decisions, financial, personal finance

Credit Score Challenge

My previous several posts have described a credit card experiment I started last August — about 8 months ago.  During 2014 I went from 2 cards to 5 and tripled my available credit.  Instead of paying off about $12,000 in business debt, I transferred it to a card with zero-transfer fee and an introductory rate of 0% for 15 months.

On thing I learned is that the credit-score simulators I used were pretty inaccurate. My score dipped, but over 8 months has recovered all but 10 points.  It tends to keep ticking up about 2 points per month — presumably because my “age of credit history” — the average age of my credit cards, really — gets a month older each month (obviously).

I have all of my cards on auto pay.  I have all but my “balance transfer” card set to pay the full balance every month.  Thus I never pay interest or finance charges.  For the “balance transfer” card, I have auto-pay set up to pay the minimum statement balance. On this card there is 0% APR on balance transfers until September. This card just sits in a drawer.  I will pay it off in full in September.  Until then I will continue to enjoy 0% interest.

I’ve benefited by my choice of cards.  It may be a small thing, but 1.5% cash back adds up after a while.  And 5% cash back on “rotating categories” can be nice depending on the categories.  I almost always simply apply the cash back rewards to my current balance.  Logging on to check my cash back is also a good incentive to review my cards for any suspicious charges.

I also have credit monitoring that double-checks for charges or other activity that may indicate “identity theft”, or simply errors like being double-charged for a purchase. Personal diligence is the first line of defense against ID theft, and anything like cash-back rewards that makes it fun to log into your account means you have a better chance of catching ID theft early.

I’ve read that credit card fraud often starts with small charges.  The criminal is just checking to see if you are vigilant or lazy in your credit monitoring.  If you catch these small charges quickly and get them reversed/cancelled you are likely avoiding big fraudulent charges later.

I hope you found these credit score articles useful.  Best of luck in your credit score journey.  And please feel free to shared your credit stories (or questions) by leaving a comment.

decisions, Finance, finance blog, financial

Credit Card Experiments, Continued

Quick Credit Score Update

Both credit score predictors were wrong.  One predicted a small drop (about 3 points) the other a small gain (again, about 3 points).  Instead my score dropped from 735 to 724 — 11 points.  However, two months later, it bounced back to 733, roughly what I expected.

I anticipate, that with continued paying of my full balance due every month, except on my one zero-interest, balance-transfer card, that my scores will gradually increase.  I will provide occasional updates as developments occur.


decisions, financial, Investing, personal finance

Experiment: Improve my Credit Score to 769 or Higher

I have added my latest and last credit card this year. According to the handy credit simulator at Credit Karma this new card should increase my credit score by 3 points, from 735 to 738. According to another credit simulator this new card will lower my credit score by 3 points to 732. What I take away from this is that this should be my last new card for a while.

I’ve learned that stopping getting new cards and letting them grow is called “gardening”… FICOforums Guarden Club.  I intend to start “gardening” for at least a year and let my “average age of open cards” grow.

It take a surprisingly long time of 4-6 weeks for a new cards to show up on ones credit report.  So I’ve have to wait to see which credit simulator is more correct.  The question… will my credit score go up, down, or stay the same when my newest card is reported? Let’s see how I’m doing in terms of goals:

Credit Score and Credit Card Goals and Results


  • ✓ Get 3 new cards without hurting my score much. (Score is down only 6 points)
  • ✓ Get new cards with complementary and useful features.
    • Slate (Chase): 15-months zero interest, zero cost to transfer balances (during intro period). [No annual fee]
    • Quicksilver (Capital One): 1.5% Cash-back on any and all purchases. $100 “signing” bonus. [No annual fee]
    • Chase Freedom (Chase): 5% Cash-back on rotating categories. $200 “signing” bonus. [No annual fee]
  • ✓ Secure total limits greater than $50K.  Current limits total $61,700.

