New FICO score uses 24 month account average balances

Has anyone looked into this? It seems like a pretty massive change.

It looks like the new FICO 10 scores take your average balance over a 24-month period and generate your credit score based on that.

That could be bad news for people in the App-O-Rama crew that pay off all our credit cards right before applying for a mortgage, applying for credit card promotions, or trying to get new 0% balance transfers.

I think a lot of people are going to get a lot of surprises when they go to apply for credit.

It seems like some people strategically want to keep their credit cards paid off depending on their situation.

The new credit scoring model will be calculated to incorporate consumers’ account balances for the previous 24-plus months, which is bad news for anyone carrying balances month to month. These changes are expected to widen the gap between people with good credit (scores 670 to 739) and those with bad credit (scores below 580).

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If lenders get around to ever using it, I dont see the trended score to have much effect.

The typical AOR strategy is unaffected, potentially even benefits from this trending. The initial balance spike hurts, but it hurts under any scoring algorithm. Once the balance is paid off, the lookback only shows a trend of large balances successfully being paid down.

Even in the interim, current/old scoring models only show a snapshot of a large outstanding balance, while this new model will show that outstanding balance progressively declining - for a $25k balance I cant see a $300 per month decrease being given much extra weight, but it certainly isnt hurting any more than a snapshot of the current balance.

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Should not affect the crew that prepays all (but 1-2) credit cards before every statement :smile:

Are no-fee BTs back yet?


Worth creating a new thread perhaps?

Good catch OP.

I take it that the 24 month history will be an average of reported, not actual balances. If I’m right, then any high balances that are paid off before the billing cycle closes will never make it into these models.

I like it, as it smooths out scoring overall. If you’re caught with a high balance during one month (for whatever reason), you’re less likely to be penalized.

I did a basic search for that a couple weeks ago and came up with nothing.


I view pretty much any BT offers as having no fee.

Example: You pay a 3% fee, then pay the balance back after a year, and the lender loses 10% of their purchasing power to inflation. The cost is the 3% fee - 10% inflation = -7% real BT fee cost.

Yeah no. It doesn’t matter what inflation is and how much the bank loses. At the end of the day you had to pay 3%. You’d have to earn 10% (after tax) on that money to make your formula work.

Which is no problem, even assuming you do something super conservative like a 2-year bond you are still getting 4.7%. Or you could have done i-bonds which get 6.89%. Or you could just buy a basket of non-perishable goods which will go up more than 3% and you won’t owe any taxes.

It is a bit of a problem since a 2-year bond takes 2 years while BTs are usually only for 12-15 months. I-Bonds might work, but takes some work and a bit of money to create the trusts and will only yield about 2% profit after taxes. If you’re gonna play AOR + BT game you gotta go big and I’m not buying tens or hundreds of thousand worth of non-perishable goods :rofl:, BTs gotta be repaid and those goods would have to be resold at a profit (and technically you would owe taxes on the profit). You might as well have suggested crypto :money_mouth_face:

I have a good either/or right now. I have money sitting in Ally that is getting me a 1% bonus, but isn’t going to take the whole year, so it’s more than 1% annualized. I also have a balance on a card at 0% that will end before the Ally bonus pays out. So I am going to have to take money out of Ally to pay off the balance on the 0% card. OR I could pay 3% and transfer that balance to another card at 0% for 15 months and not touch the Ally. Balance. When I did some back of the envelope math a couple weeks ago, it came out almost as a wash. BUT if I could get a BT card that also pays a bonus on minimum spend, it could make it worth it. BUT, there is a possibility they might only give me enough credit to cover the BT and I won’t have the credit available to meet the minimum spend.

US1Y is yield 4.7% also.

You don’t have to sell goods for a profit and pay taxes on them, you can just consume them. You are basically arbitraging the difference between the current price and the future inflation-adjusted price.

Just some ideas, there are lots of ways to make money off 3% fee balance transfers although I appreciate the naysaying because it makes it overall more lucrative for the rest of us. If everyone was profiting off balance transfer offers then banks simply wouldn’t offer the product.

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LOL. These ideas are not lucrative – buying a year’s worth of food in advance isn’t worth the potential savings. Also there’s absolutely no way to know what will go up in price and what will stay flat or go down.

It’s not like there is deflation everything is collapsing in price except a few goods. Inflation is everywhere in just about any good. It’s not like you have to be a genius to pick the right thing. Even forever stamps are going up 5% per year and never going down in price. There’s so much inflation people were making money off used cars which are normally depreciating assets.

But you have to be able sell the goods and pay back the BT, and selling is not free.

I read a story today that Carvana lost 98% of its market value because they bought too many used cars. The prices on used cars are coming back to reality. The rise in used car prices were causing inflation, not the other way around.

No, you consume them over time. And use the money you would’ve used to buy more goods in 12 months to instead pay off the BT.

Yes, with a 12-month time contraint it’s going to be difficult to make paying a 3% fee worthwhile (which I think is what this was initially about) - it’s possible, but not guaranteed, and relies on some degree of luck in buying the right items who’s prices go up significantly. But in general, stocking up to stave off inflation is a very legit strategy (unless you live in a broom closet with no storage space).

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To which I wrote:


Especially so if you’re limited by what you can consume.

A better strategy for consumption would be to just use a credit card with 0% on purchases. Same idea but no fee, and you can stock up or just buy at the regular pace and invest the difference until 0% APR ends.

Even better if it’s a business card that doesn’t report to personal report (I brought this back to the topic at hand! :tada: :confetti_ball:)

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Well I bought TSLA and Bitcoin with my BT money. Now it is BK time