topic Re: # of Accounts - Really help or hurt? in Understanding FICO® Scoring

# of Accounts - Really help or hurt?

BenH — Wed, 07 Nov 2012 19:03:49 GMT

So I just got my credit score for the first time from CreditKarma.

It says I have a 740. This is after applying for about 4 new cards over the past 2 months (mostly cards for points for a lot of new business travel I am doing).

Anyway, one of the areas I was marked low in was # of accounts. It says I have 13 accounts, with 9 closed.

It additionally states:

"Total accounts is another measure of your creditworthiness. Consumers with more credit accounts generally have better credit scores because it means more lenders are willing to grant credit. This metric represents the total number of accounts listed on your credit report. A breadth of different account types is indicative of good credit."

To get an A rating, it says I should have 21+ accounts. This seems counter-intuitive to me. Just because I can get credit, it means I should apply for a bunch of cards that I won't use? Applying for those cards will hurt my rating (in the short term) - but does it really drive my rating up long-term to have that many accounts?

CreditKarma seems to make its money by pushing CC apps on its members, so I'm not sure how reliable it is for them to tell me to have so many accounts.

Can someone give me the low down on this?

thanks!

Re: # of Accounts - Really help or hurt?

RobertEG — Wed, 07 Nov 2012 19:37:59 GMT

A vast oversimplification to just state that more accounts are better.

Some "number of accounts" issues to chew on...

1. Apart from pure FICO scoring, it is difficult to juggle many open accounts... meeting due dates, etc. So they can be negative from that perspective.

2. The scoring categories

Of the FICO basic scoring categories, no. of accts comes into real play wrt length of credit history, mix of credit, new credit, and util of credit.

a. Length (approx 15% total)

Oldest acct is but one acct, so no. of accts doesnt matter, but it does matter as to avg age of accts. Opening any new account will mathematicall lower your avg age of accounts. No way around it.

b. New credit (approx 10%)

Same general issues as withAAoA, but with the unknown of how "news" are defined by FICO, and weighted in scoring. Accts under one year, for example, may affect New Credit as being a newbie. There is little in the published literature of how New Credit is scored based on having "new" accounts, or what "new" credit even is.

c. Credit Mix (approx 10%)

Yes, showing a mix of different types of credit is scored, however it seems to be the consensus that multiple revolving of 2-3, and at least one installment, are the most significant, and therafter having many more does not significantly score as improved risk. Additionally, use of installment credit is not weighted highly by FICO, so becomes much less important to have multple installment accounts.

d. Util of Credit (30%)

For revolving, FICO scores both overall % util and the % util on individ accts, and additionally considers % revolv with reported balance.

One maxed out card will hurt under individ card scoring, but be smoothed out in calculting overall % util.

Having increased revolving accts gives a larger denominator in the % with balance ratio, and thus could make it easier to keep a lower % with bal.

A simple example: with one card, you are always at 0 or 100% with balance; with two cards, you can be at 0, 50, or 100%; with three, at 0, 33,66, or 100%, etc.

Thus, use of one card might have less impact from month to month.

Those, and many other factors, make generalizations about number of accounts kinda meaningless. It depends.

Re: # of Accounts - Really help or hurt?

llecs — Wed, 07 Nov 2012 19:49:30 GMT

OP, Welcome! Ignore CreditKarma's advice. It isn't FICO-related and the scores offered via CK are non-FICO scores (we call them FAKOs) called VantageScore and TransRisk. The advice on CK is often counter-productive and contradictive to FICO scoring. In some cases taking their advice will hurt your FICO.

21 accounts is too high. There are plenty of success stories in here of FICO scores in the 800s with only 3-4 accounts.

Re: # of Accounts - Really help or hurt?

BenH — Wed, 07 Nov 2012 19:56:04 GMT

Thanks for the exhaustive explanation. On Credit Karma it actually breaks down all of these categories as separate:

# of Accounts

Avg Length

Util of Credit

As well as some other categories that don't map to what you listed.

I assume they group your "new credit" under Avg. Length - they also show the new inquiries which may also map to that.

I see nothing there which maps any factor to the "credit mix" as you put it - although you can see a breakdown of your mix.

