The Master $2 reporting "trick" explained

[mendelssohn]

This discussion had come up several times recently, so I thought we would have a clear thread on this subject.

 

Who does this help? People with clean reports.

 

What does it do? It helps you eek out every point possible from the utilization portion of FICO scoring.

 

What do you do? Let $2 report on 1 card and have the rest report $0.

 

Why $2? Because you want non-zero utilization reporting on 1 card that is included in FICO utilization calculations. Experimenting with amounts lower than $2 has often resulted in the balance being credited to $0, so $2 is the smallest "non-zero" amount to use reliably.

 

Are there any cards that this won't work for? Discover is $3 minimum. They will credit $2 to $0. Cards over $50K are not counted in utilization and also do not count.

 

I verified all of this with BobWang via email. I'm not going to post the emails, but if for some reason that is not good enough, I will forward the emails to Breeze and let her verify the authenticity of this information.

Edited May 18, 2015 by mendelssohn

[mendelssohn]

Too late to edit my post.

 

To clarify, it is not 1% or any other number. It is the smallest amount you can get to report that is not $0.

[Cappy]

Thanks

[djhall]

Too late to edit my post.

 

To clarify, it is not 1% or any other number. It is the smallest amount you can get to report that is not $0.

 

Out of curiosity, since you specify $2 unless Discover in which case $3, how much real difference do you think there would/could be between $2, $3, $5, or even 1%? Are we talking the 1-2 points I would expect or something more significant like 5 - 10 for such tiny balance changes??

[mendelssohn]

 

 

Too late to edit my post.

 

To clarify, it is not 1% or any other number. It is the smallest amount you can get to report that is not $0.

Out of curiosity, since you specify $2 unless Discover in which case $3, how much real difference do you think there would/could be between $2, $3, $5, or even 1%? Are we talking the 1-2 points I would expect or something more significant like 5 - 10 for such tiny balance changes??

That can't be reliably predicted. This is to get every last point possible out of the utilization portion of FICO. It could be 0, it could be 1 or it could be more than that.

 

The difference between $2 and 1% can make a big difference though, depending on how much 1% is for your profile.

 

It's certainly not 1.5-2+%.

 

If you don't let $2 report on 1 card that also doesn't mean you're going to have low FICOs.

 

The $2 on 1 card approach is to keep it as simple as possible without having to do any calculations. You can experiment with your own profile and see if you want you want to bother doing it.

Edited May 18, 2015 by mendelssohn

[JoeBowler]

Thanks for clarifying!

 

14 accounts, I screw this up every month. Stuck with 89.00 owing last month spread over 4 accounts.

 

I lack any type of account management skills!

 

Pending transactions, slow merchants, weekends and scattered statements dates are making this harder than it should be.

 

All those wasted $$$ on public education, I'm no good!

[mendelssohn]

Thanks for clarifying!

 

14 accounts, I screw this up every month. Stuck with 89.00 owing last month spread over 4 accounts.

 

I lack any type of account management skills!

 

Pending transactions, slow merchants, weekends and scattered statements dates are making this harder than it should be.

 

All those wasted $$$ on public education, I'm no good!

Push payments from bill pay to get $0 to report.

[GR8WhiTE]

Very well explained

[JoeBowler]

 

Thanks for clarifying!

 

14 accounts, I screw this up every month. Stuck with 89.00 owing last month spread over 4 accounts.

 

I lack any type of account management skills!

 

Pending transactions, slow merchants, weekends and scattered statements dates are making this harder than it should be.

 

All those wasted $$$ on public education, I'm no good!

Push payments from bill pay to get $0 to report.

 

Clever!

 

Bill pay is set up for all payees

 

Seems like I've reached a point where a fico increase, even a point (especially if its a new career high) is more rewarding (?) than a cli or new account approval.

 

Thanks for the tip!

Scott in Az

[ubercat]

Remember, as your score goes up, the returns on FICO geek tricks like this diminishes. When a score is in the 710 range, the 2$ trick will give you a decent boost. When a FICO score is has passed 800, tricks like this will return less.

 

The 2$ trick is for clean reports.

Edited May 19, 2015 by ubercat

[pkrider7]

I'll be saving this also for once my report is squeaky clean

[Konrad2012]

Edited May 19, 2015 by Konrad2012

[Konrad2012]

The above chart is from Bob's master graphs.

