Comments on: Become a Better Borrower with Your Credit Score

By: Ryan

Ryan — Wed, 22 May 2013 03:22:20 +0000

A good trick is to get a credit card where if you make a big purchase its finances it at 0% interest for a few months as long as you make monthly payments that way you can keep the balance and not get charged interest.
You could also try leaving a small amount still on the credit card at the end of the month, figure out your interest and see how much you could leave on your card to pay lets say $1 in interest every month, yes its an extra $12 dollars at the end of the month, but you could save that much a year by having great credit.

By: Philip

Philip — Sat, 04 May 2013 19:00:22 +0000

They key is to pay off the balance before the monthly statement is made. This will show that you did use your card, but that you paid it off with out having a balance to pay at the end of the billing cycle. This is what will in crease your credit score. I found this out by playing around with it. I would use my card to get the cash back rewards. When I got the monthly statement I paid the amount in full. ZERO interest was charged and ZERO fees. However, that balance is shown on my credit report. My score did not move. So I repeated this again the next month and the same thing. no increase. I did make sure that in fact it was reported to all three BUREAUs and it was. So I decided to use the card but pay off with in days and make sure it had a zero balance by the end of the cycle to show zero on the monthly statement. BAM! my credit score has improved 5 or more points every month for the last 5 months by doing this. What does show on my report is HIGH BALANCE / CREDIT LIMIT with my credit limit in there, however under BALANCE AMOUNT it shows Zero! That is the key. That shows that you use your credit but that you pay it off before the billing cycle comes around. That is what shows a responsible borrower. I have not use my visa check cards for over 4 months I just use my credit card for everything to get the rewards and as soon as a transaction posts to my account I pay it! I even over pay because I know I will use it. Try that for the next month. Make sure that two days before the last day of the billing cycle the account is zero balance you will see a credit score increase on the BUREAU that your creditor reports to. I have capital one and they report to all three every month! Not all of them do that. I had to find out the long way by playing around with this. But this is what has made my credit score jump!

By: Bob M.

Bob M. — Sat, 09 Feb 2013 23:10:59 +0000

Any chance home equity will be entered into calculation of credit scores?

A fair % of consumers own their homes free & clear. They have substantial equity easily ‘monetized.’

Will Equifax recognize this real equity?

By: Ready your FICO Score for Success | Fifty Plus Housing

Ready your FICO Score for Success | Fifty Plus Housing — Thu, 17 May 2012 20:44:07 +0000

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By: EFX Finance Blog Editor, JF

EFX Finance Blog Editor, JF — Thu, 26 Apr 2012 21:53:37 +0000

@April – Take a look at this blog about how your credit score is calculated (http://blog.equifax.com/credit/debt-reduction-why-paying-down-your-credit-card-debt-helps-your-credit-score/).

If you consolidate your credit card debt and close all the other accounts, you might be eliminating your available credit. Even if you have the same dollar amount of debt, you have less credit available to you. However, paying off debt is a good financial decision, and paying your credit card payment on time every time will always help.

By: April

April — Tue, 24 Apr 2012 22:52:50 +0000

Does anyone know if you’ll take a hit to your credit score (a pretty good one I may add) for consolidating your credit card debt to eliminate making several payments every month?

By: Don

Don — Sun, 22 Apr 2012 15:42:05 +0000

The point-in-time credit score assessment is understood. As your credit card balance increases with charges, and then is decreased with a payment, a different amount of credit balance vs approved credit line will be seen on different days during every month. And I understand that those with credit balances close to their limits, vs those with balances much lower than their limits, would have a poorer credit score.

Between the time a credit card closes each month, and the due date of the payment, typically the card balance continues to grow with usage. When the payment is made on the due date, the then current balance is reduced by that payment amount (adjusted for interest paid if any). So people such as Richard (above) and me who pay in full each month will likely never show a zero balance owed at any one particular time.

What’s missing completely from the credit score equation is the long term history of carry over balances from month to month as an indicator of credit worthiness. Look at two classes of credit card users: a) those who pay only the minimum each month when due because they simply do not have the money to pay the full balance and so carry over balances to the next month and pay interest on it; and b) those who do have the income to pay the balance in full each month and have zero carry over and zero interest paid. I’ll bet that if you could compare group a) vs group b) against their history of credit problems, missed or late payments, etc. you would find group b) to be a much more credit worthy group, and therefore should carry a higher credit score based on zero carry over balances – and simply being better money managers.

Show us some research on this point, please.

Or would the credit card companies frown on this, and use their influence on you to not do this as it might encourage others to make payments in full every month too, thus driving down their interest income while still paying us the 1% to 2% rewards cash back on all purchases?

By: EFX Finance Blog editor, JF

EFX Finance Blog editor, JF — Wed, 11 Apr 2012 20:44:11 +0000

A credit score is a point-in-time assessment. You could make a payment and pull your score before your creditor reports the payment/new information and your credit file is updated. In this situation, your score would be driven off of the balance before you pay off your card, thus potentially reflecting a lower score.

Credit scores are calculated based on a number of different factors and can vary for each consumer based on their financial situation. Because your credit report is updated every day, your bureau score is recalculated continuously. It could change every day as credit grantors, public records, and collection agencies report data. So your credit score from a month ago is probably not the same score today.

Check out some other blogs for more information about how credit scores are calculated:
http://blog.equifax.com/credit/credit-report-update-how-is-information-updated-on-my-credit-report/

By: Richard Goldstein

Richard Goldstein — Mon, 09 Apr 2012 16:27:26 +0000

My name is Richard and I have have the same issue as you. I just posted a comment like you did about a minute ago and I am waiting a response. If you would like to discus this matter with me my email address is rich33181@gmail.com. Hopefully we can get some answers to our questions instead of getting brushed off by the Equifax Blog. How frustrating.

By: Richard Goldstein

Richard Goldstein — Mon, 09 Apr 2012 16:16:09 +0000

My name is Richard. I have 4 credit cards each with a credit line of 1000.00 for each one. I pay the whole balance off every month on each credit line. My question is that if I pay the whole balance off every month on all accounts it will show that I always have a zero balance and therefore my score does not go up on those credit card accounts I pay off every month. The only time I see my score go up is when I pay my car loan which is a 3 year car loan and I have a rooms to go account that I pay down every month at a set amount of 330.00 for 4 years so I pay no interest. If I pay more then the set amount of 330.00 a month it will mess up my free financing. My question is how do I raise my credit score with the 4 credit card accounts I pay the total amount due every month which I know the credit card companies do not like but I feel it is my right to pay the whole amount or any amount right down to the minimum amount. I do not think it is fair that my credit score does not go up just because I pay the total of what is due on my 4 credit card accounts. It seems to me if you pay off the total amount due you are punished by the banks issuing the credit account just because you pay the entire amount and the banks make no interest on your credit card account you pay off every month. I was also told by one of the banks that owns one of my credit accounts to not pay the total amount off every month if I want my score to go up on that account. I do not see the logic in not paying off the total amount just to raise my credit score. Any input or information on how to raise my score with the 4 credit card accounts I pay off every month would be most appreciated. The one thing I will not do just to raise my score is only partially pay off the balance on my credit card accounts. Are there any other ways of raising my credit score with these 4 credit card accounts that I pay off every month besides only paying a portion of the balance. Why should my credit score be affected in a negative way just because the banks do not want me to pay the full balance every month.