Credit Karma suggests I should have 22 open accounts

[jello77]

gen-specific said:

Credit Karma suggests I should have 22 open accounts or something

Sounds ludicrous

thoughts?

CK is full of promotional links for credit cards.  CK makes its money from fees provided by card companies for promoting their products.

So CK has a vested interest in getting people to sign up for more cards.  

A basic lesson in life:  Be very skeptical of advice coming from someone who makes money from you acting on that advice.

konayoda said:

Available credit to debt ratio is the biggest part of your score, assuming that you always pay bills on time. The more cards you have, the higher your available credit. As long as you are responsible enough not to use the cards, your score will improve.

This statement applies only if you regularly carry a balance on your cards.

If the goal is to improve your financial life, the best way is to get out of debt and stay that way by not carrying a balance.

If you are carrying a balance, trying to achieve a higher FICO score to make it easier to get more credit and take on even more debt does not seem like such a good idea.

Trying to goose up your FICO score by getting more cards might work for some people in some circumstances.

But for most people, getting more cards you don't need is not a good idea.

[gen-specific]

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@Anonymous wrote:

Thanks for the welcome fused.

Is it NECESSARY to have 20 cards to have an 800 score? No, but it sure is a lot easier to get a <10% utilization ratio if you have quite a few that you never use. 

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Thats interesting, from my profile here I have like $220,000 in available credit across 10 lines and I use less than 10%

I really don't know how normal/abnormal that is (although I realized some of my lines are pretty massive)

my point being that having 20 lines would make this even more redundant than it already is

[Anonymous]

Okay, fused and gen-specific, how about this argument?
Don't put all of your eggs in one basket!!
When I was 17 and joined the Air Force (yes, I graduated high school out of 11th grade, and for 6 months was the youngest airman on my base) I got an American Express card, because I had heard that having one was a great way to establish credit.
I eventually ended up with 3, no annual fee, American Express cards (one was a card for my computer tech support business).
For 20 years, I had made every single payment to them on time, and in 2007, when the economy tanked, they lowered my credit from a total of over $25,000 to the $7,000 balance that I had over the 3 cards. ($500, $2500, and $4000). Yes I was under the stupid assumption that the fewer cards you had, the lower risk you were to creditors, and therefore the higher your credit score. Exactly the opposite of the truth)
I'm not sure exactly what my credit score was in 2007, but I am quite sure that taking my available credit to debt ratio from around 20% to 90% in a single day devastated my score. (I also had a Bank of America Visa.)
A couple years from now, when I have 20+ cards, each with around 20k+ credit lines, and one of them hits me with an annual fee (which Amex did on one card, but I got them to remove it a couple years later) I won't hesitate to tell them to kiss my (_i_) and what they can do with their card.
You guys lose your highest card (because they impose an annual fee, lower your limit to what you owe, or the bank folds, is bought out etc...), because you only have a few cards, you lose 30% of your available credit in a single shot.
Even if it does nothing for your score, as long as you are responsible with credit, collect as many no annual fee cards as you can, if for no other reason than to be able to tell any of those issuers at any time, "Bite me! Losing your card won't hurt me at all!"

[fused]

I'm not putting all of my eggs in one basket. I have 7 open CC's and that's more than enough for me. I don't have a thick or thin file. I have an average file with 13 TL's. I have options even without having 22 open accounts. I already kicked BoA and Discover to the curb for messing with me. Just because CK says you need 22 open accounts, doesn't mean Mrs. FICO agrees. Applying CK "opinions" to FICO scoring doesn't fly here. I still maintain you don't even need more than 3 CC accounts to have FICO's in the 800's. I would NEVER advise anyone to accumulate as many non AF CC's as possible. Most people just don't have the time to manage so many accounts. Sure some can handle 25 CC's, but I think most of us can't or don't want to.

