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Optimal number of cards to raise credit score?

Moderator

Re: Optimal number of cards to raise credit score?


CreditScholar wrote:

The ideal number is between 3-5, but they all need to have high CLs. Having 3 cards as a "magic number" doesn't mean anything if they all have toy limits.

 

The reason people cite 3 as the number for a high FICO has nothing to do with the actual number of cards. You can have a high FICO with any number, but the number of cards you have says something about you as a consumer.

 

People who have 10+ cards typically have some with low limits, are in the rebuilding stages, binge on credit at least semi-regularly, etc. Also it's a lot harder for most people to use and manage that many cards properly. The chances of screwing up something increases with each additional card since it's just one more bill, due date and payment you need to keep track of. There are exceptions to this, but it's true in the vast majority of cases.

 

On the other hand people with 3-5 cards with high limits typically are very stable and conservative. They aren't constantly applying for new cards, don't feel the need to jump on the bandwagon every time there's a new sign-up offer (probably because they have enough cash not to care), are probably pushing a decent amount through their cards regularly, and have an overall long-term card strategy.

 

If someone has 10 cards with limits of 2000, 2500, 1500, 4000, 5000, 3500... it signifies that they're not fully established yet.

 

If you have a Chase Sapphire Preferred (20k limit), Amex SPG (25k limit), and say an Amex Platinum or JP Morgan card... that also says something about you too. These are the kinds of customers that companies like Chase and Amex go out of their way to get, and it's for good reason too.


Apples and Oranges.

 

FICO does not care about what your CL's are, at all.  It's all about revolving utilization.

 

That said, lender underwriting does indeed look at what your CL's are.

 

I won't suggest otherwise to your analysis on statistical data, personally I'd like to find out what the national average is for numbers of cards, and just hold that and no more.  Read it was something like 4, and that the high FICO folks had something like 7 but I don't know for certain.  I like being "normal" on my credit reports, even though I know I'm probably not for various reasons.

 

 

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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Message 11 of 18
Moderator Emeritus

Re: Optimal number of cards to raise credit score?

Here is an interesting (at least I think so) read on Characteristics of FICO High Achievers.

Message 12 of 18
Valued Contributor

Re: Optimal number of cards to raise credit score?


Revelate wrote:

CreditScholar wrote:

The ideal number is between 3-5, but they all need to have high CLs. Having 3 cards as a "magic number" doesn't mean anything if they all have toy limits.

 

The reason people cite 3 as the number for a high FICO has nothing to do with the actual number of cards. You can have a high FICO with any number, but the number of cards you have says something about you as a consumer.

 

People who have 10+ cards typically have some with low limits, are in the rebuilding stages, binge on credit at least semi-regularly, etc. Also it's a lot harder for most people to use and manage that many cards properly. The chances of screwing up something increases with each additional card since it's just one more bill, due date and payment you need to keep track of. There are exceptions to this, but it's true in the vast majority of cases.

 

On the other hand people with 3-5 cards with high limits typically are very stable and conservative. They aren't constantly applying for new cards, don't feel the need to jump on the bandwagon every time there's a new sign-up offer (probably because they have enough cash not to care), are probably pushing a decent amount through their cards regularly, and have an overall long-term card strategy.

 

If someone has 10 cards with limits of 2000, 2500, 1500, 4000, 5000, 3500... it signifies that they're not fully established yet.

 

If you have a Chase Sapphire Preferred (20k limit), Amex SPG (25k limit), and say an Amex Platinum or JP Morgan card... that also says something about you too. These are the kinds of customers that companies like Chase and Amex go out of their way to get, and it's for good reason too.


Apples and Oranges.

 

FICO does not care about what your CL's are, at all.  It's all about revolving utilization.

 

That said, lender underwriting does indeed look at what your CL's are.

 

I won't suggest otherwise to your analysis on statistical data, personally I'd like to find out what the national average is for numbers of cards, and just hold that and no more.  Read it was something like 4, and that the high FICO folks had something like 7 but I don't know for certain.  I like being "normal" on my credit reports, even though I know I'm probably not for various reasons.

 

 


It's actually not apples and oranges at all. The OP simply asked why people said 3 cards is often cited as an ideal number. This is about correlation, not causation.

 

People tend to think of 3 or so simply because of the kinds of people who often fit this profile. I'm not referring to 3 mediocre cards, but instead a handful of quality ones. It's also a lot easier to manage and maintain lower util with high CLs.

 

Sure FICO treats 10% util the same whether it's 25/250 or 5000/50000. This much is true. However it's a lot more difficult to stay under 10% util with a $250 CL than a $50,000. The previous would require a lot more micro-managing, and not everyone is willing or able to do this. The latter doesn't have to worry about it that much, unless they charge more than $5k per month.

 

It's very much like seeing someone driving a Ferrari. He's not rich because he owns a Ferrari, but instead driving a Ferrari indicates that he is rich. This is the same but with credit cards. Having a few credit cards doesn't make you have a high FICO, but it reflects the habits of people who are likely to have high FICOs. As I said previously, it's correlation not causation.

 

 

EX 798, EQ 789, TU 784
American Express Platinum (NPSL) || Bank of America Privileges with Travel Rewards Visa Signature - $23,200 CL
Barclays American Airlines Aviator Red World Elite Mastercard - $20,000 CL || Chase IHG Rewards World Mastercard - $25,000 CL
Chase Sapphire Preferred Visa Signature - $12,700 CL || Chase United MileagePlus Club World Elite MasterCard - $26,500 CL
Citibank Hilton Reserve Visa Signature - $20,000 CL || J.P. Morgan Ritz Carlton Visa Signature - $23,500 CL
Message 13 of 18
Moderator

Re: Optimal number of cards to raise credit score?

