Scott On Money

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

I had been seeing the little blue checkmark on many websites. Then I saw a comment from on of my readers on it so I decided to check it out. The blue check is a service called Bill Me Later.

Bill Me Later is a credit card alternative for online purchases. It requires you to enter less information with the merchant, just the last four digits of your social security number and your birth date along with your name.

The Advantages
- The system is very easy to sign up for.
- It is very easy to use.
- It is more secure against merchant database security disclosures.

The Disadvantages
- Worse terms than the best credit card offers. The account does not charge interest during the grace period but there are no rewards and the interest rate is 17.99%.
- No pre-approved credit limit. Every transaction is checked and can be approved or denied unlike a credit card when you know in advance how much you’ll be allowed to buy.
- The potential for more frequent credit checks. There is no data on this but only time will tell how often they review their customers credit records.

Ease of payment is not the only hurdle in the path to internet shopping growth, but making payment easier and more secure is certain to help boost sales.

The service also boasts a merchant fee of only 1.5%. This can be significant as I’ve seen other cards charge merchants over 3% in some cases. For merchants with a large volume this can be a huge benefit and if Bill Me Later gets big enough there will be some good competitive pressure on Visa, Mastercard and friends to lower their rates a bit.

Bill Me Later still has a limited number of merchants and I haven’t been through a full service cycle with them yet but they certainly look like they add value.

Posted by Scott at 09:07 PM | Permalink | Comments (2) | TrackBacks (0) | Subscribe | Digg | del.icio.us | Technorati