Devastated Over FICO Scoring System.

[Anonymous]

I understand that FICO thinks if I put a huge balance on my card in relation to its limit that Im having credit problems, but there are other reasons we do so, such as the fraud protection CC's provide.

Such is the folly of FICO.

I'd like to know how long it takes for FICO to figure out I'm not broke. I was a 671, and now dropped overnight to a 647. It took me a whole year to get up to 671! I put a charge of 2K on my card and paid it off a few weeks (I thought I'd have at least 30 days) later in one sum before interest, but unfortuantely after FICO decided I was headed for the unemployment line.

I'm looking to buy a house now... or a noose.

This couldnt happen at a worse time.

[marty56]

Once you pay the balance back down, your FICO score will go back up.  It may take a month or 2 for that to happen since some CCCs are slow to report 0 balances or even below 10% util.

As your scores go up, the worse it gets in terms of having util report.  In my credit profile, I can only have one CC report a balance since I have a mortgage and a auto-loan.  Also my util better be under 10% or I am dinged as well.

Mortgage lenders advise that you should not do anyting that would lower your FICO score several months before you apply for a mortgage thru the time you actualy close on the house and you make your first payment.  A one point drop or increase in your score can affect the interest rate of the loan.

Message Edited by marty56 on 05-18-2008 01:18 PM

[haulingthescoreup]

For future reference, realize that your scores factor in the balances that are reported by the lenders to the CRA's. Most of them report the balance that's on your statement (HSBC is the exception, and AmEx reports the previous month's balance.)

What many of us do, especially when we're headed for a big app like a mortgage, is pay off our cards online about 5 days before the mortgage is due to drop. I pay all mine to $0, except one, which seems to help my scores the most. If you do that, let that one card report less than 10% of its credit limit (in other words, 1-9%), and your scores will love you.

[RobertEG]

Seymour, understand FICO for what it is, and nothing more.

FICO is NOT an evaluation of your credit strength.  It is an evaluation of your risk of repaying.  Donald Trump and Archie Bunker are equally evaluated, not on their income or debt, but rather on how prompt and consistent they are in paying their debt.  That is FICO.

If you perceive a folly in FICO, then I would ask you to first perceive the folly in the mind of the lendor using it.  Would any lendor, once you apply for a half-million dollar loan, pull your FICO, and stamp "approved" or "not approved" based on your FICO?  KInda silly,huh?  Without knowing your income, debt, marital status, etc., all of which are factors that are prohibited under the FCRA from appearing in your credit report, and thus being scored by FICO?

Dont stamp FICO or any credit score, regulated by law in what it cannot include, as being an evaluation of credit heatlth.

[Anonymous]

I feel your pain. We bought a motorcycle with a Suzuki/HSBC credit line, which reports as a revolving account. A few days after the balance posted online we BT'd half of it to another card at a lower interest rate so that both accounts would show less than 50% util. Not ideal, but better financially and for our credit scores. Unfortunately due to bad timing, the Suzuki reported before the BT went through at 18k and the card we BT'd reported with a balance of 9k - so it looks like the Suzuki line is maxed out & we have an additional 9k of revolving debt that we don't really have. My score plummeted 58 points; DH's dropped 42 points. We're just hoping we get those points back when both TL's report correctly next statement.

[RobertEG]

desifink,  you were just caught in a CRA reporting lag.  It looks like you did the right thing, so just let the smoke clear, when all report current info.

[haulingthescoreup]

BTW, Seymour, I should have mentioned: if the paid-down balances haven't posted by the time you're getting ready to sit down at the mortgage table, you can do something called a Rapid Rescore, which will update the stubborn reports. There's a fee for each account (CC, loan, etc) though, so you're best bet is to get everything reporting the way you want it now.

You can still use your cards; just pay earlier than you normally would, before the statement date in most cases. That way, those high balances won't report to the credit bureau and get used in crunching your scores.