Perhaps, but I can state unilaterally that for my rationale of 3 cards, it has nothing to do with the three major lenders, or that my birthday is in March, or that we're living on the 3rd Rock from the Sun, or that I've seen a Oujia board 3 times in my entire life.

 

The other major proponents of the 3 card strategy on these forums, are also surpsiringly analytical and I sort of doubt it's any correlation with the three major providers given that the conventional wisdom here is that getting a card from 3-4 networks is not important.

 

Kinda silly debate and neither of us is going to be swayed from our opinions I suspect; however, suggesting that those of us who are recommending 3 cards from a FICO building perspective are being emotional (ooh, 3 it's so pretty!) instead of rational is a little far fetched I think in this case.

 

 

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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Message 14 of 18
Established Contributor

Re: Optimal number of cards to raise credit score?


Revelate wrote:

Perhaps, but I can state unilaterally that for my rationale of 3 cards, it has nothing to do with the three major lenders, or that my birthday is in March, or that we're living on the 3rd Rock from the Sun, or that I've seen a Oujia board 3 times in my entire life.

 

The other major proponents of the 3 card strategy on these forums, are also surpsiringly analytical and I sort of doubt it's any correlation with the three major providers given that the conventional wisdom here is that getting a card from 3-4 networks is not important.

 

Kinda silly debate and neither of us is going to be swayed from our opinions I suspect; however, suggesting that those of us who are recommending 3 cards from a FICO building perspective are being emotional (ooh, 3 it's so pretty!) instead of rational is a little far fetched I think in this case.

 

 


There's no optimal number, period.

 

You want several active CC trade lines for a couple of reasons:

 

1) Build solid, clean and active trade lines

 

2) Manage utilization

 

3) Backup (different issuers, different networks, etc)

 

4) Rewards (my optimzal rewards strategy involves 3 major CCs and 1 store card -- Amex BCP, Citi Forward, Sallie Mae 2%, Target Red Card)

 

I have at least 12 active CC trade lines, but I only use 4-5 in a given month -- the rest get sock drawed until special uses (i.e Small Business Saturday, staying at a Hilton Property, etc.).

 

FYI -- I should note that the not all of the above reasons are Fico maximizing; if they are not, they are finance maximizing (i.e. backup and rewards).

Message 15 of 18
Valued Contributor

Re: Optimal number of cards to raise credit score?

At least 3 is the number (if you can consider it a number). You can have more if you like. Having less doesn't preclude a high score. Why do I say three? Many people have seen immediate fico gains from going to 3 cards from 2 even with new account and inquiry reporting. The same cant be said of 4 cards from 3.
               LIMITS IN CARD DESCRIPTIONS
Message 16 of 18
Moderator

Re: Optimal number of cards to raise credit score?

Stan: the debate was on minimum number of cards to raise FICO score, not overall.  We're (or at least I was) speaking from a building / rebuilding vantage point, YMMV. Really once you hit 700 and 3+ tradelines it's probably a wash, but for thinnish files:

 

1 card: suboptimal, this is pretty much unarguable from the amount of data collected here.

2 cards: appears to be close but not quite.  This is the realistic minimum number of revolving tradelines to have in my opinion at least.

3 cards: for just what Crashem said, is probably better, in addition to the aggregate tradeline requirements that underwriting tends to have at lending institutions.  Put simply you build payment history faster on 3 tradelines than 2.

 

Managing utilization: more tradelines or larger CL's is a convenience factor, nothing more.  Plus there are silly tricks you can do to hide utilization anyway for the week or so it takes a tradeline to report, it's even easier if you have some disparity in statement dates although admittedly that requires more juggling.

 

The rest I agree with you, especially payment history: the undisputed king of raising FICO scores.  Revolving utilization is really a distant second given the incredibly massive penalties of derogatory marks.

 

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


Take the myFICO Fitness Challenge
Message 17 of 18
Valued Contributor

Re: Optimal number of cards to raise credit score?


Revelate wrote:

Stan: the debate was on minimum number of cards to raise FICO score, not overall.  We're (or at least I was) speaking from a building / rebuilding vantage point, YMMV. Really once you hit 700 and 3+ tradelines it's probably a wash, but for thinnish files:

 

1 card: suboptimal, this is pretty much unarguable from the amount of data collected here.

2 cards: appears to be close but not quite.  This is the realistic minimum number of revolving tradelines to have in my opinion at least.

3 cards: for just what Crashem said, is probably better, in addition to the aggregate tradeline requirements that underwriting tends to have at lending institutions.  Put simply you build payment history faster on 3 tradelines than 2.

 

Managing utilization: more tradelines or larger CL's is a convenience factor, nothing more.  Plus there are silly tricks you can do to hide utilization anyway for the week or so it takes a tradeline to report, it's even easier if you have some disparity in statement dates although admittedly that requires more juggling.

 

The rest I agree with you, especially payment history: the undisputed king of raising FICO scores.  Revolving utilization is really a distant second given the incredibly massive penalties of derogatory marks.

 


+1 again to Revelate.  Way more detailed than I explained it.  I blame the ipad and its crappy keyboard/formatting.  Better watch out as I am on computer at the moment.

               LIMITS IN CARD DESCRIPTIONS
Message 18 of 18