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Re: Real scoring advantage of 3+ revolvers over 1?

I have that reason text on all three reports bought through Experian, FICO 08. I have 2 revolvers open, 1 mortgage closed, 1 mortgage open, 1 auto loan open.
2017-09-09 08: EQ 677, TU 640, EX 705
2017-09-22 08: EQ 675, TU 689, EX 706
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Re: Real scoring advantage of 3+ revolvers over 1?


Ardecko wrote:
I have that reason text on all three reports bought through Experian, FICO 08. I have 2 revolvers open, 1 mortgage closed, 1 mortgage open, 1 auto loan open.

Any revolvers closed?

 

Thinking more about the "real" way to test the topic of my thread here would be for someone with 3+ revolvers to close 2+ of them, bringing their profile down to 1 open revolver.  Of course, testing in that direction is much harder than the other way around, at least on this forum, as most people are growing their profiles here not trimming them down.  And, those trimming them down generally speaking aren't trimming them down to 1 revolver.

 

By going in the other direction, from 3 revolvers to 1, the impact of 3 revolvers verses 1 on a FICO score change would be much more cleanly realized, as there would be no AAoA change, no AoYA change, no inquiries, etc.  The only thing that could potentially change would be utilization, but if they person is of the PIF variety and kept their utilization at < 8.99% both before/after the change we'd see a nice representation IMO of 3 open revolvers vs 1 and its impact on FICO scoring.

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Re: Real scoring advantage of 3+ revolvers over 1?


BrutalBodyShots wrote:

Ardecko wrote:
I have that reason text on all three reports bought through Experian, FICO 08. I have 2 revolvers open, 1 mortgage closed, 1 mortgage open, 1 auto loan open.

Any revolvers closed?

 


I had some 10+ years ago, but it's been long enough that they are not even visible to me.

2017-09-09 08: EQ 677, TU 640, EX 705
2017-09-22 08: EQ 675, TU 689, EX 706
Gardening until Jan 1, 2018
Approvals Data Dump: https://pastebin.com/Lz7yZZvv
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Re: Real scoring advantage of 3+ revolvers over 1?

Imitation is the incerest form of flattery. 

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Re: Real scoring advantage of 3+ revolvers over 1?

sincerest

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Re: Real scoring advantage of 3+ revolvers over 1?

For sure you need at minimum 3 credit cards to be able to get the highest scores that you are capable of achieving.

 

The reason is these 2 score calculations that are run on a profile every time a score is pulled:

 

  • You get dinged points if 50% or more of your cards report a balance.
  • You get dinged points if all cards report a $0 balance.

You can't get past those 2 scoring calculations by having just 1 or 2 cards. This has been proven many times on this forum and that is why it is like a law around here to have a minimum of 3 cards. That's why the whole AZEO technique works.

 

Even having just 3 cards is a really weak/thin profile IMHO. If you just have 3 CCs, every time you app for and get new credit, say for an auto loan, it will wreck havoc with your AAoA until the 3 CCs are really well aged. IMHO it seems that having 5 to 8 CCs is the sweet spot. Once you have 5 to 8 CCs that are about 5 years old you will never have to worry about your scores again as long as you keep up with good credit behavior. (Pay all your bills on time.)


Starting Score: EQ 653 6/21/12
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Re: Real scoring advantage of 3+ revolvers over 1?


jamie123 wrote:

For sure you need at minimum 3 credit cards to be able to get the highest scores that you are capable of achieving.

 

The reason is these 2 score calculations that are run on a profile every time a score is pulled:

 

  • You get dinged points if 50% or more of your cards report a balance.
  • You get dinged points if all cards report a $0 balance.

You can't get past those 2 scoring calculations by having just 1 or 2 cards. This has been proven many times on this forum and that is why it is like a law around here to have a minimum of 3 cards. That's why the whole AZEO technique works.

 


I agree that this is common knowledge on this forum and no one is arguing against 3+ cards being beneficial to scoring over 1 card.  The purpose of this thread however is to attempt to quantify the scoring benefit of 3+ cards (with AZEO in place) over 1.  As with many credit-related topics, it's very difficult to isolate this IMO to quantify the benefit of 3+ cards over 1, as there are other variables that inevitably get introduced into the equation under most circumstances.

 

My general opinion is that while 3+ cards provides a scoring benefit over 1, I don't believe that it's as much of a scoring benefit as some are lead to believe is the case.  Again, with so many variables going into it, it's tough to tell really.  I think people often see their scores go up for reasons in addition to just the new revolvers, like aggregate utilization dropping a significant amount due to the increased credit limits.  This can give the false impression that a 10-15 point gain (for example) is actually 50 points due to having 3 cards instead of 1.  

 

In another thread I wrote about how I had only 1 credit card for 14 years and for the majority of that time, say 10 years, my scores were in the 790-800 range.  What would my scores have been if I had 3-5 cards that entire time?  Who knows.  Impossible to quantify really.  I also wasn't actively watching my reports/scores like a hawk back then like I do now, nor did I have even 1% of the credit knowledge that I do now with things like AZEO or even utilization basics.   

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Re: Real scoring advantage of 3+ revolvers over 1?


BrutalBodyShots wrote:

jamie123 wrote:

For sure you need at minimum 3 credit cards to be able to get the highest scores that you are capable of achieving.

 

The reason is these 2 score calculations that are run on a profile every time a score is pulled:

 

  • You get dinged points if 50% or more of your cards report a balance.
  • You get dinged points if all cards report a $0 balance.

