AZEO question

[aircobra]

With the AZEO method, does it allow for 1 balance every 3 cards or just 1 balance all together? Meaning, if I have 6 accounts, can 2 report a balance?

[xaximus]

It would be reporting a balance for 1 card, regardless of however many you have. I personally don't always do that though, at times, I report several (small) balances across several lines, just to see if there's an impact for doing that or not. So far, DPs show that there really isn't any impact.

[Anonymous]

And remember too, AZEO is a strategy that is intended as....

A simple universal technique for getting all available extra scoring points in the 40 days prior to an important application for credit.

That means...

*  Doing AZEO every month does not aid you in building a great score over time.  To repeat: doing it each month does not help you AT ALL for the long haul.  It's intended for the short term boost mentioned above.  A monthly AZEO won't hurt you long term either though.

*  For a particular profile or FICO model, you might be able to have a multiple acounts with balances and do just as good.  AZEO is a universal technique because it will optimize regardless of profile or model, but it doesn't mean that deviating a bit from it might not be just as good for a particular person or scoring model.

[longtimelurker]

---

@Anonymous wrote:

And remember too, AZEO is a strategy that is intended as....

A simple universal technique for getting all available extra scoring points in the 40 days prior to an important application for credit.

That means...

*  Doing AZEO every month does not aid you in building a great score over time.  To repeat: doing it each month does not help you AT ALL for the long haul.  It's intended for the short term boost mentioned above.  A monthly AZEO won't hurt you long term either though.

---

Monthly AZEO doesn't hurt long term FOR SCORING, but constant "waste" of the grace periods has an opportunity cost, which adds up over several cards, every month.

[Anonymous]

Just to clarify for anyone who didn't fully understand LTL's reference to opportunity cost, he's referring (I believe) to the ability to earn interest on the cash you use for payments.  With AZEO you have to make the payments earlier, but if you set them up on autopay to pay the day before the due date, you could keep that money in a high interest savings account for an additional 25 days (say) during the grace period.

I am myself not convinced that you make that much extra cash doing that.  If a person has an average of $2000 extra that he'd have otherwise paid to his CC issuers by implementing AZEO (that's a lot) and he earns 2% interest on it (in a very high interest checking account) -- that's $40 a year.  He then has to pay state and federal income taxes on, so perhaps it's more like $25.  An extra $25 is nice, but there's probably a ton of ways to make a lot more than $25 -- chasing bank account bonuses, CC signup bonuses, etc.

Don't get me wrong.  I am like a broken record on the wisdom of using AZEO only as a strategy to optimize shortly before an important credit app.  Otherwise my advice is always to just let your cards report naturally and use autopay to pay them.  But for me the biggest reason is that you save yourself the extra headache associated with all the payments.

[Revelate]

Hrm, have you seen the gyrations of the market over the past two months or so?

At some points in there I've literally gained 20% on some things, and on a 3K property tax bill even if we only call it 10% which isn't that much more than the swing in stocks each day currently if someone has the desire to actively trade, that's leaving $300 (minus taxes of course) on the table potentially.

Interest in a checking account or similar nice safe place to store cash is one thing, but during the bull market we've had until recently, I'd suggest LTL is right and that opportunity cost is non-trivial.

There's also the debt reduction bit too: I'm floating that tax payment for 45 days or so at 0% effectively, and throwing money at my now 5% HELOC instead.  Admittedly I don't have cash flow issues unless I screw up so I can do some things like this, but when we're talking long term, it's really no different than making small budget tweaks to save a couple extra bucks a month... it all adds up.

Also in my case I haven't applied for anything in 18 months, and clearly the lenders don't really care about my score short of a BK at this point, so why worry about it zealously with AZEO?  Trying to learn how to relax more and worry less about stuff that doesn't matter

(at least in my case currently, when I next apply for something better believe 2 months out I'm going to be implementing AZEO!)

[MakingProgress]

---

@Revelate wrote:

Hrm, have you seen the gyrations of the market over the past two months or so?

At some points in there I've literally gained 20% on some things, and on a 3K property tax bill even if we only call it 10% which isn't that much more than the swing in stocks each day currently if someone has the desire to actively trade, that's leaving $300 (minus taxes of course) on the table potentially.

Interest in a checking account or similar nice safe place to store cash is one thing, but during the bull market we've had until recently, I'd suggest LTL is right and that opportunity cost is non-trivial.

