Scott On Money

You’ve seen me talk previously about dragging my credit score down by refinancing opening a slew of credit card accounts and creating huge balances to take advantage of 0% credit offers.

Today I got my credit score again and it popped up more than 15 points. Why? Time. All those accounts that were opened over a 5 month period have aged another month and the scoring model has decided that I’m now a few percentage points less risky as a borrower.

Remember to give yourself a big discount on your car or home loan by paying down credit balances and not opening accounts several months before you plan on getting a loan.

The time factor is huge. About a month. Over fifteen points.

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You can make many changes and not have your credit score respond significantly. At some point you cross a magic line and your credit goes down hill big time.

I had applied for a USAA 0% card and the inquiry for that card was one of the precipitating factors in the recent drop in my credit score. Now the account has been reported open to the credit bureaus. Ding, ding, ding. I just got the alert that my credit went down about 15 points. This is before my balance transfer even hit.

It will be interesting to see how this further impacts my credit score.

I expected all this activity to hit my credit score. I did not expect it to go unchanged for such a long time and then take dramatic drops with every subsequent action.

Posted by Scott at 08:41 PM | Permalink | Comments (1) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

Refinancing. Check.

0% Chase card. Check.

0% Citi card. Check.

Bill Me Later account. Check.

0% USAA credit card. Check.

If you look at my credit moves over last six months you might guess that I was trying to drive my credit score down. It is not true. How my credit score changed is an important lesson.

When I was considering how to leverage my credit I first decided I wanted to keep my credit score as high as possible before refinancing because the rate and fees there are so large. This made me put the refinance effort first. I also knew that I wanted to be taking more advantage of my credit. This made me examine 0% credit card offers.

I was actually a little bit surprised after refinancing the house, applying for getting, and maxing out two credit cards how little my credit score actually moved.

But I find now, after the inquiry for Bill Me Later, the new account opening and the inquiry for the USAA credit card my credit score finally taking the serious hit that it so justly deserves (Just kidding, I think thousand of on time payments over tens of years counts for a bit too). Because of the inquiries and the new account opening my credit score plunged over 10 points on a single day. I found this out thanks to the myFICO ScoreWatch service.

I my credit score to fall given all of the activity that I’ve instigated and had been quite surprised the previous months that I hadn't seen more of a move in my score.

It's easy to see from this example that it takes quite a collection of individual events to move your credit score dramatically. I consider this all an interesting experiment in what moves credit scores. I'll I will not be applying for new credit in the near future. We'll see how quickly it takes for my credit score to bounce back to where it was before. The hope is by late this year my credit score will have rebounded again giving me the opening to start new 0% accounts and keep leveraging my credit to help earn income.

Posted by Scott at 09:56 AM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati

The short story for you impatient readers is Citi is better. As you may have read I borrow money using 0% credit card offers and invest them. I pay them back before the offer expires.

Citibank made the process easy. Login and request that they cut you a check. Done.

I logged into Chase to do the same thing. You are not allowed to do this online. So I called them and asked about it. They told me that they don’t let 0% accounts do balance transfer checks online. They also will not cut you a check on the phone for the first three months. I went online to transfer the money over to my Citi card and it wouldn’t let me do that so I had to call to get the card to card balance transfer.

Of course then I had Citi cut me another check for the balance. Kudos to Citi for being easy to work with. Thumbs down to Chase for being hard to deal with and for making me deal with them so many times. They could have put a notice in their website about these restrictions, explained the error online or explained all the rules when I called the first time.

If you have a choice go with Citibank.

Posted by Scott at 10:36 PM | Permalink | Comments (0) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati