@thelethargicage wrote:
@longtimelurker wrote:
@09Lexie wrote:FICO 08 does score open and closed accounts differently than its predecessor. It appears that a small number of TLs -either open or closed will be viewed negatively. Theoretically, a person with a thicker file can afford to close a higher number of TLs .
Number of accounts
Ethan Dornhelm of FICO said that under FICO 8, having "a relatively large number of open accounts in good standing will be viewed more favorably than having only a few accounts in good standing." Having only a small number of accounts that are both open and active will now have a more negative effect on your score.
Accounts that are open but inactive
FICO 8 is more aware of which accounts have been inactive with a 0 balance for a long time, and those accounts will factor less into your score.
So taken together I think that means the Closing Credit Card link (and my usual advice) isn't right any more, at least for 08 scorers. It seems to be that:
For score maximization: do not close credit cards yourself and put small charges on each regularly (no longer just to prevent an issuer closing them, but for score purposes as well).
Do you need to let multiple accounts report a small balance? Or can you still get away with letting only 1 card report a balance?
No, they just shouldn't show a zero balance for a long period of time. I prefer to use those cards quarterly or even for the small reoccurring charge like Netflix
@user5387 wrote:
@09Lexie wrote:FICO 08 does score open and closed accounts differently than its predecessor. It appears that a small number of TLs -either open or closed will be viewed negatively. Theoretically, a person with a thicker file can afford to close a higher number of TLs .
Number of accounts
Ethan Dornhelm of FICO said that under FICO 8, having "a relatively large number of open accounts in good standing will be viewed more favorably than having only a few accounts in good standing." Having only a small number of accounts that are both open and active will now have a more negative effect on your score.
Accounts that are open but inactive
FICO 8 is more aware of which accounts have been inactive with a 0 balance for a long time, and those accounts will factor less into your score.
This is interesting information, but I wonder how useful it is in practice.
For example, the gain in having 10 CCs instead of 5 CCs might be very small or nonexistent.
A person who chases after CCs to improve scores may actually do more harm than good, because of the costs of inquiries, new tradelines, and reduced AAoA.
Maybe CK is on to something with their 22+ TL is an A.
Seriously, I think it's more for the profile with fewer than 3/4 open cc's. If the rest of the profile consists of closed and/or no activity cc's it would be be difficult for FICO to score ones ability to pay multiple cc's for any lengty of time.
Just how I'm reading the tea leaves.
It sounds like rotating which card carries a balance will be the better strategy for maximizing this FICO score.
What a PITA.
Starting Score: All Under 590 (8/2011)