My questions was specifically with the "# of Account" that they mention. You don't seem to map that as a category.

My mix an util are both good. My length and new credit is a bit hit right now because I just got a few new cards.

My total accounts however it being rated poorly becaues I *only* have 13.

Would it be better to open a few additional CC now so all my hard pulls are together (as well as my length) so that in another year or so my total accounts are higher?

thanks

Re: # of Accounts - Really help or hurt?

BenH — Wed, 07 Nov 2012 19:59:22 GMT

@illecs - thanks

CK reports that they are giving a TU score of 740 and a VantageScore of 915.

At this point I guess I will wait until I have some time to request my credit report and comb through it (over thanksgiving maybe) and then come and post back with some questions as to what I might be able to do to improve it.

Thanks.

Re: # of Accounts - Really help or hurt?

BenH — Wed, 07 Nov 2012 20:49:03 GMT

@illecs - you were right I checked again and it wasn't TransUnion it was Transrisk!

So curiousity got the better of me and I signed up for my free score on this site.

It showed that I had an Equifax score of 793.

I then signed up for a free trial on ScoreSense which reported the following:

TU - 740

Equifax - 773

Experian - 772

Why would myFico and Scoresense return to me TransUnion scores 20 points different when queried just minutes apart?

Re: # of Accounts - Really help or hurt?

llecs — Wed, 07 Nov 2012 20:59:54 GMT

The EQ FICO on here is used by nearly all of the mortgage lenders out there.

The scores from ScoreSense are not FICO scores. They are FAKOs and lenders don't use them at all.

You can only buy your EQ FICO from myFICO.com, your lender, or Equifax.com (they push their FAKO, but a couple of products still offer a FICO. Buyer beware).

You can only buy your TU FICO from myFICO.com or your lender.

You cannot buy your EX FICO from anywhere as of a few years ago. Experian blocked consumer access to your own scores, though your lender can still get it for you.

Aside from the above, some banks and CUs offer a FICO at a free or reduced price. You can also get your EQ FICO from Unitus Community Credit Union, Digital Credit Union, and M&T Bank. You can get your TU FICO (TU08..newer version) from Wal-Mart if you have their CC. And you can get your EX FICO from PA State Employees Credit Union (aka PSECU) for free if you have their checking acct. There are other banks and CUs out there that offer a FICO as part of a benefit. Check with your local lender to see if they do so.

Scores from other sources are not FICO scores. Any service that offers all 3 scores together aren't FICO scores at all. 99% of the services out there offer scores, but none are FICO scores and lenders don't use them. They also offer advice around these FAKO scores and the advice is often counter-productive to your own FICO.

Re: # of Accounts - Really help or hurt?

BenH — Wed, 07 Nov 2012 21:51:19 GMT

@ illecs

Thanks for this info. I'm surprised that these other sites can get away with giving you these FAKOs and claim they are actual scores. I didn't know that the only real place for an Equifax score was from myFICO or Equifax. Not that I doubt you - but how would I know that and what makes myFico able to provide the real info? Are they owned by EQ?

So MyFico shows me at 793 for Equifax

I signed up at TU and they show me at 915

Both of these are much better than what these so-called FAKOs are showing me. I guess they are in the business of making you worry about your credit score, huh?

Now to find a way to get my Experian so I know for sure.

Really appreciate your answers!

Re: # of Accounts - Really help or hurt?

BenH — Wed, 07 Nov 2012 22:22:52 GMT

I went ahead and paid the $1 for my experian score too - 799.

So I just want to confirm

Experian - 799 - from Experian

TransUnion - 915 - from TU

Equifax 793 - from myFico

These then would be my real FICOs as all these are accurate places, yes?

Is there someplace I could learn more about the ranges of scores? I am most interested in why my TU is so much higher than the others? Is this typical?

thanks!

EDIT: I was just reading more and it seems that TU scores can't be above 850 - so how in the world did TU show me a score of 915!?!?

Re: # of Accounts - Really help or hurt?

llecs — Wed, 07 Nov 2012 23:58:19 GMT

The score from TransUnion.com is a FAKO called a VantageScore. It runs on a scale of 501-990.

