@astrangerwcandy wrote:
Just curious as to people's opinions as to the sweet spot for the number of open revolving credit accounts one should have open as far as giving yourself the best score/profile?
No such thing as indicated in the many "number of cards" threads. It's not the number itself that matters. Select cards based on your needs/wants and what you can reasonably manage. The bigger concern with creditors is amount of credit extended for a given credit profile and what that amount is even for a given profile can vary from creditor to creditor.
"Sweet spot" is highly subjective and you can't just poll to determine yours. You need to use your specific criteria and scoring isn't a useful metric since there's no causal relationship. You can have excellent scores with just a few cards. You can have excellent scores with a large number of cards. You can have excellent scores with any number in between. You can also have terrible scores with any number of cards.
The only general advice with regard to number of cards is "at least 2-3 for scoring purposes". IIRC that's so one can leverage the "all but one reporting 10% or less" advice based on number of reporting balances.
Where a larger number of cards can have some benefit is in stengthening AAoA. As a quick example, consider how adding a new account to a profile with just 1 account that is 10 years old impacts AAoA versus adding a new account to a profile with 10 accounts that are 10 years old each. In each situation the starting AAoA is 10 years. Granted, new accounts don't count as having a 0 age but we'll use that assumption to keep the math simple (the entire example is oversimplified):
1 account, 10 years old + new account, (10 + 0) / 2 = 5 year AAoA
10 accounts, 10 years old each + new account, (10 * 10 + 0) / 11 = 9 year AAoA
You have to be careful singling out one factor on its own and consider that it's the sum of all the factors that matter. Even AAoA is just one factor.
@astrangerwcandy wrote:
Followup question, do you think it is generally better to have more accounts with midrange limits or fewer cards with higher limits?
I don't think it really matters. I'd suggest focusing on the known factors versus specific situational comparisons where we don't know for certain how scoring models (which are not all the same anway) favor one over the other, if at all.
http://www.myfico.com/crediteducation/whatsinyourscore.aspx
There seems to be a common assumption that creditors match limits which isn't correct. Limits factor into utilization. Utilization factors into one's credit profile. The limit that one qualifies for when apping or requesting a CLI all depends on one's credit and income versus a given creditor's criteria.