There's also the debt reduction bit too: I'm floating that tax payment for 45 days or so at 0% effectively, and throwing money at my now 5% HELOC instead.  Admittedly I don't have cash flow issues unless I screw up so I can do some things like this, but when we're talking long term, it's really no different than making small budget tweaks to save a couple extra bucks a month... it all adds up.

Also in my case I haven't applied for anything in 18 months, and clearly the lenders don't really care about my score short of a BK at this point, so why worry about it zealously with AZEO?  Trying to learn how to relax more and worry less about stuff that doesn't matter

(at least in my case currently, when I next apply for something better believe 2 months out I'm going to be implementing AZEO!)

---

I think in my case as I started my rebuild I wanted every point I could get so as soon as I heard about AZEO I jumped on the bandwagon.  Now that I have better scores and more available credit I don't worry about it nearly so much.   When I get ready to app I will impliment AZEO.

Back to the OP question.  My understanding of AZEO is that it is really AZ except 1/3 of revolving accounts, if that is indeed the case you can allow 2 of 6 accounts to report a balance and still recieve the score boost of AZEO.

[Anonymous]

---

@MakingProgress wrote:

---

Back to the OP question.  My understanding of AZEO is that it is really AZ except 1/3 of revolving accounts, if that is indeed the case you can allow 2 of 6 accounts to report a balance and still recieve the score boost of AZEO.

---

There's a number of us (Thomas Thumb, Brutal Body Shots, etc.) who think that installment accounts may matter too.  One reason is that the negative reason statement does not say "too many revolving accounts showing a balance."  It just says "too many accounts."

Similarly, it's not clear from the reason codes that FICO is looking at some kind of proportion or ratio test here.  FICO might use that, but it might also look at the integer number of accounts reporting a balance.  I receive this negative reason statement even when the vast number of my cards are at zero: e.g. when I have two open loans, two cards reporting a balance, and 11 cards reporting zero (I have 13 revolving accounts total).

The simplest practical way to think about it (in my opinion) is to let your cards report naturally as long as you are not applying for credit.  Accept the fact that you might be losing some points.  You don't care because you are not using the score for anything. 

Then, when you are applying for credit, implement AZEO if you would like every available extra point.  That's going to be a person who (say) has a 738 when he's not using AZEO.  He wants the confidence of knowing his score is as perfect as it could be.  In contrast, somebody with an 800 (not using AZEO) will likely never implement it, since his score will guarantee him best rates and approval regardless.

[Anonymous]

Another practical/logical way to look at AZEO is that it's a scoring hack that may work against you with any kind of manual review.

What incentives do potential lenders have in granting approval or approval with high limits when they see a profile with 1 out of 10 cards reporting $5 out of $100k+ CL? Lenders want to see "responsible use of credit" and not using or barely using your credit do not satisfy. On the other hand, reporting naturally with reasonable UTI and excellent payment record across multiple cards demonstrates "responsible usage", it also shows potential lenders that there is money to be made either through swipe fees for transactors or even better, those that carry balances and pay interest.

[Anonymous]

OM, while I agree with 90% of what you said above regarding AZEO micromanagement (one $5 balance alongside 9 $0 balances on 10 total revolvers) I do think that the natural reporting of balances could also be frowned upon upon a MR given the right circumstances.

For example, someone with low CC limits and/or someone that otherwise uses a significant portion of their CC limit(s) and doesn't micromanage their payments (multiple payments per cycle, worrying about the statement date/payment date, etc).

Say such a person has three revolvers, all with $2000 limits.  Perhaps they tend to put around $1000 in purchases through each card every cycle and float the other $1000.  This would put them at around 50% utilization at all times.  If they were to bump up their spend by $500 per card on any given cycle, the next month they'd be at ~75% (both aggregate and highest individual card) utilization. 

This person above is a Transactor that is exhibiting PIF behavior, but his non-micromanaged snapshot from a MR pull could show him at 75% or more utilization depending on when it happens. 

I get in your post above that you said "reasonable utilization," but something like this needs to be considered as well.  I personally would believe that this person above bringing 2 of those cards down to $0 balances and leaving just a tiny balance to report on the third would actually look ideal upon a MR where they could see that this person has "high balances" of ~$1500 on those cards and that their last payment was made [paying it/them down/off] in the last 30-45 days prior to the app.