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astritaho1979
Posts: 451
Registered: ‎10-02-2011
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How many credit points a credit card contributes in a month to the credit score

[ Edited ]

Just wondering how many fico points each creditt card account contributes to the fico score taking in to consideration using the  card and paying in full every month

My understanding is that not always a credit card add to the score every month rather they do add something to the score every 3 months

Anyone here has any opinion how that works.Thanks for any inputs


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thom02099
Posts: 1,323
Registered: ‎08-30-2011
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Re: How many credit points a credit card contributes in a month to the credit score


astritaho1979 wrote:

Just wondering how many points each creditt card account contributes to the score taking in to consideration using the  card and paying in full every month

My understanding is that not always a credit card add to the score every month rather they do add something to the score every 3 months

Anyone here has any opinion how that works.Thanks for any inputs


Not quite sure what your question is.  When you refer to "points", are you talking about reward points that one accumulates via various purchases?
If so,reward points don't affect one's score at all.  That's something internal and unique to each card issuer, but is not a factor in FICO credit scoring. 

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astritaho1979
Posts: 451
Registered: ‎10-02-2011
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Re: How many credit points a credit card contributes in a month to the credit score

sorry i meant credit fico score points.


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eviLution
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Registered: ‎06-11-2012
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Re: How many credit points a credit card contributes in a month to the credit score

I've always wondered if each credit card you have helps boost your credit score every month.

Do we need to use all of them? What if I only use one card? What if I use all, but only let one report a balance each month?

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ryanbush
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Registered: ‎08-19-2012
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Re: How many credit points a credit card contributes in a month to the credit score

you only need 2 credit cards to get maximum fico score, any more than that and they have no affect 

 

now utilization is another story and accounts with a balance

 

to get the maximum fico you need two credit cards, one with a balance between 1-9% and the other with no balance

 

getting more than two credit cards will do nother except add additional credit lines which can help with your utilization if you continually carry a balance

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eviLution
Posts: 706
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Re: How many credit points a credit card contributes in a month to the credit score

In my opinion 3-4 is the hot spot.

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astritaho1979
Posts: 451
Registered: ‎10-02-2011
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Re: How many credit points a credit card contributes in a month to the credit score


ryanbush wrote:

you only need 2 credit cards to get maximum fico score, any more than that and they have no affect 

 

now utilization is another story and accounts with a balance

 

to get the maximum fico you need two credit cards, one with a balance between 1-9% and the other with no balance

 

getting more than two credit cards will do nother except add additional credit lines which can help with your utilization if you continually carry a balance


So if i pay every month 5 cards only 2 have effect to the score and the other 3 dont really matter if u make payments and they show as trade lines. I thought that you have to be active on the use of credit cards and is not good to let them idle?Have i thought wrong about that imo?


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ryanbush
Posts: 1,299
Registered: ‎08-19-2012
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Re: How many credit points a credit card contributes in a month to the credit score

You're credit report has no idea wether you have used those cards or not, it only knows what your balance is and wether you pay on time for not.  Also for every account over your second one that has a balance you are loosing a few points

 

as stated above the best way to maximize your score is to have only one card reporting a balance of 1-9% and the rest reporting 0

 

are you planning on apping for anything in the near future?  if not then you really only need to worry about tweaking your score a few points until it's time to app.  Remember your credit report/score is just a snap shot of that point in time and is very fluid depending on your balance on accounts.  the best way to get your credit score up is to open credit as needed, get 3-4 cards and keep the balances low and pay on time every month, and let everything age and your INQs fall off...  other than that there really isn't much you can do day to day 

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astritaho1979
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Re: How many credit points a credit card contributes in a month to the credit score

Good advice.Thanks


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RobertEG
Posts: 17,456
Registered: ‎03-19-2007
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Re: How many credit points a credit card contributes in a month to the credit score

FICO scoring is multi-category, so accounts factor into many different considerations. 

 

Having multiple revolving is important, as FICO places heavy emphasis on showing the effective use of discretionary credit, and that is usually the first type of payment a consumer will become delinquent in paying should bad times come about.  FICO is a risk of repayment analysis, so it is a highly weighted factor.

How many is ideal is a matter of conjecture, as FairIsaac has not disclosed the innards of their scoring, but it is clear that at least two are important.

 

In calculation of util of credit, FICO places much greater weighting on util of revolving than upon % balance owed on installment accounts of orig loan amount.

The emphasis is skewed to the point that most will advise not to be concerned with installments in scoring of util of credit.

FICO has stated that there are three main sub-categories in scoring of revolv util.  One is overall revolving % util, the second is the conbined % util of each revolving account, and the third is the % of revolving carrying a monthly balance.  The precise weighting of each sub-category is, again, a FICO trade secret, but it appears that overall % util is given the most, with combined % util on individ cards second, and % with balance third.

 

A simple look at % revolv with a balance shows that the number of revolving can most certainly affect scoring.  Having only two revolving means that the consumer is always at either 0%, 50%, or 100% carrying a balance.  With three revolving, the distribution expands to 0%, 33%, 66%, and 100%.  And so on.

With increased number of revolving accounts, the impact of one or two carrying a balance can be offset by the higher denominator.

 

Having a larger number of revolving can also be a guard against maxing-out one account should a large purchase be necessary, as most cards permit balance transfers that permt movement of balances between accounts.

It can also, as the age of existing accounts mature, serve as a smoothing factor in calculation of average age of accounts when new credit is added

Having, for example, 5 CCs with good age will offset the negative effect of a new TL on AAoA more than having only one or two CCs.

 

As for "gaining points" each month, that is done primarily in FICO scoring by improved age of accounts.  More accounts with higher age, again, contribute more to building average age of accounts than does having only one or two.

 

I would not simply scoring by assuming that one gets no favorable results for CCs greater than two.

 

 

 


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