@Iusedtolurk wrote:
@Anonymous wrote:
@Iusedtolurk wrote:
I believe I read something about this but haven't came across it again.
Is there some type of penalty that occurs if you carry a zero balance on a card for too long making it seem like you are not using the card and then when you use it you get hit with a sorta dormant account now being used penalty.
In the near future I will be paying some cards in full so they will be reporting zero balances (reducing the number of accounts with balances).
I don't want them to report zero balance for too long and end up getting a penalty when I let a balance report.
@Iusedtolurk it has been theorized that if an account is not used for so long it may have some sort of effect. This has mostly been fueled by the dormant account alerts offered by various CMS to alert you when an account that hasn't been used in a while is used, in case it was a fraudulent use. This is a service provided by the CMS and has nothing to do with the workings of the algorithm.
I haven't been able to nail down any gain or loss attributable to this. There was a report of someone having a point change when they received the dormant account alert, but that was a isolated report, so there's no way to know that that's what caused it. Unless it's repeatable, we can't rely on it. Maybe in the future with more data points, we may know more, but for the time being, the data hasn't shown there's an effect in my humble opinion. I am open to more data or data I have missed.
@Anonymous Good to know about the no effect. Trying to avoid all the surprise pitfalls of the algorithms. Too bad that in the beginning of my journey I was under the impression that an open installment loan helped creditwise so I was getting a couple of personal loans to fill that criteria and when they were paid off I would get another one. BUT unknown to me at the time I didn't know they were being classified as CFA which are negatives to the algorithms.
Now when I see scores reasons in certain FICO score models, "Too many consumer finance accounts" shows up. for example in Fico 2,4,5 scores.
@Iusedtolurk i'm sorry to hear that. That's one of the most complained about hidden pitfalls of the algorithm I think in my opinion.
It does help scorewise to have a open installment loan with aggregate utilization under 10%, for versions 8/9. But you definitely want to do it through a bank/CU, not a finance company as you unfortunately learned the hard way.
Also, you don't want to continue to successively do short-term loans and lower your ages. Preferably get a five-year one and that way you don't have to open them that often.
not much you can do about the CFA but wait them out, but it's my understanding it's not a huge penalty, but we haven't been able to quantify it.
One thing about it, if you're seeing that code, then you don't have a lot of big problems to hide that code. So you can look at it in a positive way like that.
