What are the Benefits Of The AZEO Method??

[arkane]

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@Anonymous wrote:

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@Anonymous wrote:

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@Anonymous

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I see your point but why would you grant someone more credit who uses only $5 out of $100k+ total limit? I would still look favorably to the profile that has a long history and the ability to pay that $10k revolving debt in full every month.

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Not using, reporting.  Someone can use tens of thousands of dollars in revolving credit per month and still report 5 bucks.  And, it happens all the time.  I've taken myself to AZEO with a small balance (say, $5) prior to each of my last 7 applications and each has resulted in a favorable result.  This is when my monthly spend on CCs is usually in the $3k-$5k range.  Also keeping the snapshot in point of time in mind here, seeing $10k+ in revolving debt is what would happen and the lender wouldn't necessarily know that it's being PIF monthly. 

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Obviously we are talking about identical profile which includes monthly spending, just as lenders might not know if revolving debt is being PIF, they also have no way of knowing your 3-5k usage beyond $5.

I don't know how far back those 7 apps are but there is no way to tell if non AZEO wouldn't have produced favorable results if you kept UTI under a reasonable level. Currently your scores are 850 across the board and assuming they were decent during those apps, I doubt AZEO made much of a difference if any.

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I think this is where the "high limit" number could come in handy. If you show the lenders that at some point in time (even if years ago) you were able to use >50% of the CL and pay it off, and you're reporting a very small balance now, I could certainly see some lenders viewing that favorably with regards to usage and ability to pay. 

[Bees18]

Does AZEO apply to only credit card account or would an open loan with a balance mess it up.

I recently got a "too many accounts with balances" notice, but I only have two cards one with a balance and the other I have report zero. I do have a SSL with a small balance.

[Anonymous]

When people refer to AZEO, it's commonly assumed that they're speaking only of revolvers and not taking into consideration open installment loans.  It's important however to understand that the FICO algorithm in fact does take into account all open accounts with balances, which of course by default includes installment loans, as if they're open, they possess a balance.

So, for someone like you (and me for that matter) that have exactly one open installment loan, while we say we're at AZEO (1 CC with a non-zero reported balance) we're really at AZE2.

I have 9 open accounts, 8 revolvers and 1 installment loan.  When at AZEO (really AZE2... 1 revolver + 1 installment loan) I've received negative reason statements pointing to too many accounts with balances.  On my profile I can't do any better than that balance wise in terms of score-maximization.  You're in the same boat, except you have less revolvers.  When you're at AZEO, you're really at 2 of 4 accounts with balances.  Because you're at 50% of your total accounts with balances, you would likely see a greater score ding than I would and the negative reason statement pointing to too many accounts with balances could be higher in your list than mine.

[Anonymous]

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@Bees18 wrote:

Does AZEO apply to only credit card account or would an open loan with a balance mess it up.

I recently got a "too many accounts with balances" notice, but I only have two cards one with a balance and the other I have report zero. I do have a SSL with a small balance.

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Nice response by BBS.

How many accounts do you have total, including closed ones?  You may have a thin (ish) profile.  That can limit your score in a number of ways.

A good medium range goal for you is to gradually build up to six accounts total, of which three are open cards.  There are many advantages to a thicker profile.

A good long term goal would be a dozen accounts total of which eight are open.  Many people never have a profile like this and if you don't it's really OK.  There is some evidence that FICO imposes a small penalty when a person has only six accounts total.  But as I say many people rightly don't care whether their score could be 805 when it is already 800.  Thicker profiles are less vulnerable to adding new accounts, which is a mild nice to have.

[Bees18]

This question was for both me and my husband (we are both working on building our credit profiles but have very different ones).

his oldest card is 12 yrs that is open

he has two closed cards at 9.5 years

two at 6 months

one SSL at six months

and one new card from august that hasn't reported.

mine is: 

2 cards at 7 months

and one ssl