The score from Experian.com is also a FAKO. They offer two FAKOs: a PLUS score and a VantageScore.

Nobody uses a PLUS score. A teeny tiny minority use Vantage. There are one or two out there that'll touch it.

Ignore both, IMO.

The Score from Equifax.com would either be a FICO or a FAKO. They sell FAKOs, and they tend to hide links to their FICO. If it doesn't say "FICO" next to the score, then it isn't.

Re: # of Accounts - Really help or hurt?

BenH — Thu, 08 Nov 2012 00:19:51 GMT

I got my Equifax score from myFICO using the trial service.

Can I consider that accurate?

Re: # of Accounts - Really help or hurt?

llecs — Thu, 08 Nov 2012 00:44:20 GMT

MyFICO offers nothing but FICO scores. Most all mortgage lenders use that EQ FICO version.

Re: # of Accounts - Really help or hurt?

bettercreditguy1 — Fri, 09 Nov 2012 12:27:53 GMT

Another perspective. Sometimes when they refer to 21 plus accounts, that could mean earlier/closed/paid off trade lines as well. If that is the case, that is just refering to a number of various credit types over a longer period of time. I have 28 trade lines, of which about 65% are paid and closed. They consist of auto loans, store cards, home mortage(s) and unused/closed credit cards. The other big factor here is AAOA. Since auto, mortage, and credit lines do not report forever, your AAOA can be greatly reducedif you do not have a very long history with your current credit insturments. For example, one credit card open 20 years and one 2 years. 20 + 2 =22. 22/2 = 11 years AAOA.

Now close card 1, remaining is card 2 only. Your AAOA is 2 Years. This dramatically effects your Fico Score. So as you see, the more trade lines you have had, the less that

AAOA goes down when one account ages off of your credit report.

Re: # of Accounts - Really help or hurt?

llecs — Fri, 09 Nov 2012 16:32:07 GMT

bettercreditguy1 wrote:
Another perspective. Sometimes when they refer to 21 plus accounts, that could mean earlier/closed/paid off trade lines as well. If that is the case, that is just refering to a number of various credit types over a longer period of time. I have 28 trade lines, of which about 65% are paid and closed. They consist of auto loans, store cards, home mortage(s) and unused/closed credit cards. The other big factor here is AAOA. Since auto, mortage, and credit lines do not report forever, your AAOA can be greatly reducedif you do not have a very long history with your current credit insturments. For example, one credit card open 20 years and one 2 years. 20 + 2 =22. 22/2 = 11 years AAOA.
Now close card 1, remaining is card 2 only. Your AAOA is 2 Years. This dramatically effects your Fico Score. So as you see, the more trade lines you have had, the less that
AAOA goes down when one account ages off of your credit report.

Per FICO, closing a CC won't have any impact at all on AAoA since closed accounts are still factored in. Per CreditKarma, they calculate AAoA differently. CK's version of AAoA includes open accounts only, and yet another reason to ignore it (IMO).

Re: # of Accounts - Really help or hurt?

Imua — Mon, 12 Nov 2012 05:51:49 GMT

BenH wrote:
@ illecs

Thanks for this info. I'm surprised that these other sites can get away with giving you these FAKOs and claim they are actual scores. I didn't know that the only real place for an Equifax score was from myFICO or Equifax. Not that I doubt you - but how would I know that and what makes myFico able to provide the real info? Are they owned by EQ?

So MyFico shows me at 793 for Equifax

I signed up at TU and they show me at 915

Both of these are much better than what these so-called FAKOs are showing me. I guess they are in the business of making you worry about your credit score, huh?

Now to find a way to get my Experian so I know for sure.

Really appreciate your answers!

as you've discovered by now, scores obtained at myFICO are real FICO scores.

i recently purchased both TU and EQ scores here at myFICO. as noted below in my sig, my EQ is 793 (like yours :smileyhappy: )

i have 7 TL's on my CR's: 2 BofA, 1 chase, 2 macy's (store and AMEX),1 sam's club and 1 LOC (overdraft) with my credit union.

if any scoring model told me i had to have 21 cc/s or TL's to increase my score, i would certainly ignore that advice! no way i want that many to keep track of.