Exactly When Do CC Companies Report Balances to Credit Bureaus?

[Anonymous]

Hi, this is my first post, thanks in advance to anyone who replies...

This is an issue that could really help anyone pursuing a mortgage in developing their strategy: 

A common technique to quickly boost a credit score is to pay down revolving debt, to decrease the credit utilization ratio. 

However, one must wait until these new, lower balances are reported to the credit bureaus, before any benefit to the credit score will be realized. 

Thus, for timing purposes, it is helpful to know when you can expect the credit card company to report the new balance to the credit bureaus. 

Does anyone have experience/knowledge of when the major CC companies (Citi, Bank of America, Capital One) report the new balances? 

My guess is that it would be sometime shortly after the close of the monthly statement. 

If so, how prompt are they...same day? ...a week after? 

Thanks!!!  I've got to get the mortgage soon, and get the rate locked before the Fed stops buying them up at the end of March! 

[Anonymous]

Most cc's report to the CRAs on the statement date.  It then takes the CRA's a few days (even up to a week) to update.

Best wishes on your mortgage!

[haulingthescoreup]

+1

And HSBC/ Orchard bank cards and US Bank cards report your balance as of the last business day of the month. US Bank updates that night, but HSBC/ Orchard takes its time, as in up to two weeks or maybe even skipping a month for the heck of it.

For anyone wanting/ needing to control the number of cards reporting balances, HSBC/ Orchard cards are the ones that you want to get to $0 and keep reporting $0, because it can take forever for them to get around to updating.

OP, the new balance is often on your full Experian report the next day, but Equifax and TU routinely take anywhere from 5 days to 2 weeks to update.

Plan on zeroing out all but one of your balances 6 weeks before mortgage time, and keep them that way until your scores are pulled. Let one card report a balance of ten bucks or so and then immediately pay it off. For many of us, all cards reporting $0 results in a score drop --normally not a huge one, but if you're fine-tuning your scores for the best mortgage rate, you'll want every point.

[Anonymous]

Thanks for the advice! 

Deciphering these policies could really help anyone who's attempting to fine-tune their credit score before a mortgage/HELOC/car loan. 

For what it's worth, I asked my mortgage lender today and she said the new credit card balances are "typically posted between the 10th and 20th of the month". 

A more general question is: 

Why are the inner workings of the credit agencies such seemingly covert operations?

Everyone's always trying to figure what the impact of X, Y, or Z on their score will be, and usually no one seems to have a clear answer.   

How did we get into such a situation where secretive computer algorithms weild massive control over our major life decisions? 

Every situation is different, and it seems that often a computer-generated score may not accurately depict our true credit risk.   

I think the algorithms should be made public, to enable the people to have the power to better control their own financial destiny. 

Of course, I wouldn't expect Fair-Isaac to take kindly to the idea... 

[Lel]

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ParadigmShift wrote:

Thanks for the advice! 

Deciphering these policies could really help anyone who's attempting to fine-tune their credit score before a mortgage/HELOC/car loan. 

For what it's worth, I asked my mortgage lender today and she said the new credit card balances are "typically posted between the 10th and 20th of the month". 

A more general question is: 

Why are the inner workings of the credit agencies such seemingly covert operations?

Everyone's always trying to figure what the impact of X, Y, or Z on their score will be, and usually no one seems to have a clear answer.   

How did we get into such a situation where secretive computer algorithms weild massive control over our major life decisions? 

Every situation is different, and it seems that often a computer-generated score may not accurately depict our true credit risk.   

I think the algorithms should be made public, to enable the people to have the power to better control their own financial destiny. 

Of course, I wouldn't expect Fair-Isaac to take kindly to the idea... 

---

The information that comprises a credit score is known, but the exact way that the score is calculated is proprietary information.  The FICO models were developed over years of research and is continually being refined.  I have no idea what the "formula" looks like - it is certainly a very complex mathematical model, but even if this were made publicly available, I don't it would necessarily shed any more light about what is known about FICO scores and how they generally react to different factors.

Like you mentioned, each situation is different.  And it's pretty clear to me from all the stories posted on these forums that the way that one's score might change is highly individualized.  Some people have seen big score drops from opening a new account; others have not.  I just had a CC inquiry hit my report and my score didn't budge, whereas some people have lost 10 points or more.  Having access to the pages and pages of code that goes into the calculation of a FICO score isn't going to make these differences any more understandable (at least not to me! ).

