I think the general consensus is 3 major credit cards and an auto/home loan is optimal for scoring. I don't know if more helps or hurts..
@Skye12329 wrote:So according to CK the more accounts you have the better? Is this true? If it is why is it true or helps?
No one pulls CK scores except us. FICO doesn't agree with CK. Lenders pull FICO scores, so I don't care what CK says. My wife doesn't have that many accounts on reports and her FICO's are 826 and above.
CK reverse engineers the TU New Accounts Score.
Namely, those with long-established credit histories, tend to have more accounts, and likewise a higher score... so it gives a grade based on the tranch of consumers who are using the site. There's all sorts of problems with that method of analysis, but it sounds reasonable enough.
That said FICO doesn't seem to care: minimum I would suggest is 3 open revolving and 2 open installment tradelines, and that's just fine for maxxing out the scorecard as near as we can tell. Certainly will take you to 800+ and FICO's north of 740 are pretty irrelevant.
@Anonymous wrote:More accounts simply indicates that you are credit worthy. The thing to keep your eye on is your "debt to income ratio". You dont want to borrow so much that it appears that you are weighing yourself down with debt. There is a breaking point where your credit will drop. If you have opened new credit the key is to keep ahead of it. 30% of your score is based on what they call "revolving" credit. That means Visa Cards, for instance. Keep those balances BELOW 30% of the maximum allowed and you will see your credit go up. What creditors, and the system wants to see is that you have "available" credit (like a Visa Card) in your pocket and you have the self control not to max it out.
Conversely, if you CLOSE a Visa Card your credit score will go DOWN by about 30 points! Weird right? So keep those blanaces low and pay those bills ontime.
Too much bad information on the Intarwebs. I'd highly recommend spending some time here as there's a number of fallacies in your statements but quick hits:
DTI isn't factored into FICO scoring, that is a seperate calculation done in underwriting of various things, namely mortgages.
Closing a credit card has no immediate impact on one's credit score, unless it makes a non-trivial change to your utilization, or if it makes you drop below the minimum number of revolving tradelines (usually around 2, though I'd recommend to anyone to have 3 open credit cards to play reindeer games with balance reporting and FICO optimization) and a ding to the mix of credit function. If you are not carrying much in the way of balances and you have sufficient other revolving tradelines, the impact is 10 years from the date of closure when the positive history falls off your credit report and the tradeline no longer factors into your AAOA.
There's a large amount of information used in underwriting, and there's no one size fits all for loan origination. More accounts does not necessarily mean more creditworthy to an individual lender.