How many CCs is considered Optimal for FICO Scoring?

[Anonymous]

Strange I just signed up for the service to check my report and I have EQ 763 The only thing bad is 2 30 day late pays in 2000 that shouldn't be there since it was a bank error. Currently I have 0 Credit Cards, I closed my last card early 07. I just paid off my car in the beginning of Feb, and that's been closed, so overall I owe $0 and have 0 open Credit accounts. No Mortgage, 0 lines of Credit. I guess my score will start dropping now that I don't owe any money at all? Is it just me or is the only way to have a high FICO score by borrowing money and paying the bank interest? (Sounds like a scam to me) I'm confused, why do I want a high score? So I can borrow more money? For the opportunity to get into debt? Maybe I'm missing something here, how does it benefit me? I guess I don't see the point to have 16 credit cards just to try and get my FICO score up. I'm not making any money here, the bank is.

[Anonymous]

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SamSausage wrote:
Strange I just signed up for the service to check my report and I have EQ 763 The only thing bad is 2 30 day late pays in 2000 that shouldn't be there since it was a bank error. Currently I have 0 Credit Cards, I closed my last card early 07. I just paid off my car in the beginning of Feb, and that's been closed, so overall I owe $0 and have 0 open Credit accounts. No Mortgage, 0 lines of Credit. I guess my score will start dropping now that I don't owe any money at all? Is it just me or is the only way to have a high FICO score by borrowing money and paying the bank interest? (Sounds like a scam to me) I'm confused, why do I want a high score? So I can borrow more money? For the opportunity to get into debt? Maybe I'm missing something here, how does it benefit me? I guess I don't see the point to have 16 credit cards just to try and get my FICO score up. I'm not making any money here, the bank is.

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No, you don't have to pay any interest to have a high FICO score.

Credit cards only require you to pay interest if you revolve a balance on them from one month to the next.  FICO will still give you points for having the account and for your good payment history on that account even if you don't carry a balance from month to month.

[Anonymous]

I wonder what percentage of users pay off the entire balance every month and never paid interest or service charges over an extended period of time. Not to mention the time spent balancing and paying it every month.

Message Edited by SamSausage on 03-27-2008 11:28 AM

[MidnightVoice]

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SamSausage wrote:
I wonder what percentage of users pay off the entire balance every month and never paid interested or service charges over an extended period of time. Not to mention the time spent balancing and paying it every month.

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Me,  - except for when I travel overseas or by things from overseas and have to pay conversion fees.

[Anonymous]

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@MidnightVoice wrote:Me, - except for when I travel overseas or by things from overseas and have to pay conversion fees.

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That would make you one of the few users that does pay the balance in full every month and never missed a payment. The vast majority of users do not. It's definitely not impossible, but very unlikely. Kudos to you, that's quiet a feat! When I had cards I tried to pay them of every month but over an "Extended Period of Time" I did pay interest because there where a few months where I did not.

[Anonymous]

You'll find that many folks on this forum are not like the public at large when it comes to managing their credit card accounts.  I, for example, have never paid interest on any credit card.  Ever.  I know many others here can say the same thing.  Not only do I not pay any interest, but I actually routinely pay off my credit cards BEFORE the statement even generates so as to control the balance that those cards report to the CRAs.  I also use my credit cards for every one of my everyday expenses so that I can collect rewards on money I would be spending anyway.  In the long run, this costs me exactly $0.  There are many, many others here who play that same game.

Your point is well taken that the non-credit-savvy general public does not understand the rules of that game, for the most part.  But that's what this forum is all about.

Message Edited by cheddar on 03-27-2008 03:01 PM

[Anonymous]

I pay off the entire balance every month. It's just a matter of not going over budget. Plus you can keep your $ in a moneymarket account and earn interest while you delay the payment of your month's purchases for up to 31 days. Interest from revolving credit usage is free $ for these lenders. Yes they have to deal with a bit of risk but those who they find risky are documented as such with FICO scores.

[haulingthescoreup]

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@Anonymous wrote:

That would make you one of the few users that does pay the balance in full every month and never missed a payment. The vast majority of users do not. It's definitely not impossible, but very unlikely. Kudos to you, that's quiet a feat! When I had cards I tried to pay them of every month but over an "Extended Period of Time" I did pay interest because there where a few months where I did not.

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We're actually not that rare! I wish I could remember the figure, but it was something like 40% of American consumers never carry a balance, many of the rest carry a balance on one or two cards, and a relatively small remainder carry balances on nearly all or all of their cards.

I use my credit cards as a version of debit cards, I guess: I pay each one off online every week or 10 days. This takes almost no time at all --think of the Bank of America commercials with the young woman doing her BillPay while the popcorn is in the microwave. The CCC's are perfectly happy that I do this, since I use them for every possible purchase I can, so they're making money off a me via transaction fees. But if they require interest from me, we'll have to sever the relationship. I haven't carried balances in a good long while, but I do now on one card. But it's a 0% balance transfer, so I still don't pay any CC interest.

I'm glad to know the option of carrying balances is there, if I have some sort of financial crisis, but I regard credit as financial insurance: have it, and hope you don't need it.

[smallfry]

Optimum is 5 credit cards. 1 store card. 1 mortgage and 1 car loan. Utilization on all cards between 1-4%. Let 2 cards report a balance every month. Never pay anything late.

[Anonymous]

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@smallfry wrote:
Optimum is 5 credit cards. 1 store card. 1 mortgage and 1 car loan. Utilization on all cards between 1-4%. Let 2 cards report a balance every month. Never pay anything late.

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On what are you basing the 5 card assumption?

I've heard some say 2, 3, or 4 cards.