Ratio of open credit accounts

[jluthma2]

I pulled my credit score and it was a 752. I know this is good but the report that came with the score had a section saying what was hurting my credit score. One thing they said was that I had too many open credit accounts with balances on them. The report said that "FICO High Achievers have an average of 3 credit accounts carrying a balance". I have 14 different credit accounts/cards that are open/active.

-Chase Credit Card, average balance = $1500, limit = $8500, used as my primary spending card

-Citi Credit Card, average balance $200, limit = $9000, used from time to time

-Best Buy Credit Card, current balance $900, limit = $2000, only used once when I purchased my TV to get no interest for 36 months

-Kohls Credit Card, average balance $50, limit = $3000, used some months when I get an extra 10% off

-Credit union car loan, current balance = $13000, original balance = $16000

-Chase Home Loan, current balance = $137000, original balance = $139000

-Student loan through private bank, current balance = $18000, original balance = $22000

-(7) Department of Education loans, current balance = $16000, original balance = $21000 (they are reporting my loan as 7 separate accounts so that is one thing that is causing a high number of accounts).

Now I have heard in the past that a lot of credit accounts is not a bad thing because a large contributor to credit score is the ratio of your total credit limit on these accounts to the average balance that I have. In addition to the Kohls Credit Card, I also have other stores like Banana Republic, JCPenney, Elder Beerman, & Zales. It just happens that I did not have a use these in the past month so they show $0 balance, or my active credit accounts number would have been higher than 14.

So my main questions is which is correct. Is it okay to have all of these cards open, but just don't use them? Or should I close them down and only use my main Chase credit card for everything? Or is it okay to have these accounts, but if I use my Kohls account one month, I shouldn't use my Banana account until the next month? Any advise/direction that anyone can give me would be appreciated no matter how little. Thanks!

[NewtoCredit80]

Suggested approach is to pay in full all your cards except one before the bill is generated so that only one credit card reports balance for each month.
You have 4 cards reporting balance.
Anyway 752 is a g8 score.

[myjourney]

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@jluthma2 wrote:

I pulled my credit score and it was a 752. I know this is good but the report that came with the score had a section saying what was hurting my credit score. One thing they said was that I had too many open credit accounts with balances on them. The report said that "FICO High Achievers have an average of 3 credit accounts carrying a balance". I have 14 different credit accounts/cards that are open/active.

-Chase Credit Card, average balance = $1500, limit = $8500, used as my primary spending card

-Citi Credit Card, average balance $200, limit = $9000, used from time to time

-Best Buy Credit Card, current balance $900, limit = $2000, only used once when I purchased my TV to get no interest for 36 months

-Kohls Credit Card, average balance $50, limit = $3000, used some months when I get an extra 10% off

-Credit union car loan, current balance = $13000, original balance = $16000

-Chase Home Loan, current balance = $137000, original balance = $139000

-Student loan through private bank, current balance = $18000, original balance = $22000

-(7) Department of Education loans, current balance = $16000, original balance = $21000 (they are reporting my loan as 7 separate accounts so that is one thing that is causing a high number of accounts).

Now I have heard in the past that a lot of credit accounts is not a bad thing because a large contributor to credit score is the ratio of your total credit limit on these accounts to the average balance that I have. In addition to the Kohls Credit Card, I also have other stores like Banana Republic, JCPenney, Elder Beerman, & Zales. It just happens that I did not have a use these in the past month so they show $0 balance, or my active credit accounts number would have been higher than 14.

So my main questions is which is correct. Is it okay to have all of these cards open, but just don't use them? Or should I close them down and only use my main Chase credit card for everything? Or is it okay to have these accounts, but if I use my Kohls account one month, I shouldn't use my Banana account until the next month? Any advise/direction that anyone can give me would be appreciated no matter how little. Thanks!

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Welcome to the forum

No easy way to say this but if my math is right and I did it rather quickly

you have a total credit limit of 220.500

Of which your using 186,650

Your overextended sorry they are correct

[NewtoCredit80]

Loans are not revolving balances. :-)
OP's util is below 10%.