Close to Reaching:

  • Part I of Utilization (ratio of debt to total credit limit).  Get below 20%.
    • Currently at 20%, but not below
    • Since newest card has not been included in credit report, TransUnion still thinks my utilization is at 24%
  • Part I of “Delinquency”/Payment History:  Go from 2 “30-days late” entries down to 1.
    • Currently at 98% payments on time
    • 2 months until oldest delinquency expires
    • On-time payments will increase to 99%

     Will likely take over 6-months to achieve:

  • Part II of Utilization.  Get below 10%.
    • My Slate card has about $12K of debt, but the APR is 0% until September 2015.  I will likely make minimum payments until August when I will pay in full.
  • Part II of “Deliquency”/Payment History: Have zero late entries.
    • Will take time.  Last negative entry should expire in April.
  • Part I: High Credit Scores: Earn a score of 769 or higher.
    • I’m at 735
    • One estimator says, if I follow my plan, I will hit 745 in about one month… still a ways to go

      Will likely take a year or more to achieve:

  • Part II: High Credit Scores: Earn a score of 785+
  • Beat my wife’s credit score (currently 783, but will probably go up!)
  • Secure total limits greater than $100,000
    • Preferably by requesting/earning higher limits on existing cards

The first credit goals, which I’ve achieved, show that my initial credit plan was achievable given my starting circumstances of good credit. The second and third groups of credit goals are reasonable goals for attaining excellent credit. Finally, the last group of credit goals constitute vanity goals.

The vanity credit goals are will have virtually no practical use since any credit score above 769 is unlikely to make any difference in getting the best rates, best cards, best mortgages, etc.  The only practical consideration is that a 785+ score may provide a small margin of safety against falling below 769 — however that margin would likely evaporate for even one 30+ day late payment.  So, really, the vanity goals are there just for fun.  And I maintain that having fun is a perfectly good goal!

decisions, Finance, finance blog, financial, personal finance

The Credit Score Game Continues

In the last post I wrote about how my wife’s credit score (783) was significantly higher than mine (747).  That just won’t do — I embarked on a credit-score-improvement quest that includes research and experimentation.

The experiment is already paying off in unexpected ways.  I got a $100 bonus and began using a 1.5% cash-back Quicksilver card as my day-to-day card.  This a small upgrade from my 1% cash-back card.  I also convinced my wife to get a Citi Double Cash Back card for most of our recurring monthly expenses that ends up saving us 2%.

I learned more taking with my brother about his credit card management techniques.  It turns out that he and his wife are pretty expert at credit-card savings.  He has various 5% cash-back category cards he uses to buy groceries and gas.  They also have 2% cash-back cards for non-category purchases.  He also uses a neat trick to stretch the 5% grocery purchases further… buying pre-paid gift cards at grocery stores for, say,  Home Depot or Target — effectively getting 5% off of purchases there too!  Financial savvy definitely runs in the family.

Let’s not forget mileage cards too.  My United MileagePlus Explorer Card is the only card I have with an annual fee ($95).  I fly often enough on United that it is worth it to me.  And recently between my wife and I we recently bought 5 tickets with United miles for myself and some family members  (Tip:  if you want to help someone buy a ticket with your miles, don’t pay to transfer your miles to them… instead simply buy the ticket for them with your miles!)

The Credit-Card/Credit-Score Experiment

As expected, getting two new cards temporarily lowered my credit score — from 747 to 728. However, it recovered a bit… to 735. So what did I do… get one last new card… The Chase Freedom Card with a $200 (20,000 point) bonus.

I decided to get a %5 cash-back “rotating-category card.”  It was the $200 bonus that caused me to chose this this particular one. The criteria for collecting the bonus is pretty simple: charge $500 of purchases in the first 3 months.  I view this as purchasing $500 worth of stuff that I would have bought anyhow — Christmas gifts and such — for only $300.

This third new card will probably cause another temporary downward blip on my credit score. What’s important about this last card is that it brings my total credit card limit (amongst all active credit cards) to $61,700.  This means that the debt (see previous post) of approximately $12,000 will get below the critical level of 20% of utilization of available total credit… which should help my credit score in the mid to long term.  In the meantime I am “floating” $12,000 in debt for free at 0% interest for 15 months.

What Next: A Credit-Score Challenge?

My personal challenge is “no more new cards until 2016.”  I’ve had my fun getting 3 new cards that I believe will 1) help my improve my credit score in the long-run, and 2) help me save money (via cash-back programs) on purchases.

