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So according to CK the more accounts you have the better? Is this true? If it is why is it true or helps?
I only have 4 cc accounts and a mortgage and all of my scores are above 800. I have not had a car payment in 27 years either. My oldest, ( closed ), account however is 22yrs.
@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.
@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?
It helps TU & FICO sell more credit scores. The more accounts you have the more money they make selling credit scores.
Adding more accounts will probably just lower your AAoA and lower your real score. However, if you have a couple dozen 20 year old accounts, adding a new account or two will hardly budge your score.
@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?
More accounts = Better score? should be: More accounts = More solid score.
Having more and various types of credit is important to having a good solid score that you can trust to stand the test of time. You can reach an 800 score by having just 3 credit cards but look out if you apply for an auto loan or mortgage. By not having any installment loan history you will have a tough time getting that first auto loan or mortgage.
The thicker your file the less your score will drop when adding new credit for life's necessities like an auto loan, mortgage and new credit cards.
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.
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.
@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.