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GregB
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11 open accounts "too many"

[ Edited ]
Getting close after 4 years to having to get a new mortgage to pay off my psycho ex-wife. That lower rate with a 760+ score is SO close. TU-755, EQ-742, EX-758
 
I pulled all three reports and they all "flagged" 11 open accounts with balances saying "too many accounts with balances". These are going to be tough to get down since I have 3 small businesses and use the credit cards frequently, different cards for different purposes. Most are PIFed each month on/before the due date but they still report balances with new charges. 4 accounts can't go away since it is mortgage, LOC (wife ran it to limit), car (business) & motorcycle loan.
 
Is doing something difficult to get 1, 2, or 3 showing zero balance really going to matter?
 
One thing that seems really strange is that I sometimes have a 12th account with a balance and it seems to make a big hit on credit. I just looked up a Score Watch credit alert where having $80 charged on a Kohl's card that I hadn't used for 4-5 months dropped my score 8 points. I found another place where using a mostly inactive $12000 limit card for $31 did a 8 point hit! 
 
Two of them, the lowest and highest scores, are showing a flag on a "30 day late" from almost 6 years ago.  One guess who did that!  I assume that has little effect. Correct?
 
Any help appreciated.


Message Edited by GregB on 01-25-2008 05:37 PM
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haulingthescoreup
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Re: 11 open accounts "too many"

Hi, Greg, welcome to the forums, and sorry to hear about your battles.

There's nothing wrong with having 11 acounts; the problem is having them all report balances. FICO scoring is done off the balances that are reported by your creditors. For credit cards, this is almost always the figure reported on your statement (note the "almost".)

What you need to do is pay down/off most of your cards before they report. As above, for most cards, this is on the statement date, which is NOT the same as the due date. The statement date is the date that shows on the mailed or online version of your statement. This is also called the post date or the drop date.

First count up how many open accounts you have that report to the CRA's, including mortgages and loans. For instance, in my case, I have a mortgage, a HELOC, a student loan, and 5 credit cards, so I have a total of 8 open accounts. Divide this number by 2. Your scores will be optimized by having half or fewer accounts report balances. Since by definition, all open loans report balances, you are reduced to controlling how many CC's can report a balance. Subtract half the number of open accounts minus the number of loans, and now you know how many CC's you can let report. In my case, that would be 4 (one-half of 8 open accounts) minus 3 loans = 1 CC that can report.

Statement dates generally wander around 2-3 days before or after the previous month's statement, so go online 4 or 5 days before your statements posted the previous month, and pay most of them off. Leave however many cards that are OK to have balances with less than 10% of their individual credit limits. In other words, on a card with a $1K CL, pay it down to $90 or less, which is 9% or less.

If your eyes have completely crossed by now, let's say that you subtracted your number of loans from your number of total open accounts, and you wind up with 8. That means that you can have a maximum of 4 CC's showing balances. PIF at least 4, and have the remaining report no more than 10% of each one's credit limit.

Hope that hasn't melted your brain as much as it did mine! :smileytongue:
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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GregB
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Re: 11 open accounts "too many"

[ Edited ]
Thanks, that was a very clear answer.
 
I assume that 11 is around half of the open accounts showing on my report. I have around 30 more showing on the reports that are closed. I will have to go through them and try to figure out what they call open or closed. For example a van I leased in 1996 is still showing as "open" with a zero balance even though the lease ended in 2000.
 
Your answer explains something I didn't understand. A bit over a year ago I opened two new account with 1 year no interest no payments when I had to replace all the missing appliances. The credit hit was not very large but then the amounts charged were not over 30% of the limits that they gave me. When I paid them off after a year, my score increased to a higher score than I had before I added the two new accounts.
 
I am now kicking myself for merging a few accounts that were redundant. Like where I had two accounts with MBNA, one business and the other personal, and I decided that I would add the two limits together for the business since I really didn't need the extra personal one. I would have been better off to have them just transfer most of the limit from the personal one to the business and then put the personal one in the drawer.  
 
I think I now see the reason that EQ has a much lower score. When BofA would not remove the "30 day late" for a large PIF that was received two days late, I decided to close the account in an emotional decision. There was a $185 balance at the time so they reduced the limit to $200 until my payment reached them, then closed the account. The CRA that has the lower score shows that account as still open and with the highest balance $28,900 against a $200 limit.