[gen-specific]

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@Anonymous wrote:

You guys lose your highest card (because they impose an annual fee, lower your limit to what you owe, or the bank folds, is bought out etc...), because you only have a few cards, you lose 30% of your available credit in a single shot.

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Thanks for the perspective

I'll keep it in mind, to counteract this possibility, I have a) kept my cards fairly diversified, and b) do CLI on all the cards at the same time

last CLI spree I was aiming for $30k limits across the board, but I requested higher to see what happened, and one bank just auto gave me the 60k I asked for

did make me wonder how much I could have actually said

[xXIDaShizIXx]

If that were the case, I would probably never get there. I mean I have student loans being paid on, which account for a handful of accounts, but when those are paid off, I'd rather only have 4 or less open credit cards with higher limits if possible. Less to manage that way.

[RushXTC]

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@gen-specific wrote:

Credit Karma suggests I should have 22 open accounts or something

Sounds ludicrous

thoughts?

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CK and CS are both to keep track of your record for free, Do not take suggestions from them! LOL.

Also, It says 22 accounts... Don't have to be open. I reached 22 accounts due to 3-4 closed accounts.

[bdhu2001]

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@gen-specific wrote:

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@takeshi74 wrote:

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@gen-specific wrote:

Credit Karma suggests I should have 22 open accounts or something 

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While one has to take CK with a grain of salt one also has to carefully read what CK states.  CK doesn't say you need to have 22 open accounts.  CK indicates that there is a correlation between those with a higher credit score and a larger number of accounts reporting.  Reporting and open are two entirely different things.  I'm in the 22+ group but I only have 14 open accounts.

Verbatim statement from the site:

Consumers with more credit accounts typically have better credit scores

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Nope, still not following

Do you mean you have 8+ old closed accounts still reporting?

Do you mean that your 14 open accounts report multiple times?

something else?

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Your close accounts report for 10 years.  So when you pay off a car, pay off furniture, or just close a department store card that you no longer need, it continues to report for 10 years. Thus, I have a lot of accounts that report, but aren't open.  I've bought two sleep number beds and also leased/purchased 4 cars that show as closed accounts.

[--HighHopes--]

I would think that while looking at this on the side of raising your overall available credit by adding new TL's may be beneficial to your utilization if you need to carry a balance, but on the other hand you also have to look at what opening new TL's does to your overall AAoA which can suffer greatly when opening several new accounts...so even if looking at it that way I'm not sure it would really help that much as one tends to cancel out the other.  On the other hand having a smaller amount of cards with high limits and seeking CLI's on those you already have keeps your AAoA in tact without a hit for an new TL and ultimately if you get the CLI then its helped your overall utilization too so you can't loose that way.

[takeshi74]

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@gen-specific wrote:

Nope, still not following

Do you mean you have 8+ old closed accounts still reporting?

Do you mean that your 14 open accounts report multiple times?

something else?

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I'm not sure how to clarify this for you.  I'm in the 22+ bracket.  I have 14 open accounts and 8 closed accounts.  It's simply a matter of 14+8=22.  Closed accounts factor into number of accounts.  They also factor into AAoA even though CK actually provides AAoOA.  FICO uses AAoA, not AAoOA.

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@jello77 wrote:

This statement applies only if you regularly carry a balance on your cards. 

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@--HighHopes-- wrote:

I would think that while looking at this on the side of raising your overall available credit by adding new TL's may be beneficial to your utilization if you need to carry a balance

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Higher limits can help utilization even if one is not carrying a balance. Balances can report without being carried -- i.e. one is not paying prior to reporting to reduce the reported balance.

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@--HighHopes-- wrote:

but on the other hand you also have to look at what opening new TL's does to your overall AAoA which can suffer greatly when opening several new accounts...so even if looking at it that way I'm not sure it would really help that much as one tends to cancel out the other.

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Whether utilization and AAoA cancel each other out all depends on the specific situation but, yes, one always has to consider all the factors at play and not just one.