Credit Score Question: Anyone In This Industry?

[alpinevibes]

Carrying a small balance helps. Used to be better than paying off each month.

Not true.

[Mustonen]

There are two different games that frequently get conflated. (1) is building that credit report in such a way that the models like you. (2) is managing your relationship with your financial institution so they’ll help you build that report (keep your account open, increase your limits, etc.).

There isn’t a place on credit reports for an average balance either, fwiw. Just what it is the day of the billing cycle that they report it. Along with your current limit, your current payment, and your highest reported balance (which doesn’t impact FICO or most other scoring models). And historically whether you paid on time and if not how late each payment was, open date, and credit type. And really not much else.

[Tailwind]

I was chucking at in the industry because it makes it sound like a special designation and you should list a resume and current title within your response. No shade intended.

Agreed on not ‘needing’ to use a card. I normally say ‘buy something’ because I think 0% utilization (across all accounts) does make your score drop… but then again that’s fluid just like revolving utilization.

Wouldn’t be how I’d say it, but those are the words they were using. ¯\_(?)_/¯



Using the card doesn’t impact fico either, except maybe for that specific reporting cycle. Some lenders will cancel or close inactive* cards, though, and may not give you increases if you don’t use it. I get CLIP increases frequently when I make large purchases and eat up most of a line, and that’s how we monitor for limit increase opportunities.

*Keeping it active usually means using it every 60-90 days (or more likely annually).

[Hood26]

Student loans would be a good way to establish credit, yes or no?

[Kevo]

Kevo used to be the TGR expert on this, may still be, PM him. Not rontele.

Hello! Checking in.

I was a credit nerd for a long time and was a member of another board where a large group of people made a dedicated effort to test the FICO scoring algorithms month after month by changing what we allowed the banks to report. The purpose was to figure out how to optimize scores, but there were also people trying to repair credit so we slowly figured out what negatively impacts scores and by how much.

I later worked closely in a career job with a PhD physicist turned data scientist who had previously worked for FICO developing their scoring algorithms. He confirmed my understanding.

First question- what score and where did it come from? If it isn't a FICO score it does not matter. There are a million free credit scores available and for the most part only FICO scores matter because generally banks won't use other scoring algorithms besides FICO when making lending decisions. If it isn't a FICO score that went down for Rideit, the rest of this won't be applicable.

It is worth noting that there are also multiple FICO scoring algorithms available to banks. They mostly function the same way, so I'll just lump them all together.

Ok, so assuming it is a FICO score my next question would be- do you use other forms of credit? What else is in your file? Do you have mortgages or auto loans or other credit cards? If yes, how many other credit cards?

A major drop like that in a FICO score would likely only happen if you either had a thin file (like no other credit cards or only a few other credit cards and no other loans) OR if you were carrying balances on other cards and your overall available credit limit dropped when the airline card was cancelled. In the latter example, your revolving credit utilization percentage would go up.

Ultimately, there is no advantage in terms of the APRs that banks will offer you once your FICO score is above 760. Above 760 is the top bucket for the lowest risk consumers, so you won't get a better mortgage or auto loan rate based on your credit score at 820 vs 780, etc.

[Mustonen]

Pedantic: 780 is the new high water mark, though anywhere from 720-760 is still top tier most of the time, but that will vary be lender. Your bank up the street could decide to offer special financing for 800+ credit, and some do…

ETA: Kevo - did you ever validate the 0% vs 1% or 2% utilization issue and the relative impact, if any? That’s one I’ve never been able to get a handle on anecdotally, neither with my own scoring nor through reviewing scoring on others.

[Kevo]

Pedantic: 780 is the new high water mark, though anywhere from 720-760 is still top tier most of the time, but that will vary be lender. Your bank up the street could decide to offer special financing for 800+ credit, and some do…

ETA: Kevo - did you ever validate the 0% vs 1% or 2% utilization issue and the relative impact, if any? That’s one I’ve never been able to get a handle on anecdotally, neither with my own scoring nor through reviewing scoring on others.

Highest score was achieved when one revolving account (credit card, line of credit) reported a small nonzero amount (like $10) and all other revolving accounts reported zero.

This was controlled by paying down cards before the statement date. Almost all credit cards only report the balance as of the statement date, so if you pay them off in advance of the statement date you can control what they report to the credit reporting agencies. There were a couple banks at the time that would sometimes report mid cycle. I think Bank of America was one.

All of my info is from the 2009-2013 time frame, so I'll defer to your expertise on 780+ now being the highest score bucket.

[Hopeless Sinner]

Highest score was achieved when one revolving account (credit card, line of credit) reported a small nonzero amount (like $10) and all other revolving accounts reported zero.

This was controlled by paying down cards before the statement date. Almost all credit cards only report the balance as of the statement date, so if you pay them off in advance of the statement date you can control what they report to the credit reporting agencies. There were a couple banks at the time that would sometimes report mid cycle. I think Bank of America was one.

All of my info is from the 2009-2013 time frame, so I'll defer to your expertise on 780+ now being the highest score bucket.

Still correct in late 2023. I was intending to car loan shop in late 2023 and was playing w my FICO for months and low utilization is key.

[Dantheman]

Last month I had a hard pull to apply for a loan and my utilization was higher than average and my scores went up.

[AK47bp]

Last month I had a hard pull to apply for a loan and my utilization was higher than average and my scores went up.

I heard heli skiing in AK instantly raises your credit score. I’m no expert, just what I heard.


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