Message Edited by GregB on 01-25-2008 07:46 PM
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haulingthescoreup
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Re: 11 open accounts "too many"

You can tie yourself up in knots, trying to figure out what would have been the best way to do things. One thing to aim for when combining cards is to demand that they stay with the opening date of the older card, so that you keep the history.

But this is all water under the bridge, and in another year or two, it won't matter anyway.

Just remember that overall, the impression that you want your reports to give is that you are someone with almost unlimited credit, who uses it every now and then, and takes care of it immediately. Once that profile is out there, you will be buried in offers.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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Boscoe
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Re: 11 open accounts "too many"

Is it possible that his maxed out HELOC (courtesy of the ex) is being reported as a revolving account, therefore hurting his score?
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haulingthescoreup
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Re: 11 open accounts "too many"

I can't find the HELOC on this thread --I'll need to go clean my reading glasses. :smileytongue:

HELOC's under a certain credit limit report as revolving, on Experian at least. One member's $30K (I think it is) limit line pulls down his EX because of this, although the other two report it as installment/ mortgage. My $50K limit HELOC reports as installment/ mortgage on all 3, thank goodness, and other members have posted the same.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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Boscoe
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Re: 11 open accounts "too many"

I pulled all three reports and they all "flagged" 11 open accounts with balances saying "too many accounts with balances". These are going to be tough to get down since I have 3 small businesses and use the credit cards frequently, different cards for different purposes. Most are PIFed each month on/before the due date but they still report balances with new charges. 4 accounts can't go away since it is mortgage, LOC (wife ran it to limit), car (business) & motorcycle loan.
 
 
-----------------------------------
 
Hauling - above is a paragraph from Greg's initial post.  See where it says "LOC (wife ran it to limit)"?  I guess the question for Greg is, what is the balance of this LOC?
 
So is the cutoff somewhere between $30k and $45k for the install/revolving change for HELOC's?   Yours is installment at $50k, so must be below that, obviously......
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haulingthescoreup
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Re: 11 open accounts "too many"

[ Edited ]
Ah, got it. My eyes are wearing out.

I'm shaky on this, but I think regular lines of credit report as revolving, because they are unsecured, whereas HELOC's should report as installment, because they are secured by an interest in your home. But it's very possible that I am wrong on regular LOC's, so others please update and correct this.

In situations where there are lots of loans and other forms of credit that always report a balance, it is helpful to have many CC's, so that most can report $0 and counter-balance the tradelines that do report. Counter-intuitive!

I imagine that by the time I have finally figured out all the ins and outs, FICO 08 will have kicked in and I can start all over again. :smileytongue:

edit: the current educated guesses about HELOC's is that $39K / $40K is the tipping point, but that's pretty speculative. And as you say, we have figured out from several members that $50K is safe.

Message Edited by haulingthescoreup on 01-26-2008 11:06 AM
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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GregB
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Re: 11 open accounts "too many"

I should have used the standard terminology HELOC - sorry for the confusion.
 
It is a HELOC with the same lender, Countrywide, as the mortgage. It is $30K. For the benefit of others looking for answers, here is the info from the credit reports:
 
TU, FICO 755: Listed under "Mortgage Account"
Account Type: Home Equity Loan
Credit Type:    Overdraft/Reserve Checking Account
 
EQ, FICO 742: Listed under "Mortgage Account"
Credit Type:     Revolving
 
Ex, FICO 758: Listed under "Line of Credit"   ****!****
Account Type: Credit Line Secured, Revolving
Credit Type:     Revolving
 
One wild card here is that several business CC report on my personal account so that $30k revolving is less than 10% of my total CC limit for accounts that show on my CRs.
 
All three CRA report exactly the same 11 accounts with balances out of a total accounts shown of 27-30. Open and Closed accounts is confusing but they are all pretty similar except EQ shows that one problem credit card paid 30 days late in 2002 AND shows that account still open with a credit limit of $200 and a largest past balance of $29k. NONE of the CRAs show the actual credit limit of that account of $58K, only the $200 limit for the last two weeks when I closed the account with the small balance and a check being mailed that day. Lesson to learn is don't close an account with a small balance.
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ilovepizza
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Re: 11 open accounts "too many"

You could always over pay to report a $0 bal?
If we never set higher goals we would never get as far.
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