Onc challenge will be in keeping some activity on all of my open cards, and earning maximum cash-back while resisting the temptation to overspend just because there is a small reward.  I hope to have a zero balance before the teaser 0% APR rises to some ridiculous level (of, say, 19%).  I will keep you updated here.

personal finance

Credit Score Games

I’m supposed to be the “Finance Guy”, but I’ll share a dirty little secret:  My wife’s credit score is higher than mine!

OK, hers is quite high: 783 averaged over the three credit bureaus: Experian, Equifax, and TransUninon.   According to her score reporter her score of 783 is higher than 93.77% of U.S. consumers.  783 is “Excellent” credit.

Mine, I trust a bit more.  I paid $19.95  for two scores from and a free one from (which seems to be the least offensive “free” service I could find… decent privacy policy, decent reviews, etc).  Bottom line:  747 is my current average score.  It turns out that this 36 point difference is fairly big — the difference between “very good” and “excellent”.  If 783 is in the top 93.3%, 747 is merely in the top 60-65%.

I find this all very strange since I recently cancelled a credit card that I had for 10+ years which had a $48,000 credit limit because they started charging an annual fee.  This, I think, hurt my score.  The other thing that hurt my score big time is a missed payment of about $95 dollars.  This happened because my credit union was merged and the auto-pay for the annual fee didn’t go through. Ouch!  And that was about 30 months ago.

It appears that the gold standard (true FICO) score average is 770.  Moreover the best practical score is 785+.  Notice that is very close to my wife’s average score. I’ll call 785 the platinum standard.  Any improvement above 785 is essentially meaningless, except as a “game.”  A 770 score will qualify you for just about the best rate on anything, a 785+ score will practically guarantee it.  (NOTE: Lenders use more than your credit score for making lending decisions, such as your years in profession, years at current employer, current salary, and several debt ratios based on your salary, etc).

Since my current average FICO (2/3 FICO, 1/3 “other”) score of 747 is 23 points below the “gold” standard of 770, I wish to increase it by at least 23 points.

Here’s my plan:

  • Pay everything on time with autopay. Double-check that there are no hiccups. If there are, promptly call the credit card company and ask how it can be fixed.
  • Get 2 new credit cards.  This will initially hurt my score, but I believe it will ultimately help.  Whether it does or doesn’t is part of my credit-score experiment.
  • Request credit-limit increases on all my cards… so long as they don’t require a “hard pull” of my credit score.
  • Keep paying all but one of my cards balances in full every month. This means no “finance charges” (aka interest charges).
  • Pay just over the minimum payment on my new 0% transfer-fee, 0% interest for 15-months “Slate” card.  [Ironically the balance comes from my wife’s card!]

So far some things have happened…

  1. I received two new cards.  I requested a limit increase on one and they doubled my limit.
  2. I requested a limit increase on a card I have had for 7 years, and they doubled my limit.
  3. I asked about increasing the limit on a card I have had for 3 years, but learned that it would require a “hard pull” of my credit data.  Thus I said, nevermind, keep the old limit.
  4. I requested a limit increase online for a 4th card.  It was not clear if it would require a “hard pull”, but I will eventually find out if a) If and how much of a limit increase I receive, and b) if a “hard pull” was done.

Based on the credit score simulators at, and, I anticipate that initially my score will drop between 3 and 10 points.  That’s, OK.  My goal is to improve my average FICO score over the next 6-12 months.

Depending on how #4 above turns out, I will easily have more than doubled my total credit limit from about $26,000 to at least $63,000.  Since I am holding a balance on the zero-interest intro-rate card of $12,500, my credit utilization will be about 19.8%.  This is higher that optimal (about 2-7%), but still far better than the 48% level I would have had, had I done nothing!  It looks like the minimum payment will be $125/month at first, so I will pay about $135/month.  Unfortunately auto-pay does not have a setting of pay the minimum balance plus X dollars. So I will simply set auto-pay to pay the minimum balance, and I will augment with monthly extra payments.

The thing to remember is that I won’t be paying a single penny in credit-card interest.  In order to ensure this, I don’t dare charge anything on the “balance transfer” card, as the credit card company is likely to apply any payments in a way that is least favorable to me (e.g. most favorable to them).

