Brace for FICO 08 impact this week!

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The Fuzz
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Brace for FICO 08 impact this week!

Postby The Fuzz » Wed Feb 04, 2009 11:19 pm

The Consumerist blog indicates that FICO 08 will roll out on Thursday February 5, 2009. I've been reading about this and waiting for it for two years. It is going to be huge in credit scoring and our individual credit worthiness. Everything I know about credit is about to change. Be prepared to either have your credit negatively or positively impacted... If you are planning on buying a car or a house or any major purchases on credit in the next several months, then my recommendation is that you get familiar with how FICO 08 is going to affect you. It is going to be huge for some people.


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Postby Cucumber » Thu Feb 05, 2009 2:19 pm

This is gonna blow for people like me who only have revolving credit and now installment loans!!! :(

Oh well. I guess that's an excuse to go finance a new car purchase right now ;)
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Postby AnthonyBarone » Thu Feb 05, 2009 8:15 pm

This is a bunch of bologna if you ask me, credit is credit. There's no reason one kind should get more weight then another. Did they ever think that the ones that don't use loans with set amount monthly payments could be more credit worthy because they choose not to be financed up to their eyeballs in debt?

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The Fuzz
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Postby The Fuzz » Fri Feb 06, 2009 11:11 am

I don't know about that... Credit can be very different. A loan that goes up and down is a lot different than one that only goes down. Your installment loans like a car loan or your mortgage are very different from a revolving loan like a credit card. If all you have is credit card debt that you can continue to rack up and increase, then that should send some red flags.

The report didn't say that you had to be carrying ballances on these loans. I've got several accounts showing on my credit report if you count the store accounts like Discount Tire, Gateway, and Best Buy that are all at $0. All of my credit card accounts are paid off every month, so I don't pay finance charges. When I do use one of my store accounts it is only to take advantage of a six, twelve, or eighteen month no interest deal. If you can finance something for no interest then you should do that instead of paying cash. Using cash does nothing for you.

Here is the secret... If you want to improve your credit score without doing a thing different in your spending and paying habits, then here is what you do. Contact your creditors and find out when they report to the credit reporting agencies. Then move your billing cycle to be a week after that date. That way everytime they report your account to the bureaus it will show a ballance that changes. Do this on the accounts that you use. That will help your credit because it will show utilization and ontime payments. Beware though... If you max out your credit cards every month then this is also going to show a very high utilization. The trick is to calculate how you can show a low debt to credit ratio while still showing utilization. That is why I keep my store accounts open even though I hardly ever use them. The eight or ten thousand dollars in available credit that sits there unused offsets the utilization of the cards that I do use. Of course, the card I use mostly now is a charge card that has no limit, so my backup limits are largly just sitting there being open and showing credit history. If you use a charge card then you don't have to do as much calculation. However, when I was using my Delta Skymiles Credit Card for everything, then this was a great way to build credit. I build my credit score 150 points in one year with this as one of my methods. I now sit near 800 and my wife is in the 800s with her score. I am interested to see what it does after the new FICO calculations go into effect...

Credit manipulation is a specialty of mine. ;) I used to do it for a very large consumer credit repair law firm that I'm sure you have heard of if you have ever looked into that kind of thing. I'll have to write up what I know about this sometime in the future when I've got some time. It really isn't as hard as some people make it out to be. There are just a few tricks that you can utilize that make a massive difference in your FICO score.

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Postby Floppster » Mon Mar 09, 2009 9:52 pm

The Fuzz wrote:I don't know about that... Credit can be very different. A loan that goes up and down is a lot different than one that only goes down. Your installment loans like a car loan or your mortgage are very different from a revolving loan like a credit card. If all you have is credit card debt that you can continue to rack up and increase, then that should send some red flags.

The report didn't say that you had to be carrying ballances on these loans. I've got several accounts showing on my credit report if you count the store accounts like Discount Tire, Gateway, and Best Buy that are all at $0. All of my credit card accounts are paid off every month, so I don't pay finance charges. When I do use one of my store accounts it is only to take advantage of a six, twelve, or eighteen month no interest deal. If you can finance something for no interest then you should do that instead of paying cash. Using cash does nothing for you.

