Future FICO models (e.g. FICO 10) will have the ability to look at every CC balance you'd had for the last 30 months and every payment you have made -- these are called trended data and in the history of credit reporting only became available very recently.  They will enable FICO's statisticians to look at things that are far more predictive than they can now -- e.g. whether a consumer pays his bill in full or whether he carries debt from cycle to cycle.

But right now util and number of $0 cards id they have, and it is based on the most recent sbapshot.

To protect yourself for future models, I would I also always Pay In Full.

[Anonymous]

The reasoning my score is at 650, well I'm happy to say it's at 660 as of this morning going by what CK says because my utilization went down from 12% to 2. Anyhow it's because of late payments from two years ago roughly when I got laid off. Some went to collections but they are all paid in full. No balances on any of them. A couple credit cards got closed.

[Anonymous]

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@Anonymous wrote:

The reasoning my score is at 650, well I'm happy to say it's at 660 as of this morning going by what CK says because my utilization went down from 12% to 2. Anyhow it's because of late payments from two years ago roughly when I got laid off. Some went to collections but they are all paid in full. No balances on any of them. A couple credit cards got closed.

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I'd recommend pulling your 3 FICO 08's from CCT for $1 so you can really see where you stand.  CK scores aren't very meaningful.

You may want to consider tackling those late payments and trying to get them removed.  If they are 2 years old, they still have 5 years of negatively impacting your scores.  Getting rid of them would push you solidly above 700 in the blink of an eye, where with there presence it will probably take you a year to get to 700 then another year to get to 730 or so.  Just something to consider if you hadn't yet considered a GW letter campaign to get those lates removed. 

[Anonymous]

So a goodwill letter is just explaining that my debts were due to being laid off and that I paid in full without requesting a settlement when I became able to pay those which I did? And request that they please remove them because I want to but a home etc in the near future. Does that sound about right?

[Anonymous]

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@Anonymous wrote:

So a goodwill letter is just explaining that my debts were due to being laid off and that I paid in full without requesting a settlement when I became able to pay those which I did? And request that they please remove them because I want to but a home etc in the near future. Does that sound about right?

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In general, yes, but you want to be very friendly and admit that you made a mistake and explain how/why you wouldn't ever make the same mistake again.  If you head over to the rebuilding forum you can find a ton of information on GW letter writing.  When it comes time to send out your letter, I highly recommend the Saturation Technique which will allow you to get your letter into many more hands and thus increase your odds of a favorable result:

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/The-Saturation-Technique-Best-GW-adjustment-odds/td-p/4727098

[Anonymous]

So when I see people on these forums using the term "Pay In Full", are they referring to paying your STATEMENT BALANCE in full? Or paying your charges in full BEFORE the statement closes, thus reporting a "statement balance" of $0?

For instance, I always pay my statement balance in full every month to avoid incurring interest charges, but do I need to pay them off before the statement actually closes? Are the cc companies reporting my "statement balance" to the CBAs as a "balance", or do they report a "balance" as what your balance was at the time of charging interest?

Considering I use my cards to maximize rewards, they all have a "statement balance" to pay off before a due date, which I do pay off in full bfeore the due date, so I've viewed that as not technically carrying a balance since I am avoiding carrying a balance to be charged interest. Am I incorrect in my thought process, and this is actually hurting my score as the 4 cards being used are reporting a "statement balance" as a "balance"?

Sorry if I talked in a circle, just trying to cover all my bases.

[Anonymous]

Your thinking is exactly right.  PIF is short for Pay In Full, which in turn is short for "Pay (the balance that appears at the top of your monthly statement) In Full.

The CC issuers will indeed report that statement balance to the CRAs each month.  Pull your reports and you will see that this is exactly what they do.  (Credit Karma is an awesome tool for getting free reports as often a once a week, by the way.)

A tool like Karma (or many others) will tell you what your CC utilization is.  If it looks like your CC utilization (based on those reported balances) is 30% or more, then you should probably start paying off a couple of those cards BEFORE the statement prints, so that your reported utilization goes down.

Otherwise you are doing fine.

Final note is that before any important need for credit (applying for a loan or a new credit card that might need a high score) you should make all your cards are reporting $0 except one, and that card should report something small, like $20.

[Anonymous]

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@Anonymous wrote:

Your thinking is exactly right.  PIF is short for Pay In Full, which in turn is short for "Pay (the balance that appears at the top of your monthly statement) In Full.

The CC issuers will indeed report that statement balance to the CRAs each month.  Pull your reports and you will see that this is exactly what they do.  (Credit Karma is an awesome tool for getting free reports as often a once a week, by the way.)

A tool like Karma (or many others) will tell you what your CC utilization is.  If it looks like your CC utilization (based on those reported balances) is 30% or more, then you should probably start paying off a couple of those cards BEFORE the statement prints, so that your reported utilization goes down.

Otherwise you are doing fine.

Final note is that before any important need for credit (applying for a loan or a new credit card that might need a high score) you should make all your cards are reporting $0 except one, and that card should report something small, like $20.

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Okay, so with technicalities of my credit reports, I have 4/5 cards reporting as "carrying a balance". My total utilization would be at/under 3% (1,500/47,500) with all of them reporting a balance. As it is just my regular monthly spending that gets paid off the following month. I'd always been under the impression that it was better to let the statement cut before paying it off, I suppose I have been incorrect in this. Being young (22) and where I'm at with ~750-770 scores, I am very thankful for people like you on this forum being able to keep me informed on what to do to keep my scores up, as well as raise them.

[Anonymous]

Yeah, sorry, there was that one piece of wording that I meant to respond to and did not.  That is what it means to carry a balance.

So we were clear earlier, right, about what it means for a card to report a balance, right?  That just means that the statement prints and it has a positive balance on it.  Some amount that you owe.  That amount gets reported to the three credit bureaus, typically  the day after the statement prints. (If the statement shows $0 that also gets reported.)

To PIF or pay in full means to pay that amount in full, sometime in the 25 days after the statement prints.  (25 is a rough figure -- each issuer will give you its timeframe.)

To carry a balance, by contrast, means to pay some of the amount owed on the statement, but not the full amount.  Thus if the amount owed is $400, and you pay $100, then $300 is carried over to the next statement.

You will find occasionally that newcomers to this site will often say carry when they mean report.  They will say they always carry a balance, but they really just mean that the card is always reporting a balance that they pay off in the three weeks following the statement.

Given that, would you say that you never or almost never carry a balance?  I think that's your situation, though in your last post you say that 4/5 cards are carrying a balance -- and I am pretty sure that's not what you mean.