How many CCs is considered Optimal for FICO Scoring?

[smallfry]

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@Anonymous wrote:

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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.

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Nerd it is easier to stay within the not letting more than 40% of open accounts report a balance if you have 5 cards. Letting 2 report is already at that threshold.

[Anonymous]

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@smallfry wrote:

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@Anonymous wrote:

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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.

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Nerd it is easier to stay within the not letting more than 40% of open accounts report a balance if you have 5 cards. Letting 2 report is already at that threshold.

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I agree with smallfry.  With only two open credit cards, you can't let less than half report a balance while at the same time letting at least one report a balance, both of which are optimal for FICO scoring.

[Anonymous]

My .02 cents-

I a have

Open accounts-

1 mortgage

1 heloc (igored)

1 Auto (under 50% utl)

2 SL's

1 Charge card (amex green)

2 Store cards ( Kay and an Home depot not yet reporting)

Amex Delta, Blue Cash

Wamu 1 Visa 1 MC

Cap one 1 MC

Junny 1 MC

2 CU Visa's

15 of 16 Open accounts reporting- I don't get "too many accounts with a balance until 10"

So if you subtract the mortgage and Heloc -

14 - 9/14 =64% of accounts with balance

Just cards = 10

So the 50% of CC's rule still applies=

[haulingthescoreup]

Agree--that was one of the main motivations in my picking up more cards.

I can't tell you what a relief it is to no longer get that message when 2 whole cards reported.

With a mortgage, HELOC, car loan, and BT card always showing balances, and two other cards that my difficult-to-control DH also uses, it's a relief to have extra cards to pad out the math. Not to mention the times when TU goes for a brief (or extended) vacation on Mars and won't update anything at all, whatsoever.

[Anonymous]

"Your point is well taken that the non-credit-savvy general public does not understand the rules"

I don't mean to get off topic, but that comment struck me a little.

It is nice that you are in a position to not have to carry a balance, but I wouldn't say those of us that do are not credit-savvy.  When that car repair comes up or vet bill arrives, there are two options.  Not paying it, or going into debt.  While I may not want to pay interest on a credit card, I think the option of not paying my bills is not an option.

[Anonymous]

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RobertEG wrote:

Well, I will throw my fish into the pond.  It is not the number of CC's that you have, it is rather how you manage them.

FICO looks first at overall %util, which has nothing to do with the number of cards you have, but is the most important factor.  But the thrust of this thread is not about overall %util, but rather upon the effect of having many cards.  So I will regress to the discusssion of having bucho cards, vs. only a few.

So, with that in mind, be aware that FICO also looks at %util of each TL.  So any card, regardless of percent overall util of all cards, will have a neg effect if its individual %util is high.  If you put a charge on a low CL card, it will affect your score more than putting that same charge on a high CL card.

Additionally, FICO also looks at the percent of the number of cards (not how much balance is above zero) that have balances at th reporting period.  So ten cards, with seven having any balance, regardless of the overall %util or %util or each, is a factor.

So, this is my understanding.  Having bunches of cards requires bunches of effort to ensure that each maintains a low reported %util, and further that at least half have reported balances of zero.

Dat beez a lots a woik!

If you have more than a few cards, then you will either need the Mind of Mensa to keep track it all, or be fluid in Excel spreadsheets, and thus be able to monitor each CC before its report date.

OK, if that does not convince you, then let me put you at the shopping mall tomorrow.......

You see this really neat new gizo.  Only $200.  You plunk out your wallet of ten cards, and whip out the one on top.  It happens to be your new Platinum Blue Neat $300 CL card!  Neat, huh?   But, bud,  you are now instantly at 67% util on that Plat Blue Neat card!  It reports.  If you had put in on another card, then it would be a different credit score.  I dont have the Mind of Mensa, and dont carry my lptop to the mall each day so that I can evalutate the %util of each card, and thus where to place my purchase.

I dont want ten cards. 

So, for me, getting a new, low CL card just is a pain in the butt to control. I dont have the time to absorb further minor credit hemmorhoids treatments that require daily Preparation H.

How many cards should I have?  The answer is, how much time do you have to maintain them?

It sounds like you understand the effect of different factors on your score.  But may I suggest that you can try to take advantage of the scoring system so that having many cards will work out in your favor, and not against you.

For example,

- get many cards, use them once or twice, and sock-drawer them for a while, then use again,

- get cards with high utilization, not some $300 midgets.

Why do you need to even carry 10 cards?  Carry 2-3, but keep the other umpteen at home.

Also, you might want to check out www.yodlee.com.  One click, and you get instant updates of all your account balances.  Heck, you could manage 100 cards, if you wanted to, with yodlee.

[Anonymous]

Are you saying that I should be paying off my credit cards or lowering there balances before the actual statement ends or on the day that the bill is due.  I keep trying and can't get this figured out. Would appreciate any information on the best way to pay my credit card bills to get the best score out of it.  I usually bring my credit cards down to 20 -30% utility unless something happens and I am not able to do this, however it never reflects that on my credit report.  thanks for any information.

[smallfry]

Cards report balances on statement cut dates not the due dates. You need to pay down/off before that date. You need to get yourself a month ahead.

[haulingthescoreup]

Pull up all your CC accounts online. With the exception of HSBC/Orchard and AmEx cards, they all seem to report on the date that your statement posts, and they report the balance that's on there. Check previous months as well, because many statement dates wander around by a couple of days each month (1/10, 2/8, 3/11, 4/9, etc.)

Make a note of each card's expected statement date. Five days beforehand, go online and pay. I prefer to pay on the actual card site, because the payment generally posts that very day. If you pay from your bank site, there might sometimes be a delay of a couple of days. Check again the day before you think the statement will post to see if any lolly-gaggers popped up and pay again if necessary. Wait for the statement to drop. If you don't want to carry a balance over to the next month and pay interest, go ahead and pay it off then, after the statement has dropped and before the due date.

Many people get their statement dates changed to where they all report on the same day every month, or maybe half in the first part of the month and the other half in the second. This makes it easier to manage the early payments. It can be fun trying to change this, because usually CSR's are asked to change the due date, not the statement date, and this request can confuse them!

Unless you have really high scores, most people find that they get the best results by only letting one or two cards report balances under 10% of the card's CL, and the rest report $0. You can still use all your cards as much as you like through the month, as long as you do the pay-down before the statement date.

This system puts you in charge of your util.

[Anonymous]

Controlling UTL is a good idea, but doing so is not really necessary unless you are within 60-90 days of applying for credit. 

If the goal is simply to maximize credit scores at all times, even when you have no plans to apply for credit, then Hauling's method is appropriate.