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Can you trick the FICO system? Here's my idea.

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Anonymous
Not applicable

Can you trick the FICO system? Here's my idea.

Greetings everyone,
 
Allow me to share a thought, responses would be appreciated.
 
As of the end of March, my EQ FICO score was sitting at 632.
Currently, on that report, I have 3 collection items:
 
a medical bill in the amount of  $138 unpaid, est.date of removal, Jan. 2009
 
another medical bill,  $ 121 unpaid, est. date of removal,  Jan. 2008
 
AND a cable bill, $ 324 unpaid, est. date of removal, April 2012 OUCH!
 
Anyway...I currently also hold:
 
ONE auto loan opened in August 2006.....perfect payment history
 
Three bank cards(one is 3 1/2 yrs. old and I'm an authorized user the other two of themare mine and they're 19 mo. old accounts), $350-$2000 limits...no late payments, however each has been maxed at one time or another.
 
and FIVE store cards.....no late payments, however again, most have been maxed at one time or another.
OKAY, SO HERE'S WHERE IT GETS INTERESTING:
my score of 632 does not YET reflect my having paid off ALL of my REVOLVING debt at the end of March. I consulted the FICO simulator and found, much to my dismay that aparently my score would have greatly benefited from my making substantial but gradual payments to pay off those accounts rather than the quick, "be done with it" strategy I used. I am anxious to see what paying off 100% of my revolving debt (about $ 4000) in a month's time will do for my score but I'm not getting my hopes up. Currently, I am perplexed as to how to handle any further use of these accounts. I'm tempted to just put them away and forget about them but I'm reading here that maybe that's not such a good idea either so here's the idea I've come up with.
 
I don't want to take on any new debt....actually my daughter is getting braces next week and that may show as an installment account. I'm not sure as the financing is being provided interest free through her orthodontist and I don't believe any finance companies are involved.
Anyway, back to my plan. So I was thinking of how I can use my credit to pay for itself to earn me positive points without having to actually incur any debt to do it...and this is what I came up with...
 
I'm thinking of taking my card with the highest limit, and having a friend "bill me" for an amount equal to about 25%...in this case $ 500, through PayPal. Then, the friend gives me the cash and I put it into an individual checking account I'm currently not using and set up automatic $100 a month payments from that account and just forget about it for 5 months...or maybe $ 50/mo.  for 10 months, whatever. Anyone have any comments or suggestions?
 
Ideally, I'd like to get my score in a position to refinance my auto loan. In August, my score was in the high 500's but I know I need points and time before refinancing since the loan is less than 8 months old.
 
 
 
 
Message 1 of 12
11 REPLIES 11
Anonymous
Not applicable

I'm sure someone else will be able to chime in here, but...

I'm sure someone else will be able to chime in here, but I would think that doing that would up your utilization %, therefore lowering your score.
Message 2 of 12
Anonymous
Not applicable

Stop

The reason the FICO simulator gave you the 12-24 mos is that it is taking into consideration aging of your credit file.  Something that will happen whether you're maxed out or at zero.  The large paydown was probably a good thing as long as you didn't 0 across the borad.  With your pay down you got an instant utilization percentage decrease.
 
That being said, with your current balances, your FICO should follow the simulator's model somewhat as the 12-24 mos was for aging purposes only.
Message 3 of 12
Tavares
New Contributor

Re: Stop

Hey, I paid down last month and I actually got a 24 points increase after paing $3,600.00 on my chase card.  The sym showed me an increase of 11 points over 12 months.
 
your strategy would work, its not cheating. Just keep in mind that your friend might have to pay Paypal some fees for accepting the money Smiley Happy
 
Good Luck,

Joao
FAKO - EX: 749 | EQ: 769 | TU: 749
Message 4 of 12
Anonymous
Not applicable

Re: Can you trick the FICO system? Here's my idea.

Forget about this "loan" idea. Not going to gain you anything, and it's likely going to hurt.

 

What are the current balances, limits and APRs on your CCs?

 

DV the 3 CAs.

 

Keep your accounts paid current.

Message 5 of 12
Anonymous
Not applicable

Re: Can you trick the FICO system? Here's my idea.

I agree with Noah. You would also be paying the CC companies a small percentage of intrest.   That is your hard earned money !
Message 6 of 12
Anonymous
Not applicable

Re: Can you trick the FICO system? Here's my idea.

lol. The reason the calculator shows a higher score with smaller payments is due to time. If you pay it off fast and wait the same amount of time you may be surprised to see the same result or better. Time is raising your score not payments on revolving accounts. As long as your payments are on time, paying fast or over time has little impact. Better to pay off fast in my opinion.
Message 7 of 12
Nick777
Valued Member

Re: Can you trick the FICO system? Here's my idea.

Your post gave me an idea. Often, the cash advance limit is much lower than your regular limit, and Paypal might be a way around it...I don't know too much about the Paypal system, but it might be cheaper to get cash by Paypalling yourself through a second account, and getting the money that way - not instantly from an ATM, but you would still get the cash. Using a 0% card, you would have no finance charges. In comment to your post, I see nothing wrong with your idea, as long as you have a ton of credit...you want to keep it below the 9% util rate, so I would take your credit line, multiply that by the 9% and make that the maximum loan limit...also you can find out what the minimum payment is and multiply that by the number of months you want to do your loan thing for. It would keep the card active sure, but I'm not sure how much an actual effect in your score it would give. Of course, you would still have to pay finance charges. IMHO, it would be better to just use the card for gas and pay it in full every month, or set it up to pay something like your cell phone bill with automatic payment and have your cell phone bill paid automatically by your bank. Then you don't have to every worry about it and you get the credit bonus.
Message 8 of 12
Anonymous
Not applicable

Re: Can you trick the FICO system? Here's my idea.

I'm trying to keep an automatic low utilization on 2 cc's at a time myself.  I have my Tivo and DSL payments deducted directly from my bank account. 
 
I'm thinking about having them charged, one each, to my cc's,  then have the credit cards set up for automatic payment  from my bank.  I'll have to watch it at first to see if it reports, or shows up as a zero balance each month. The CL's are $4000 and $5000 so I wonder if this is too low to even count???
 
I have two others I'd like to keep active so I may try and put TC and/or Scorewatch charges on them and set them on autopilot too!
 
I hadn't thought about using it for gas each month.  I've used nothing but debit cards for so long to get my debts paid off that I'll have to blow the dust off of my cc's now that they are paid off.  I'd really rather not carry them around with me though.  Too much temptation!


Message Edited by Felicity on 06-01-2007 12:24 AM  (Edited for speeling errors! Smiley Very Happy

Message Edited by Felicity on 06-01-2007 12:26 AM
Message 9 of 12
MidnightVoice
Super Contributor

Re: Can you trick the FICO system? Here's my idea.

I have a monthly charitable donation on each credit card to keep them ticking over, and MYFICO will be on a third.
 
And I do everything on line and transfer electronically, which makes it easy to transfer money exactly when I want to.
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Message 10 of 12
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