@GApeachy wrote:
@SouthJamaica wrote:There are various fields in the credit report which indicate that you have used your credit during the month
Neither FNBO nor GoodSam (Comenity) reflect my pymt this month. Doesn't indicate I used their credit. I paid off both cards before due date and nowhere are the pymts reflected in my Exp credit report.....and I believe therein lies the problem.
Perhaps not all cra's report the exact same way....perhaps that's why FICO scores the way it does.You can have a higher fico when you're consistently borrowing & paying than the person with many tl's amounting to a lot of unused available credit.Which in my case looks like I didn't use credit for June on those two cards plus one au card (Lowe's).
I can't speak for FNBO or Comenity, but all of my cards (Discover, Cap One, Amex) even when reporting zero still show activity. There's always a last payment date that's from the most recently reported cycle regardless of whether tha balance reported is zero. IMO the solution to the inherent flaw in FICO scoring is that all lenbers that report a revolver to the CRAs should be REQUIRED to show a last activity date. Additionally there needs to be a separate category for cards reporting zero with activity and cards reporting zero without activity. Only giving an all zero penalty if all cards are in the latter. I have a better chance of winning the lottery than this actually being implemented but IMO it is the solution.
What about this, and hear me out...all zero isn't a penalty. It's a baseline and everything else is a penalty or bonus. Use just the right amount of UTI and get a scoring bonus. Use the wrong amount and you get penalties.
@SouthJamaica wrote:Reporting a zero balance does not indicate you are not using your credit. There are various fields in the credit report which indicate that you have used your credit during the month.
Neither the all zero penalty in revolving credit nor the no open loan penalty in installment credit make any sense from a risk avoidance standpoint, which is supposedly the reason for FICO scores. Having paid off all of one's loans, and having paid off all of one's credit cards, makes the borrower less risky, not more risky.
I have a hunch that FICO is not just about risk, it's also about reward. It attempts to locate the more profitable potential customers, and weed out the less profitable.
These 2 penalties, IMHO, are put in there on the 'reward' side, to weed out folks who don't like to owe money, because they are perceived as less profitable potential customers.
Bingo! Neither of these penalties make me a credit risk. I know how to play the game, so I do it...for now. Thus, I am carrying a balance of $101 on my car loan for credit mix. I allow a small balance to report on a CC to prevent an AZ penalty. It's a game and they make up (and change) the rules to benefit their pocket books.
Starting Score: 469
@Thomas_Thumb wrote:
@Brian_Earl_Spilner wrote:What about this, and hear me out...all zero isn't a penalty. It's a baseline and everything else is a penalty or bonus. Use just the right amount of UTI and get a scoring bonus. Use the wrong amount and you get penalties.
That's not how Fico works. If there is no revolving credit use their data shows elevated risk over some use. I have no issue with that as a metric.
[If a person has been inactive at something for a while, such as a sport or playing cards, that person is more likely to underperform when restarting the activity than if there had been steady use].
The problem is Fico's method for determining activity is flawed. It ignores use on certain cards with non zero balances. Furthermore, a zero balance is not a robust identifier of revolving account activity in an age where people payoff charges before statements cut.
I don't pre-pay and therefore don't have reason to whine about Fico's methodology for determining recent activity.
However, there is a related attribute that impacts me. So, I whine about Fico's approach for evaluating it instead. Namely, revolving utilization and number of cards reporting balances.
I am a transactor. I pay all charges in full every month just like most AZEO players. However, I pay accumulated charges after statement cut date, not before. As a result, statements often show non trivial balances.
Pay after cut date transactors get punished for not hiding credit use. How is that more risky than pay before cut date transactors. In either case the same amount of monthly charges run thru the account(s) and are paid off. The increase in risk comes when balances are carried over as in revolver behavior.
I thought Fico 10T would detect transactor behavior and adjust algorithm scoring factors accordingly. This was not done.
Why not? Perhaps pay after cut date transactors are bad for business and such behavior should be discouraged. More likely, detecting transactor behavior is too much effort and non value add to Fico's primary customers -our creditors.
Enough whine. Better stop now.
Generally speaking, I have no issue with that as a metric either. However, there needs to be a meaningful dollar amount or percentage of credit utilization to measure that metric. I don't believe for one minute that they have done all this research and concluded that a person who allows $1 to report is far less a credit risk than the person who allows $0 to report. This is pure FICO foolishness. It's the model and my ranting isn't going to change it. I'm just sick of reading that I (and anyone who plays the FICO game) is less of a credit risk than the AZ guy purely based on that metric.
@Junejer wrote:Thus, I am carrying a balance of $101 on my car loan for credit mix.
Curious; how do you do that?
