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Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007

Too many accounts with balances. New discussion.

Too many accounts with balances.

What does this mean? If you get flagged for this your number of balances combined is hurting your credit score. The balances can be $0.01 cent and up, doesn't matter. From what I have learned the limit is 4 balances before scores drop.

You can use 50 credit cards at the same time and pay them in full. This should report a $0 balance unless there is interest added.

You can use 5 credit cards and pay minimum payment on them. This will leave you with 5 balances.

Questions. If you have open installment loans are they counted in this limit of 4 balances. I don't know. When I tested this I did not have any open installments. Since some people say when they limited to 4 credit card balances and score did not increase it leads me to believe installments might be counted. So if you have 2 installments try to limit other accounts to a max of 2 balances. See if anything changes.

Each time I put a tiny charge on my 5th credit card and carried a reported balance my score dropped -18 points. Paid that one balance off score went up +18 points.

Keep in mind that even if you pay your credit cards in full, if you charge anything new before the CRA update is sent, it will be reported as a balance. This is where it becomes tricky for those that pay in full.

Example.
If your balance was $50.
Your payment due date was 10th.
Statement closing date was 15th.
And that bank reports to the CRAs on the 17th.
And you send in a payment of $50.
And then charge something for $10 before the 17th,
your credit report might show a payment of $50 and a $10 balance.

So just be aware how it works. Keeping under 5 balances can raise your credit score by as much as +18 points as it does in my case.

Please post score changes from your own tests here. Thank you.
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
Moderator Emeritus
fused
Posts: 16,243
Registered: ‎03-12-2007

Re: Too many accounts with balances. New discussion.

Too many accounts with balances = FICO scores of 792, 785, 734. I'm not buying what you're saying!:smileyhappy:
Established Contributor
TexMontana
Posts: 678
Registered: ‎05-29-2007

Re: Too many accounts with balances. New discussion.

The subject line is the story of my life!:smileytongue:
" I like to live as a poor man, with a lot of money." - Pablo Picasso (who was a jerk.)
Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007

Re: Too many accounts with balances. New discussion.

[ Edited ]

fused111 wrote:
Too many accounts with balances = FICO scores of 792, 785, 734. I'm not buying what you're saying!:smileyhappy:

Have you tried to reduce to 4 or less balances for all accounts including installments? Your answer would be very useful. If your scores are 792, 785, 734 now, what were your scores after you limited to a total of 4 balances including installments. If you have not tried this, please do if you can. You might be surprised to see 800's.

Message Edited by ilovepizza on 08-14-2007 01:28 PM
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
Moderator Emeritus
HappyDays
Posts: 7,326
Registered: ‎06-18-2007

Re: Too many accounts with balances. New discussion.



ilovepizza wrote:
Too many accounts with balances.

What does this mean? If you get flagged for this your number of balances combined is hurting your credit score. The balances can be $0.01 cent and up, doesn't matter. From what I have learned the limit is 4 balances before scores drop.

You can use 50 credit cards at the same time and pay them in full. This should report a $0 balance unless there is interest added.

You can use 5 credit cards and pay minimum payment on them. This will leave you with 5 balances.

Questions. If you have open installment loans are they counted in this limit of 4 balances. I don't know. When I tested this I did not have any open installments. Since some people say when they limited to 4 credit card balances and score did not increase it leads me to believe installments might be counted. So if you have 2 installments try to limit other accounts to a max of 2 balances. See if anything changes.

Each time I put a tiny charge on my 5th credit card and carried a reported balance my score dropped -18 points. Paid that one balance off score went up +18 points.

Keep in mind that even if you pay your credit cards in full, if you charge anything new before the CRA update is sent, it will be reported as a balance. This is where it becomes tricky for those that pay in full.

Example.
If your balance was $50.
Your payment due date was 10th.
Statement closing date was 15th.
And that bank reports to the CRAs on the 17th.
And you send in a payment of $50.
And then charge something for $10 before the 17th,
your credit report might show a payment of $50 and a $10 balance.

So just be aware how it works. Keeping under 5 balances can raise your credit score by as much as +18 points as it does in my case.

Please post score changes from your own tests here. Thank you.

I agree with fused. every charge will lower score IF you already have high UTIL. DH had that.  I opened new CC (5)  CL added $25,000  for a total of $45,000. score went from 612 up to 688.  These new cards are just starting to report. I expect score to go down only a little untill payments on all accounts are in.New cards are used for ...transfer 00% intrest  and others for drug store & groceries  then PIF. Put in sock drawer. There is 1 new auto loan which showed no change in scores.
I do expect scores to go up in about 2 months as Pyments on old CC are posted to CR.
Frequent Contributor
Posts: 353
Registered: ‎07-18-2007

Re: Too many accounts with balances. New discussion.



fused111 wrote:
Too many accounts with balances = FICO scores of 792, 785, 734. I'm not buying what you're saying!:smileyhappy:



How many accounts do you have Fused? I envy you. lol
Established Contributor
rifleman
Posts: 565
Registered: ‎06-11-2007

Re: Too many accounts with balances. New discussion.

i have interest in this topic too.

I have 3 installment loans and balances on 2-3 credit cards usually. Is this hurting me? my utilization is less then 1%. Does it really matter then that I have 5-6 accounts with balances?
Established Contributor
Posts: 739
Registered: ‎06-30-2007

Re: Too many accounts with balances. New discussion.

in order for a card to report 0 normaly requires two payments month unless you haven't made any chrages since your last statement cut , or don't charge aything for the rest of the of the cycle after you make payment. just because you PIF doesn't mean your account will report 0 balance, you PIF amount is for the previous cycle, so unless you haven't made any charges the current cycle or you make an aditional payment after you due date to bring the balance to zero and not chrage anything else before the next cycle, you will have a balance to report, but having a balance to report doesn't always mean your paying interest, it's whats called a grace period
People say "Only apply for credit you NEED"

I say "apply for credit you have PRATICAL use of"

I don't have AMEX card because I don't want a card that suffers from PMS
Regular Contributor
Redamagon
Posts: 139
Registered: ‎08-07-2007

Re: Too many accounts with balances. New discussion.

I am not following this???!!?? What are you saying? I don't get it? From now on I am charging everything that I buy on my credit cards and and paying off before the 25 days before charge. So, I guess this is the best waay to improve credit right? Or there is a better way? I only have 3 credit cards. Should I get more to improve my credit score or what?
Established Contributor
rifleman
Posts: 565
Registered: ‎06-11-2007

Re: Too many accounts with balances. New discussion.

if you rack up a balance on your cards, be sure that it's not over 10%--better yet, make sure it's not over 5%. If it is over 10%, then pay it down to almost nothing BEFORE YOUR STATEMENT is generated. I find that credit card companies typically report the balance at the time your statement is generated.

Example of what I do:

I use only AMEX blue cash and Citi Dividends now because they give me cash back

I charge everything I can to these cards.

A week before the statement is generated I pay down the balance on these 2 cards to under $10.00.

Once I see the cards report a balance under $10 to the credit agencies, I start using them again and repeat the cycle.

It is working very well for me so far--my utilization has stayed under 10% for the last 4 months and this past month it was less then 1%. You get max points for having lowest utilization possible.

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