[myjourney]

OP question was according to CR it stated what was hurting his scores 

all loans and CC's are factored into CR even tho OP has a great mix and score the balances do have an effect

[longtimelurker]

As NewtoCredit says, paying before the bill cuts on all but one card (probably) maximizes the credit score.  This is only needed when you are applying for something, and with your score probably isn't needed anyway.  (Paying early has a cost because you could be earning interest on that money).

Also, the programs are designed to always give some negative reason (i.e. a way your score could be improved) so whatever is listed is not necessarily important or something to worry about.  Basically you look very good.

[longtimelurker]

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@myjourney wrote:

OP question was according to CR it stated what was hurting his scores 

all loans and CC's are factored into CR even tho OP has a great mix and score the balances do have an effect

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But the reason was too many accounts with balances, which is very different from being over-extended,  I've had this with 5 cards reporting a total balance of  about $100, on a $250K total CL .  ALso, you referred to a total CL, and I don't think the original loan amount can be treated like a CC CL in this way.

[myjourney]

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@longtimelurker wrote:

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@myjourney wrote:

OP question was according to CR it stated what was hurting his scores 

all loans and CC's are factored into CR even tho OP has a great mix and score the balances do have an effect

---

But the reason was too many accounts with balances, which is very different from being over-extended,  I've had this with 5 cards reporting a total balance of  about $100, on a $250K total CL .  ALso, you referred to a total CL, and I don't think the original loan amount can be treated like a CC CL in this way.

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Question was ratio of open accounts

Everything is included in it not just CC's but I could be wrong

Either way OP has a great mix which is reflected in scores I do agree that it saying its hurting is not necessarily true tho

[omskillet]

There is  an awesome thread somewhere where someone shows the effects of number of accounts with balances vs. score increase/decrease. It worth a read. Basically the more accounts with balances you have the more creditors you owe. Remember your score is a metric of how you rank compared to people with similar credit profiles. At 758 I bet if you got your number of cards with balances down to 1 or 2 you'd be in the 780 range.  

[indiolatino61]

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@jluthma2 wrote:

I pulled my credit score and it was a 752. I know this is good but the report that came with the score had a section saying what was hurting my credit score. One thing they said was that I had too many open credit accounts with balances on them. The report said that "FICO High Achievers have an average of 3 credit accounts carrying a balance". I have 14 different credit accounts/cards that are open/active.

-Chase Credit Card, average balance = $1500, limit = $8500, used as my primary spending card

-Citi Credit Card, average balance $200, limit = $9000, used from time to time

-Best Buy Credit Card, current balance $900, limit = $2000, only used once when I purchased my TV to get no interest for 36 months

-Kohls Credit Card, average balance $50, limit = $3000, used some months when I get an extra 10% off

-Credit union car loan, current balance = $13000, original balance = $16000

-Chase Home Loan, current balance = $137000, original balance = $139000

-Student loan through private bank, current balance = $18000, original balance = $22000

-(7) Department of Education loans, current balance = $16000, original balance = $21000 (they are reporting my loan as 7 separate accounts so that is one thing that is causing a high number of accounts).

Now I have heard in the past that a lot of credit accounts is not a bad thing because a large contributor to credit score is the ratio of your total credit limit on these accounts to the average balance that I have. In addition to the Kohls Credit Card, I also have other stores like Banana Republic, JCPenney, Elder Beerman, & Zales. It just happens that I did not have a use these in the past month so they show $0 balance, or my active credit accounts number would have been higher than 14.

So my main questions is which is correct. Is it okay to have all of these cards open, but just don't use them? Or should I close them down and only use my main Chase credit card for everything? Or is it okay to have these accounts, but if I use my Kohls account one month, I shouldn't use my Banana account until the next month? Any advise/direction that anyone can give me would be appreciated no matter how little. Thanks!

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All cards reporting $0 with only one reporting 1-9% is the general consensus to reaching your maximum FICO. YMMV like everything else credit related, however.