Currently this experiment is just a game to me.  My wife and I have a 3.00%, 15-year, fixed home loan that we got with a 50% down payment.  I don’t see any reason to pay extra on that.  Further my only other debt is the 0% on the teaser-rate balance transfer card.  I have heard that paying even a single dollar over the minimum payment on such a card is a favorable sign for the mysterious credit score.  I’m willing to throw a few extra bucks every now and then on the off chance that this is true.  (However, just before the intro rate of 0% expires, I will certainly pay the full balance!!)

I will keep score on my little credit-score game using two free sources that are staggered by 2 weeks, and which both pull from TransUnion.  I will also monitor my credit history on a revolving basis every 4 months, by pulling from each agency in a staggered basis (from for any evidence of unusual activity.  The two-week (bi-monthly) staggered scores will be my benchmark for now.  When I feel that my scores appear sufficiently awesome, I will probably pay a one-time fee to to get the “real deal” scores again.

So, here are my goals/plans for the next 6-12 months:

  1. Get a 770+ score based on TransUnion data (using free scores)
  2. Get a 785+ score based on TransUnion data (using free scores)
  3. Pass my wife’s score, if possible 🙂 [again based solely on the two TransUnion-based scores]
  4. When I feel the TU-based scores are high enough, pull one-time scores to see if I really satisfied goals 1,2, and 3 on scores that actually count.

Since I don’t use credit for anything but a mortgage, my score doesn’t really mater too much.  However, because credit scores can affect insurance rates for cars and home(s), I do care a little bit.  However, mostly I care about testing my theories about credit-score improvement. And I care about good-natured competition with my wife, too 🙂

Please don’t take offence if I sound like I have a cavalier attitude about credit scores.  I know that they can be incredibly important to people at various stages of life (such as when buying a first home).  I have learned that mental “game play” can be a powerful “idea formulation” tool for ultimately making smart financial decisions.  Temporarily framing the problem in terms of a “game” can help in separating emotion from cool-headed rationality.  I take investing very, very seriously — however I have also learned a lot by playing games on the side with relatively-small “fun money” financial accounts.  Credit and finance are serious and important topics.  Perhaps ironically, introducing a little levity in the process every now and then can be a useful method of making serious progress and (sometime) serious money.  At the end of the day I am serious…. however, before I take irrevocable actions, I often engage in fun as part of the decision-making process. When I commit to final decisions, I  strive to be extremely focused and grounded.

I hope to keep updating this blog about my “credit experiment.”  Hopefully my findings and observations may be of some use to you.  Until then, all the best to you and yours!





Why I didn’t get a 4.0 in College (The first time anyway)

My undergrad GPA was 3.97.  In all off my classes but one I earned an “A”.  I steered clear of the dreaded (by me) “A-“.  However, ultimately, I got one non-“A” grade — a “B-” in International Marketing.

I am proud of this “B-” for a variety of reasons.  But let me first tell you quick story…

I signed up for International Marketing because it satisfied two university pre-requisites 1) Multi-cultural. 2) Global.  Two birds, one stone.  It also looked to be an easy “A”.  Finally, it seem like a class that would have a good percentage of female students. Hey, a lonely engineer can and should play the odds!

Anyhow, things went well at first.  I was invited to several study groups, and I picked one based on the attractiveness and relative intelligence of the students.  I finished midterms with a solid A.

Everything seemed fine until the final exam.  The professor said that the final exam would be take-home, open-book, and open-note.  It would be graded on a curve.

I took my test home and started answering it.  It was a difficult and unusual test.  Questions like “The 5th P of marketing is _________” and “The example of _________ in Japan shows how the supply/demand curve can be invalid.”  I soon got contacts and calls from my teammates and classmates asking to “share answers.”  I refused.  They were baffled and said, “everyone is doing it, why shouldn’t you?”  I said, “I don’t cheat.” Some looked at me as if I had the plague.  I suppose they feared I would rat them out.  I did neither.  I did not cheat, and I did not rat.

I got a “D” on my final exam and initially a “C” for the course.  I went to the professor and complained that the 5th P was distribution AKA place, and so on.  He agreed to change my grade to “B-” because of my previous grades and my demonstration of knowledge.  As I said, I did not rat out my fellow students who had cheated.