The basic components of the FICO score are publicly known; you can read about them in the Credit Scoring 101 thread.  This has been sufficient for most folks here to understand how different credit decisions (and credit mistakes) affect their FICO scores.  It's never going to be possible to precisely predict how one's score will change in response to any single action even if we all had access to the secret FICO recipe, because each person's credit profile is different.

[marty56]

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@Anonymous wrote:

I think the algorithms should be made public, to enable the people to have the power to better control their own financial destiny. 

Of course, I wouldn't expect Fair-Isaac to take kindly to the idea... 

---

Not really.  The only thing making FICO scores public would be to generate your FICO score on the fly.  Everyone knows what to do and not do in terms of having a good FICO score.  Pay bills on time, low CC usage and keep new accounts at a minimum.  Credit scores are all about predicting risk.  They may not be perfect but they are consistant.

As I have said before, do what is correct for your credit and the scores, any score, will take care of themselves.

[Anonymous]

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ParadigmShift wrote:   I asked my mortgage lender today and she said the new credit card balances are "typically posted between the 10th and 20th of the month". 

---

Just for the record (in case anyone puts stock in this mortgage lender's quote), this isn't the case.  They report at all times during the month, depending on the CC.  Those who are signed up for daily pulls can, and do, see cc balances updated throughout the month.  Typical cards (except HSBC) report on the statement date and then you see the CRA's update on their own schedule (EQ is currently my slowest updater --usually taking about a week).

We received a lot of misinformation from our previous mortgage lender.  If we would have had accurate information, we would have been much better off.  Mortgage lenders specialize in mortgages, not in FICO scoring.  It's a rare bird, indeed, that knows a lot about both. 

[laz98]

only 2 of our 14 credit cards report between the 10th & the 20th.

[RobertEG]

Paradigm, you raise some good consumer beneficial points, but they are just not in alignment with fed intellectual property law.

Credit scoring is not regulated under federal law simply because to do so would be a violation of 200 years of established law.

It is because of intellectual property rights that can be based on trade secrets.

Should Coke be required to disclose their secret formula simply because it is unknown?

Should FICO be requried to disclose their trade secret algorithms simply because we dont have them?

Anyone who invents a new mouse trap or a new scoring algorithm has three options to consider.

One, they can do nothing to protect it, and thus become a total business fool when putiing it on the market,  Anyone can immediately copy it, and become an equal competitor.  Not many choose that stupid option.

Two, they can apply for and obtain a U.S. Patent on the technology.  That gives them the right to exclude all others from making or using it for 20 years, but once that date has passed, it becomes public domain, with no extension of patent rights, and all business edge is gone.Their patent, 20 years ago, required a full and complete disclosure of how to make and use the invention.

Three, they can choose to keep it a trade secret.  No patent application.  If they dont file for a patent within a year, they loose all futther rights to secure patent protection .  Kinda a big business gamble.  So if anyone else is able to copy, or reverse engineer it without illegal insider information, the right is gone.  That requires their strict and sometiimes brutal, but neessary, enforcement of employee contract obligations to maintain the trade secret for years.  Legal and legit..  A big risk, with potential bigger gains.

Coca-Cola, as well as Fair Isaac, have built their business gamble on the maintenance of their legal trade secrets. 

You will never see any Congresional legislation compelling them to divulge thier trade secrets without Congress first acting on total revision of all of U.S. intellectual proprerty law, as currently set forth in 35 U.S.C. 100, et seq.

Message Edited by RobertEG on 03-07-2010 12:13 AM

Message Edited by RobertEG on 03-07-2010 12:19 AM

Message Edited by RobertEG on 03-07-2010 12:25 AM

[Anonymous]

Thanks for your help.  What are "daily pulls", and how do I sign up for them?  Must you pay for it? 

I have a score of 698, just below the all-important threshold of 700.  I've paid off 2 credit card balances in full over two weeks ago, which should raise the score to 720.  I've been nervously waiting for the new balances to post, while constantly hearing about how mortgage rates are set to spike at the end of the month when the government guarantee expires.  I just want to take some action and get it over with. 

Funny thing is, I'd consider myself a much lower default risk now, with a score of 698, then I was two years ago, with a score of 725. 

FICO does not take into account things like income, assets, job stability, and debt-to-income ratios.  I understand that FICO can't, because they don't have access to this information (nor would I want them to).  But the point is, lenders place so much emphasis on this score that it can create an unfair situation for consumers.  And the fact that you can't even see your Experian score...that's just wrong. 

Thanks in advance for your advice!