How does having an AMEX affect your credit score?

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VisaSpeak
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How does having an AMEX affect your credit score?

Postby VisaSpeak » Sat Jun 15, 2013 9:30 pm

Its a charge card so I dont believe there is any utilization ratios. Is it simply having on-time payments?


flan
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Postby flan » Sun Jun 16, 2013 10:04 am

VisaSpeak wrote:Its a charge card so I dont believe there is any utilization ratios. Is it simply having on-time payments?


The balance reported figures into your debt/income ratio. But, right, it's not part of utilization number. Late payments will show up, too. There's probably a small benefit from having a different sort of credit from revolving credit and installment loans, but that's likely very small.

More specific scoring formulas use the existence of an amex charge card as input, and usually it's positive to those models.

creditquestion
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Postby creditquestion » Sun Jun 16, 2013 2:18 pm

So does that mean that putting things on an Amex charge card instead of revolving credit will result in a dramatically lower utilization percentage (since the debt isn't on revolving credit and therefore a smaller percentage of my revolving credit is utilized)?

paparoach429
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Postby paparoach429 » Sun Jun 16, 2013 2:54 pm

Not if your paying it off every month.. If your putting it on your Amex and paying it off monthly you obviously have the funds to do so, so paying the same on a revolver wouldn't make a difference.

flan
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Postby flan » Sun Jun 16, 2013 5:11 pm

paparoach429 wrote:Not if your paying it off every month.. If your putting it on your Amex and paying it off monthly you obviously have the funds to do so, so paying the same on a revolver wouldn't make a difference.


Because payments on revolving credit is either not reported, or reported inaccurately (very often just as the minimum payment that was required) , it's hard for a lender to tell what is balance spanning multiple months, and what's paid off every month. Some lenders don't want to see balances, and the fico models score them rather negatively. Some lenders like to see some balances, because that means you use the accounts, some also like customers who carry balances and pay interest.

The score obsessed pay their credit cards before the statement posts, largely for this reason.

SparkyinCA
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Postby SparkyinCA » Sun Jun 16, 2013 6:58 pm

For those that want to maximize their FICO scores, pay off all cards to $0 balance prior to the statements closing, but have one account post a very small amount (i.e. $2-ish). Your FICO scores will go up, however, your FAKO scores will drop (hey, they are fake scores, so it doesn't matter). If you pay all accounts to $0, your FICO's will absolutely drop as you are not showing any usage.

Have tested this with FICO many times (while gardening just to learn how this all works).

Hope this helps. This comes in especially handy when you know you are going to apply for credit/loan etc and you want your FICO scores to be at their optimum levels so you can time your apps accordingly.

rockyrock
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Postby rockyrock » Mon Jun 17, 2013 2:00 am

SparkyinCA wrote:For those that want to maximize their FICO scores, pay off all cards to $0 balance prior to the statements closing, but have one account post a very small amount (i.e. $2-ish). Your FICO scores will go up, however, your FAKO scores will drop (hey, they are fake scores, so it doesn't matter). If you pay all accounts to $0, your FICO's will absolutely drop as you are not showing any usage.

Have tested this with FICO many times (while gardening just to learn how this all works).

Hope this helps. This comes in especially handy when you know you are going to apply for credit/loan etc and you want your FICO scores to be at their optimum levels so you can time your apps accordingly.


+1

Also, since there is NPSL they assume the highest balance ever reported is your limit. So until they have a frame of reference they will assume you are 100% utilized on that particular card every month. My Amex reported >$6k one month and was back down to $0 the next. I rarely let the statement close over $1500 now.
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