Comment by nostrademons | Hacker News Reader

Comment by nostrademons | Hacker News Reader

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I was surprised how much they change constantly, for silly things like how much balance you have on your credit cards.

My wife & I both have excellent credit scores, and we pay all of our bills in full every month. Nevertheless, I've noticed a ~50 point swing in credit scores from month-to-month, all dependent on whether airline tickets, furniture, or charitable contributions happened to make it onto this month's bill. Our debt-to-liquid-assets ratio is something like 0.1%, so there's never any real risk of not having money to pay it off, but of course the credit bureaus don't have information about our assets, so they evaluate us against what other people our age have, which (being Millenials) is not very much.

Knowing how the system works, we can take steps to game it, like not putting any major purchases on credit card in the 3-6 months before getting a mortgage. But still, it's slightly ridiculous that something that's supposed to measure your creditworthiness can swing so much over short time periods.

It's not that weird. If your score is, say, 750, 50 points is about a 7 percent change. My finances very easily vary 7% from month to month!

50 points also isn't likely to make much difference, especially if your score is already good. Loans basically go off tables. Essentially if you're between A and B, you get this rate for this losan, C and D gets this rate, etc.

Once you're past 700, you're already getting good interest rates and banks will fall over themselves to loan you money if your income supports the loan size. When I was at 780, the loan officer couldn't give me a lower rate on a mortgage - I was already getting a fraction of a percent over prime.

You can eliminate credit score swings by never generating a credit card statement with a balance. You can do this by paying your card off prior to the statement date.

I spend between $1000-$2000 on credit cards a month and collectively I generate statements with less than $10 spread across 4 cards. My credit score is rock solid from month to month.

If you have six figures of liquid assets (what 0.1% debt vs liquid assets implies) this should be no problem at all.

We usually just set all our cards on autopay-in-full and forget about it. Is there a way to have them autopay before the statement date, or do you need to proactively check every month and make a payment right before the statement date?

Being proactive is the only way, unfortunately.

You also believe the stock market is nonsense, because valuations fluctuate?

It's worth remembering that an important aspect of your score is your value as a customer. Risk is one element. Carrying a balance gives you more value than if you never carry a balance.

It's the other way around - your credit score is higher if you have a lower balance on your cards.

That is not correct. A small balance raises your score more than a zero balance. But you want to keep it under a third.

This is an oft passed around urban legend, but it's not true. You can try for yourself by opening up a free CreditKarma account and seeing what happens if you zero out all your balances.

I'd take that with an entire shaker of salt; you are assuming CreditKarma knows the FICO formulas. Even the prediction engines used by the actual credit bureaus are notoriously unreliable at telling you what will happen given a particular change in inputs. Probably not accidental, they don't want to expose the algorithm.

> we can take steps to game it, like not putting any major purchases on credit card in the 3-6 months before getting a mortgage

I wonder how much your ability to game it indicates whether you are likely to be a good or bad debtor?

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