 

Notice how recent lates negate the $2 trick, which is why most people in the repair / early rebuild stages are better off to pay to $0 and focus their efforts on debt management and such.

 

Also notice though how a 4 year old 30 day late gets one of the biggest increases from the utilization boost. The equivalent to the guy with a 6 month old CC and otherwise clean reports.

 

I have a 6 1/2 year old 120 late, but I have seen the trick work to my benefit. So somewhere there is a tipping point that is not outlined on this chart. Also, as I have added new INQ's and new accounts, I saw the effects from the trick get negated again. So obviously many variables are involved which by my own experience take into account new trades and new INQ's.

Edited May 19, 2015 by Konrad2012

[mendelssohn]

I would say people with dirty reports should focus on a small balance rather than 0. You still lose points for $0 no matter what your profile.

[Cappy]

I would say people with dirty reports should focus on a small balance rather than 0. You still lose points for $0 no matter what your profile.

Who says even with a dirty report that Max Fico can't be achieved with the $2 trick??!

 

I'll be a GP... Unless this has been tried before

[David1]

If you have crap credit this "trick" doesn't matter.

If you have excellent credit it doesn't matter.

If you have crap credit you should focus on paying your bills on time.

If you have excellent credit you should focus on paying your bills on time.

[mendelssohn]

If you have crap credit this "trick" doesn't matter.

If you have excellent credit it doesn't matter.

If you have crap credit you should focus on paying your bills on time.

If you have excellent credit you should focus on paying your bills on time.

Incorrect. Science has proven that it does make a difference. As I said, it's not necessary, but it does help. Saying that it makes no difference is flat out wrong.

 

$0 reporting for a few days cost me 9 points with my EQ08 FICO, and I have a lot of negatives reporting. When rebuilding, 9 points can be the difference between an approval and a denial.

 

Of course paying on time is the most important thing. This is to get every last point possible from FICO for utilization.

Edited May 19, 2015 by mendelssohn

[tweak]

Does the $2 trick work identically for both FICO 08 and FICO 04 models?

[mendelssohn]

Does the $2 trick work identically for both FICO 08 and FICO 04 models?

I will have to confirm with BW. IIRC it gains you more points with 04 which is what is used for mortgages.

 

Before a mortgage app, it's certainly worthwhile to do this if you are borderline on a scoring tier.

[tweak]

Thanks. Sounds like you are saying the process is identical, but the results may be different. Correct?

 

While you're at it, tell BW he is missed, and to please come back.

[mendelssohn]

One of the reasons why I'm an advocate of the $2 method, even with dirty reports, is that it requires a high level of discipline to track your accounts and prepay. This ensures that you are not relying on a grace period float and are using CCs as a transactor.

 

For people rebuilding their credit, this helps keep you from making the same mistakes again and helps develop discipline.

[mendelssohn]

Thanks. Sounds like you are saying the process is identical, but the results may be different. Correct?

 

While you're at it, tell BW he is missed, and to please come back.

Possibly. This was studied mainly for 04, but the lowest non-zero utilization reporting will still yield the best results.

 

I have told him that.

[hdporter]

I'll assume that 1% or less utilization is what's really desired ... not necessarily taking your card balances to $2.

 

Under FICO 8, as long as I show 1% overall utilization, my score is 842 (under approx $5k). I presume I'm getting pretty much max credit on the utilization front, since I have a couple of inquriies < 1 yr old on each CRA, and almost always at least one account opening in the last 6 mo. If I go up to 2%, I drop to 840.

 

The "$2 trick" may a good title for those with thin credit lines, but I'd suggest "1% trick' might be stronger.

[mendelssohn]

I'll assume that 1% or less utilization is what's really desired ... not necessarily taking your card balances to $2.

 

Under FICO 8, as long as I show 1% overall utilization, my score is 842 (under approx $5k). I presume I'm getting pretty much max credit on the utilization front, since I have a couple of inquriies < 1 yr old on each CRA, and almost always at least one account opening in the last 6 mo. If I go up to 2%, I drop to 840.

 

The "$2 trick" may a good title for those with thin credit lines, but I'd suggest "1% trick' might be stronger.

It's $2 (smallest reported non-zero balance), not 1%.

 

Confirmed by BobWang.

 

This is to eek out every point possible for utilization.

[mendelssohn]

This thread was to clarify that it IS the smallest reported non-zero possible and NOT 1% or any other number.

 

This is the result of a lot of Bob's research.