Friday, May 22, 2009

Citi AA Cards And My Fico Score, Plus US Mint is Speeding Up

In the past week, my Fico score dropped twice by a few points.

My score dropped because Citi AA credit cards don't report the credit limit to the three credit agencies. As I wrote about previously, the percentage of your credit that you’re using is one of the things that make up your credit score. Now, being that Citi AA cards don't report the credit limit, (being that they are “no preset spending limit’ cards), any balance is considered 100% of your available credit on that card. Now, using too much available credit on one card, is not as bad as using too much of your overall credit from all your cards, but it still does hurt your score. Ideally, you shouldn’t use more than 10% of your overall available credit.

On one of these occasions, my bill was $500, which dropped my score by 8 points, to 765, and the other time my bill was $10, which dropped my score by another 5 points. Even though the bill was only $10, it’s still 100% of my available credit on my credit report, which for this months bill is $10....

The drop is only temporary. Next month, once I pay my bill, I won’t have any debt on these cards, and I won’t be using any of my available credit, my FICO score will go up again. If you have a low credit score to begin with, or you need to keep your score high, then you might want to avoid even a temporary drop in your score.

Here’s how to make sure that your FICO score doesn’t drop when you spend on a card that has no preset spending limit: Pay the bill before the statement closes, so that when the statement closes, the balance will be reported as $0.

Although often, when there is no limit being reported, the highest past balance is considered your credit limit for calculating your debt–to-credit ratio, it didn't work for me, as my 'High Balance' was reported as zero, even though I had a $750 bill a few months back.

Note to advanced users:
There is a massive benefit to the fact that the AA cards have no preset spending limit. Which is that you can often go way, way over your limit. For instance, on one card that I've had a $15,000 limit, I was able to spend up to $50,000!

Update To US Mint Ordering:
It seems like the Mint started speeding up their order processing times. While in the past it has been taking a few weeks to receive an order, lately it’s been arriving in just a few days!
My shipments are also being sent via UPS Next Day Air!

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