I've seen a lot of people's signatures showing a large amount of revolving credit accounts (many with high limits on them.) Is it good to have a lot of revolving credit accounts? Does this show creditors that you have a high amount of available credit and that you utilize it well - or is it just as good to just have a couple of revolving credit accounts which will do the same thing? I've currently got a couple of credit cards but I was wondering if I should open a store card or two to have more of a variety??
And, if I do end up doing that, will it help to increase my score?
Some of the revolving credit aspects that FICO factors include utilization total, utilization per card, and the percent of cards showing balances. All of these factors are easier to manage with high credit limits and more cards. You can achieve the same FICO results with 2 or 3 low limit cards, but it requires more work, payments before statements cut, and possibly multiple payments each month if you use your cards frequently.
EX:694 TU:744 EQ:777Thanks Dave. Yeah, my credit limits are not very high right now, so I though if I added another couple, then I could keep the balances low (or not even use most of them except for every now and again) so that I have more available credit but with very low - if any balance. Does that make sense? I'm just trying to get a couple other things off my reports and build it up with good accounts. I'm just hoping this will assist me in raising my score a bit.
Well, yes, more cards make it easier to control your utilization. But a new account also comes with an AAoA penalty and a new inquiry which hurts your score a little.
When my scores were lower, I started out with a secured card and a store card that I was able to get just based on my income and employment status. After only about 4 or 5 months with the secured and store card, I applied for an unsecured with the same bank that issued the secured card and was approved. I then got an NFCU card, some low-limit CapitalOne cards, a Target card, and a Household bank card. The inqs from these didn't affect my score at all since I had so many inqs already and my AAoA didn't take much of a hit since I have a longer history since before I stopped paying my bills.... I don't think my score actually improved though, just from getting more cards. It really just gave me more positive accounts to build with. After about a year with these I was able to get some better cards (some required recon). Even though none of these cards used to help me rebuild charged an annual-fee, I have since closed nearly all of them. I really only frequently use a small amount of cards now, but I do have a few that I keep open with an occasional charge, just in-case there is a promotion that I might want to take advantage of in the future. I currently have 7 cards reporting open on my credit report, but one is the secured card that I closed some time ago and just never updated from reporting open with $0 balance. So, 6 cards that I actually use, and 4 of those only get occasional use. I usually have at least 2 cards that report a balance each month. This month, I have 4 reporting, which could be why my EQ score dropped from 709 to 704, but it could also be that my util jumped from less than 10% to just over 10%. I am less concerned about it now as I don't have any credit goals to achieve in the near future.
Some people have many more cards though. Personally, I think its too much to manage and doesn't offer that much added benefit. The steps that I took worked for me. I would recommend, based on my personal experience, having at least 3 cards. But if you can get CLIs on your current cards now, you have a better chance of getting higher limits on future approvals.