You can't get past those 2 scoring calculations by having just 1 or 2 cards. This has been proven many times on this forum and that is why it is like a law around here to have a minimum of 3 cards. That's why the whole AZEO technique works.

 


 

My general opinion is that while 3+ cards provides a scoring benefit over 1, I don't believe that it's as much of a scoring benefit as some are lead to believe is the case.  Again, with so many variables going into it, it's tough to tell really.  I think people often see their scores go up for reasons in addition to just the new revolvers, like aggregate utilization dropping a significant amount due to the increased credit limits.  This can give the false impression that a 10-15 point gain (for example) is actually 50 points due to having 3 cards instead of 1.  

 


If the scoring iincrease was because it helped utilization, then the score should increase with the additon of all cards, since all cards help utilization. However, while my score increased with the 1st 3 cards, it actually decreased with the additon my 4th, 5th, and I believe 6th card. I did not see a score change with my 7th and 8th card.

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Re: Real scoring advantage of 3+ revolvers over 1?

[ Edited ]

BrutalBodyShots wrote:

jamie123 wrote:

 

  • You get dinged points if 50% or more of your cards report a balance.
  • You get dinged points if all cards report a $0 balance.

 

 


I agree that this is common knowledge on this forum and no one is arguing against 3+ cards being beneficial to scoring over 1 card.  The purpose of this thread however is to attempt to quantify the scoring benefit of 3+ cards (with AZEO in place) over 1.  As with many credit-related topics, it's very difficult to isolate this IMO to quantify the benefit of 3+ cards over 1, as there are other variables that inevitably get introduced into the equation under most circumstances.

 

My general opinion is that while 3+ cards provides a scoring benefit over 1, I don't believe that it's as much of a scoring benefit as some are lead to believe is the case.  Again, with so many variables going into it, it's tough to tell really.  I think people often see their scores go up for reasons in addition to just the new revolvers, like aggregate utilization dropping a significant amount due to the increased credit limits.  This can give the false impression that a 10-15 point gain (for example) is actually 50 points due to having 3 cards instead of 1.  

 

In another thread I wrote about how I had only 1 credit card for 14 years and for the majority of that time, say 10 years, my scores were in the 790-800 range.  What would my scores have been if I had 3-5 cards that entire time?  Who knows.  Impossible to quantify really.  I also wasn't actively watching my reports/scores like a hawk back then like I do now, nor did I have even 1% of the credit knowledge that I do now with things like AZEO or even utilization basics.  


We can attempt to quantify the difference between 3+ vs 1 card rather easily, but as I'm sure that you are aware, everyone's situation is a bit different so scores might vary a bit depending on circumstances.

 

  • You get dinged points if all cards report a $0 balance.

I have tested my scores several times with all cards reporting $0 vs one card reporting $3. If all cards report $0 I lose 18 points compared to 1 card reporting $3. Yes, I gain 18 points by having just one card report $3! (I'm sure in my past history there were several times I paid all my cards to $0 before apping for an auto loan, thinking I was doing the right thing!) (Imagine all that extra interest that I probably paid!)

 

  • You get dinged points if 50% or more of your cards report a balance.

I tested this a couple of times back when I had 7 cards. I tested it with either 3 cards vs 4 cards of 7 reporting a small balance. I can't remember the exact score change and I think it varied a bit each time but recall that it was in the neighborhood of 15 to 25 points. I would get dinged 15 to 25 points by letting the 4th card report vs having 3 cards report and this was on top of losing a few points each for the second and third reporting cards.

 

So...By having only 1 credit card and violating one of those credit scoring calculations all the time, your scores are probably depressed somewhere in the neighborhood of 15 to 25 points compared to if you had 3 cards and you used the AZEO technique. The 15 to 25 point difference, depending on where your scores are at, could end up costing you more money in interest costs on auto loans or a mortgage.

 

Thoughts?


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Re: Real scoring advantage of 3+ revolvers over 1?


Treasurecredit wrote:


If the scoring iincrease was because it helped utilization, then the score should increase with the additon of all cards, since all cards help utilization. However, while my score increased with the 1st 3 cards, it actually decreased with the additon my 4th, 5th, and I believe 6th card. I did not see a score change with my 7th and 8th card.


It would not, because scoring increases due to utilization drops are when thresholds are crossed.  If a utilization threshold is not crossed when a new revolver lands on your report, a scoring increase won't happen.  As more cards are added, there are diminishing returns with respect to the amount that utilization drops and therefore the probability of crossing a threshold decreases and eventually reaches zero.  While the chances of each card being added having the same credit limit is slim to none, for the sake of this illustration we can only assume that they are in order to make my point:

 

Cornelius has only 1 credit card with a $2000 limit and a reported balance of $600 on it.  He's at 30% utilization.  He adds a second card, also with a $2000 limit.  His aggregate utilization then drops to 15%, crossing a utilization threshold at 29%.  His score would increase.  He then adds at third card, also with a $2000 limit.  His aggregate utilization then drops to 10%.  His score would not increase here, as he did not cross a threshold.  Adding a fourth card with another $2000 limit would drop his utilization to 8%, crossing the 9% threshold which would result in a score increase.  At that time, having crossed the final/best threshold, adding additional cards from a fifth onward would have no scoring impact due to reduced utilization.  As you can see, there are diminishing returns with each card added with respect to the number of utilization percentage points that are dropped with each additional card. 

 

The reason you did not see a score change with you added a 7th and 8th card is that your aggregate utilization had already crossed into the top tier.  Rapidly diminishing returns after adding several cards quickly prevents someone from achieving further utilization-related increases. 

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