Getting Mixed Reviews

[dpechal]

hello again everyone,

     I have been researching this for a while, and just can't get a straight answer.  "Can multiple open Credit Cards decrease your credit score if they are all in good standing and are at a $0 balance".

Any help would be appreciated.

Thanks,

DPechal

[john398]

adding inquiring and lowering your average age will take a hit but how much is different for everyone

[Revelate]

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@dpechal wrote:

hello again everyone,

     I have been researching this for a while, and just can't get a straight answer.  "Can multiple open Credit Cards decrease your credit score if they are all in good standing and are at a $0 balance".

Any help would be appreciated.

Thanks,

DPechal

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Short answer: probably.  If you have an extreme number of cards which puts you outside the norms when FICO or lenders compare you to their statistical data, then you're going to get penalized for it.

Unfortunately we really don't know if that number is 10 (probably OK), 15 (maybe OK), or 20 (think all bets are off here but we just don't know anecdotally).  I suspect the average consumer has 6-7ish open credit cards at any given point; personally I like being a needle in a haystack, so I doubt I'll ever go above that number as I just don't see much rational purpose in doing so.

[tntexans72]

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@dpechal wrote:

hello again everyone,

     I have been researching this for a while, and just can't get a straight answer.  "Can multiple open Credit Cards decrease your credit score if they are all in good standing and are at a $0 balance".

Any help would be appreciated.

Thanks,

DPechal

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If the account is NEW or recently opened...than your score will mostly definitely be effected. New accounts will ding your score cause it will lower your AAoA.

[john398]

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@Revelate wrote:

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@dpechal wrote:

hello again everyone,

     I have been researching this for a while, and just can't get a straight answer.  "Can multiple open Credit Cards decrease your credit score if they are all in good standing and are at a $0 balance".

Any help would be appreciated.

Thanks,

DPechal

---

Short answer: probably.  If you have an extreme number of cards which puts you outside the norms when FICO or lenders compare you to their statistical data, then you're going to get penalized for it.

Unfortunately we really don't know if that number is 10 (probably OK), 15 (maybe OK), or 20 (think all bets are off here but we just don't know anecdotally).  I suspect the average consumer has 6-7ish open credit cards at any given point; personally I like being a needle in a haystack, so I doubt I'll ever go above that number as I just don't see much rational purpose in doing so.

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so your saying if you have a 30 open cards you get dinged even if your util is low? I am a little confused there....I can see them using the excuse of enough credit for income...but the shear number makes me wonder where in fico that is shown

[Revelate]

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@john398 wrote:

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@Revelate wrote:

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@dpechal wrote:

hello again everyone,

     I have been researching this for a while, and just can't get a straight answer.  "Can multiple open Credit Cards decrease your credit score if they are all in good standing and are at a $0 balance".

Any help would be appreciated.

Thanks,

DPechal

---

Short answer: probably.  If you have an extreme number of cards which puts you outside the norms when FICO or lenders compare you to their statistical data, then you're going to get penalized for it.

Unfortunately we really don't know if that number is 10 (probably OK), 15 (maybe OK), or 20 (think all bets are off here but we just don't know anecdotally).  I suspect the average consumer has 6-7ish open credit cards at any given point; personally I like being a needle in a haystack, so I doubt I'll ever go above that number as I just don't see much rational purpose in doing so.

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so your saying if you have a 30 open cards you get dinged even if your util is low? I am a little confused there....I can see them using the excuse of enough credit for income...but the shear number makes me wonder where in fico that is shown

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FICO (non-cynically) is considered to be a risk analysis.

If you have something, regardless of what that is, that happens to be abberent from the averages, that will be noted.  It will then be tracked against other consumers and you'll be rated against them.  I'll simply toss it out there, is it easier to manage 6 cards or 26?  Who needs 26 cards (or 30)?  Why do they have them?  Have others with that many open accounts been a problem in the past?  

Where in our piles of data are the interesting spots for customer trouble as compared to the number of open revolving tradelines they have?

All of those things could be considered, it's nearly guarunteed that the last one absolutely is, and probably just like that too.

It gets more lame if you take the cynic's viewpoint, namely that FICO is a profitability index rather than a risk one.  If a consumer has 20+ open credit cards, statistically how profitable is that customer going to be outside of whatever annual fee is charged?  Odds are more than half those cards are losing money on having this individual as a customer, why should we grant that individual another one when it hurts the lender (FICO's customer)?

Certainly lenders themselves can and likely do think like this even if FICO doesn't.  It may or may not be factored into the algorithm, but I'd bet a goodly sum that it is in underwriting by most lenders... and that'll get you a denial nearly as quickly as a shoddy FICO score will, so it's probably irrelevant as to whether FICO considers it or not.

My thoughts anyway, could be wrong.

[SanityKills]

Here's my unofficial take.

Let's look at how my credit score has decreased over time.  I had two cards and a car loan for about a year.  My score was around 738-750 when I went to get a loan on a house and had my credit checked by a lender. I had the benefit of being on someone's old Sears card 11 years ago and it's seen on my report as to having a credit history for at least that much.  So I had 2 cards and an 11 year credit history.

Since about 2 years ago I've had several new cards for a total of about 12 new cards, 7 of which remain open.  If you look at the average age of credit I'm guessing that you divide that 11 year credit history by 12 and you'll get an average age of open credit of about a year. I'm sure it's slightly different but I think you get the point.

Now I have 7 lines of credit, yes, but my score  has dropped about 70 points.  In my opinion, that's okay though.  I have no intentions of getting any huge lines of credit so I was willing to take the hit and start with a year or two old credit and let them age over the years. In a few years I don't think it's going to be a problem but I expected the hit on my score for awhile.

(Edit: I'm judging all this from my CreditKarma FAKO since it seems to be the only one of my credit monitoring services which seems to respond to changes in my accounts.)

[SanityKills]

Also, since my average age of open credit has diminished I also have established payment histories which I didn't before which will pad the amount that my score decreases.  There are pie charts on the net that describe how much impact each category has in regards to your FICO.  Balances DO impact your score but only a percentage of your score.

I notice mine go up about 5 points if I have all my cards paid off before the statements. 

[pizzadude]

FICO takes the Average Age of both Open and Closed accounts into consideration when calculating your AAoA.   Many fako scores don't include closed accounts but they are included by FICO.

[Anonymous]

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@dpechal wrote:

     I have been researching this for a while, and just can't get a straight answer.  "Can multiple open Credit Cards decrease your credit score if they are all in good standing and are at a $0 balance".

Any help would be appreciated.

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I do not believe it is so much the number of cards, as long as those accounts have a good history.  Once you combine all of the credit limits though it will start to have a negative effect.  Any lender will compare your income to available credit and start to become concerned about granting you a larger CL when they are no in sync.  If you are making 100k a year, a 50k line of cards is not much, but a 500k line would seem excessive. 

Personally my total debt (auto loan, student loans [deferred for now] and cards) is 65k, I make 42k as a government employee.  That is not as bad as it sounds, the cost of living where I live is low.  The total limit on all my cards is 40k.  How far are lenders willing to go in relation to your income?  That percentage would probably depend on your score/history.