Trade Lines and Their Effects on Scoring

[orky626]

I know that some of you have said that your score can drop because of too many trade lines reporting.  How many trade lines are considered too many.  I currently have 5 revolving CC accounts and am thinking about applying for another CC to increase my debt to CL ratio.  I am just concerned that I will get dinged for having too many CC accounts. 

Here are my CC Stats

Commerce FCU Visa - 1500 balance/4000 CL

Captial One MC - 0 balance/300 CL

Aspire Visa - 0 balance/750 CL

Orchard Bank MC - 0 balance/300 CL

First Premiere Bank Visa - 0 balance/250 CL

My FICO Scores are EQ - 600; TU - 631; EXP - 642.  What cards would I qualify for with these scores?

[llecs]

Some here have 30-40+++

You don't have too many. In fact, 30-40 isn't too many. FICO will give you an annoying red flag on your reports when you hit 30 or so, but I understand there's no damage to your score and that FICO is just being picky.

Now you do and will get dinged for getting a new CC. FICO doesn't like to see new credit. Adding a CC will lower your AAoA and thus your score drops. Moreover, new accounts will ding the score too as FICO doesn't like to see recent new credit. On avg., I took a 20-25 point hit for adding new CCs. Most of these points will return with time and about 90% will return within 4-6 months from the date the CC first reports.

[orky626]

Thanks for such a quick response.  In that case, I may hold off for a few.  I just go across to the 600 threshold so I am not trying to lose anymores points, especially if the creditors are checking my EQ score.

[Anonymous]

Taking on a lot of accounts typically hurts more in the average age and new credit/inquiry categories. As Hauling stated, you won't get a ding for the number of accounts themselves unless you have a ton.

[haulingthescoreup]

OP, if you're talking about the number of accounts reporting a balance (as opposed to just existing on your reports), here's what you look at:

--half of fewer of all open TL's with balances --this includes CC, lines of credit, mortgages, car loans, etc.
--fewer than half of all revolving accounts with balances --CC's and LOC's with CL's under $30K, maybe $40K
--most people should always have at least one CC reporting a very minimal balance.

So with 5 CC's currently, you should try to have only one or two reporting balances ( 5 / 2 = 2.5; 2 < 2.5 ) If you add a sixth one, this won't change ( 6 / 3 = 3; 2 < 3 )

If you also have, for instance, a mortgage and car loan, that's 8 open tradelines. So 8 / 2 = 4 , and by the first guideline, you can have 4 accounts reporting. Two are the mortgage and car loan, so that once again leaves you with up to two CC's reporting.

If you were indeed asking about how many total accounts can you have, then I'm sorry for the arithmetic lesson!

[orky626]

haulingthescoreup, Thanks.  I need your arithmetic lesson.  I don't have a car loan or a mortgage at the moment.  I'm will be looking to buy Fall '09 so I'm trying to find ways to boost my score.  However, I do have 30K in school loans and a personal loan of 5k that is currently paid down to 3K.  Other than that, the only other trade lines open are my credit cards.

[orky626]

I have another question for everyone.  FICO likes to see a retail CC in the mix correct?  I currently don't have one, should I try and open one and if so, how much of a boost will I see from opening a retail account.  Or, should I just go with opening a traditional CC?