It is ironic, perhaps, that I got a B- on an easy class.  International Marketing was not nearly as hard as Solid-State Physics 2. Believe me!  How does the barrier voltage of a PN junction respond to an increase of 10 degrees Kelvin? List the factors that determine your decision.  That is HARD.  What if the n-type doping is increased 10X?  That is relatively HARD.

I could have cheated and gotten an A, but I would not have earned an A. I probably could have ratted out those who I knew had cheated and also gotten an A — but that is simply not my style.  I got a “B-“, but I did it my way!

That was not the only take home exam in my undergrad.  All the rest were in engineering courses… and I was never asked to cheat.  I think that speaks to the psychology of most engineers. We, in general, do not lie, cheat, or steal.  That does not mean that there are not exceptions.  It only means that I have seen few.

What is the moral of my short tale? 1) Professors — Don’t give take-home tests. 2) When in doubt, trust Engineers. 3) Don’t cheat.  You will sleep easier.

What does this have to do with entrepreneurship?  A lot!  You WILL be faced with moral dilemma on a regular basis and you will feel like the fate of your business is on the line.  And it may well be. It is tough– tougher than I ever imagined. I have stretched the truth, and I have regretted it.  But I have also told the truth when I made a mistake on an Excel spreadsheet that it is very unlikely anyone would have noticed.  I have said “I made a mistake, attached to this email is the correction, I apologize for the oversight.”  And, OH!, the relief in hearing back from my client: “Thanks for pointing that out.  We appreciate your diligence.”  [These are not exact quotes, but they are my best recollection.]

I have learned, contrary to popular belief, that honesty can and does work. Further, to err is human. If you admit (your own personal) human error, the “good guys” will appreciate the candor. If you get significant backlash to admitting error, you are probably working with the wrong people.

I have learned to sculpt and even, sometimes, bend the truth.  However, the truth remains intact. Wordsmithing is necessary and important. Retaining personal integrity is even more important. Admitting and correcting mistakes is the best course of action — the sooner the better.  Just ask GM!


The Revised Entrepreneurship Lifestyle

Work, work, and more work.  Add a side of worry.  But, also excitement and elation.  Work is more often invigorating, rather than taxing.  However the days and nights can be long.  I’ve been pretty much working 80+ hours per week.  That may sound bad, but it’s not.  Why?  Because, as Frank said, “I did it my way!”

The beauty of the situation is that my company, Sigma1 Financial has several big things going for it:

  1. Investors.  Sigma1 now has seed capital for growth.
  2. Good, powerful references.  I’ve made some friends in high places during the HALO beta tests.  These are good guys who apparently liked me, my software, and my work ethic.
  3. Revenue.  Sweet, sweet revenue.  This means money to plow back into marketing, technology, and, yes, legal.  Sigma1’s law firm charges $250-$350 per hour — but they can because they are worth it.
  4. Insight.  More important even than the technology, because I have been obsessed with one thing for a long time — portfolios.  How to improve them by using everything I know, can learn, and can discover.  And I’ve discovered some very useful things.
  5. Technology. The single most powerful piece of technology is the tech to robustly optimize diverse, configurable, user-defined risk models.  The other cool tech is synthetic expected-return modelling that works in concert with semi-variance optimization.  And there is more cool tech, sometimes written in less than a week based on client requests.

So, it is summer and a spend most of my waking hours “working.”   Sometimes, though, the work feels like play.  Like tinkering. I get to explore ways to mitigate financial risk for real people and  institutions.  I get to work directly with portfolios large and small (well…. large and small are relative terms, eh?)  Lets just say many, many millions.  And I work hard to help make them better.  I don’t control anything; I just provide insights, with the help of the HALO Software Suite I developed.

The difference between now and then (say last year) is this:  I learn a lot almost every day.  I am learning  sh** tons!  Then, during corporate vassalage, I learned little of value at work.  My learnings then were largely trivial. I was not given much latitude to learn; I was leashed.

The leash is severed, by my own hand.  And I work as hard, or harder than ever in my life… for me, for my company, and for my investors.  And it is a roller coaster ride.  So far, it is a thrilling and largely fun ride.  When the ride is over, I keep getting back in the queue.  Each ride is different, but so far anyway, each ride does not disappoint.