Here is the secret... If you want to improve your credit score without doing a thing different in your spending and paying habits, then here is what you do. Contact your creditors and find out when they report to the credit reporting agencies. Then move your billing cycle to be a week after that date. That way everytime they report your account to the bureaus it will show a ballance that changes. Do this on the accounts that you use. That will help your credit because it will show utilization and ontime payments. Beware though... If you max out your credit cards every month then this is also going to show a very high utilization. The trick is to calculate how you can show a low debt to credit ratio while still showing utilization. That is why I keep my store accounts open even though I hardly ever use them. The eight or ten thousand dollars in available credit that sits there unused offsets the utilization of the cards that I do use. Of course, the card I use mostly now is a charge card that has no limit, so my backup limits are largly just sitting there being open and showing credit history. If you use a charge card then you don't have to do as much calculation. However, when I was using my Delta Skymiles Credit Card for everything, then this was a great way to build credit. I build my credit score 150 points in one year with this as one of my methods. I now sit near 800 and my wife is in the 800s with her score. I am interested to see what it does after the new FICO calculations go into effect...

Credit manipulation is a specialty of mine. ;) I used to do it for a very large consumer credit repair law firm that I'm sure you have heard of if you have ever looked into that kind of thing. I'll have to write up what I know about this sometime in the future when I've got some time. It really isn't as hard as some people make it out to be. There are just a few tricks that you can utilize that make a massive difference in your FICO score.


Fuzz thanks for sharing these information. Just to correct you a little bit. Try to take your charge card and spend $50.000 and see if it get declined or not :D . There is no "no limit" charge card there is only a "No preset spending limit" charge card.
Intellectuals solve problems. Geniuses prevent them.
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Postby Mogul of Pineapples » Tue Mar 10, 2009 2:07 am

Floppster wrote:Fuzz thanks for sharing these information. Just to correct you a little bit. Try to take your charge card and spend $50.000 and see if it get declined or not :D . There is no "no limit" charge card there is only a "No preset spending limit" charge card.


Clever wording. The amount of the no "pre-set" spending limit can be adjusted at any given time. This really was a brilliant move by Amex to start this years ago.
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Postby The Fuzz » Tue Mar 10, 2009 4:40 pm

Floppster wrote:Fuzz thanks for sharing these information. Just to correct you a little bit. Try to take your charge card and spend $50.000 and see if it get declined or not :D . There is no "no limit" charge card there is only a "No preset spending limit" charge card.



That is true, but if you call AMEX before you make the charge they can clear it for you based on your ability to pay. They aren't going to let me put a Ferrari on my card out of nowhere, especially if there is no proven way to pay. They will let me know if certain charges will clear though. They'll block any out of pattern spending just on principle for the protection of the consumer, but if you let them know that a big one is on the way, then they'll work to let you do it. You just may have to show them proof that you can pay it. That is what some of these things you are hearing about in the media are coming from. AMEX is asking for proof that you can pay your bills because your spending and your old financials that you provided when you got the card (speaking of business cards) don't match up still.

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Postby Floppster » Wed Mar 11, 2009 8:33 pm

The Fuzz wrote:That is true, but if you call AMEX before you make the charge they can clear it for you based on your ability to pay. They aren't going to let me put a Ferrari on my card out of nowhere, especially if there is no proven way to pay. They will let me know if certain charges will clear though. They'll block any out of pattern spending just on principle for the protection of the consumer, but if you let them know that a big one is on the way, then they'll work to let you do it. You just may have to show them proof that you can pay it. That is what some of these things you are hearing about in the media are coming from. AMEX is asking for proof that you can pay your bills because your spending and your old financials that you provided when you got the card (speaking of business cards) don't match up still.


Frankly, I doubt that Amex would accept a charge any bigger than $10k right now. Amex got so careful that unless you are on average spending of $100k a month they'll decline every single "above average" charge. I believe it is actually a really smart move of getting careful since most of the banks let these cc limits go skyrocket high and at the end it hurt themselves.

Reasons beeing:
In January more than 4% of all CC Holders in the US where more than 60days late

They'll expect delinquencies of 9% by the end of this year.

Source: Fitch-Analyst Michael Dean
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Postby KC95 » Fri Mar 13, 2009 3:13 am

and 1 in 8 american homeowners is either behind on their mortgage or in foreclosure. if they cant pay for their house i doubt they are going to pay for their credit card bills.

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Postby teddy19 » Tue Mar 17, 2009 9:00 am

I wouldn't be so sure about a change to credit score system. A couple years ago there were a lot of article about the new VANTAGE scoring system. It was supposed to be easier for people to understand by using the following system:
900 and above A
800 to 899 B
700 to 799 C
600 to 699 D
599 below F

It was to look kind of the like school were 90 and above would be an A. This was supposed to make it easier on us the consumer. So when were are told our credit score is 830 we knew that meant. With the present scoring system if you told someone they have a 725 credit score they wouldn't know what that means.

However, most major lenders have not used this system since they did not have enough data to rate someone. I doubt this new system will become a new standard.

The other thing you have to remember is many lenders still have some of their own criteria for lending approval, not just your credit score. i.e. time on job, income, current debt.

Your credit score is part of the lending decision, not the only part.



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