Understanding FICO® Scoring

[gp82402]

I was just wondering if having too many credit cards hurt you score. I checked my Transunion score a few weeks ago and it was 630 (ouch), checked again today and its now 675. The only change is I paid off and closed Cap 1 ($300). I'm not sure if this would cause the 45 point increase. I also just closed a walmart card but that hasn't updated yet..

[beamMEup]

Paying a balance on a revolving account down to reporting a zero balance can have a significant FICO score impact.

Reducing the number of accounts which are reporting a balance can also have a FICO score impact.

Closing an account is another story altogether.  Read fused's Closing Credit Cards for some helpful info.

How many revolving accounts do you currently have open (with and/or without a reported balance)?

[gp82402]

I have 6 revoving accounts and 2 auto loans. I just closed my cap 1 and my walmart card. Both have a 0 balance. I did have one late on the cap 1 3 years ago and noticed that the little red flag that shows what's hurting your score is no longer there since the account has been closed. Maybe that's why I got the 45 point increase? I'm not sure but I would think it still counts as a negative even if the account is closed.

[llecs]

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gp82402 wrote:
I have 6 revoving accounts and 2 auto loans. I just closed my cap 1 and my walmart card. Both have a 0 balance. I did have one late on the cap 1 3 years ago and noticed that the little red flag that shows what's hurting your score is no longer there since the account has been closed. Maybe that's why I got the 45 point increase? I'm not sure but I would think it still counts as a negative even if the account is closed.

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Sounds like an aspect of that TL changed, in your favor, causing an increase. I don't think you get red-flagged for anything but a negative comment, a late, negative comment, etc. Changed in util may have helped too, but that wouldn't be the cause of the red flag. I'd look in your before and after reports to see what changed in your CapOne.

[gp82402]

I thought the only differences between the two reports were it now reporting a 0 balance and the account being closed. I just noticed its now reporting that the account information is being diputed. I didn't submit a dispute because I was late a few years ago so I'm not quite sure why its there. I'm going to assume it reporting as a dispute is the cause of the increase.

[veracious]

I apoligize for the thread- jack.

If the OP is not subject to FICO Scoring Reason code #4, when would this reason code apply in

another situation?

Thanks

[gp82402]

What is fico score reason code #4?

[veracious]

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gp82402 wrote:
What is fico score reason code #4?

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Hi ,gp82402

Fico score reason codes can be found on this board. Just look above the section where the latest post appears.

Here's the link---->http://www.royalmortgagecredit.com/credit_report.htm

The link was originally added by  haulingthescoreup.------------->http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/FICO-scoring-reason-codes/td-p/631713

ETA:  added hauling's link.

[beamMEup]

Another forums poster was hit with Reason Code #4 with 6 open revolving accounts - but this was awhile back:

http://ficoforums.myfico.com/t5/Credit-Cards/Citibank-closed-my-account-for-no-reason/m-p/590246

(And of course, you have to look at how many of the six revolving accounts are actually bank or national revolving accounts - which is what Reason Code #4 is counting).

We actually do watch this one as we groom our reports (that's easy for us cuz we're rebuilders and we just don't want a lot of revolving accounts anyway) - but others would not be concerned about this at all. 

I'm going to guess it's a very very small FICO hit, and one that not many folks would worry about.

But, to play the devil's advocate, I guess Citi did care about it - at least at the time of the post linked above.  We just don't see this one referenced that often.  I'm going to guess that's because it's fairly low on the list of reason codes for many folks and doesn't show up until lots of other - more FICO damaging - reason codes are no longer impacting one's credit report.

Hopefully other folks who have seen this on their CR's will chime in.

[AndySoCal]

Im replying to all that has been discussed so far.

FICO reason Code 4 cannot  be related to the OP's question. If you look at the link  reason code 4 is not returned by TU  in the  Empirica 98 score. What will account for the score change is the account being in dispute.  While an account is in dispute for the most part it will remian neutral in the FICO score calculation.  Once the account is no longer in dispute then the effect of that account  will be fully reflected in the score. I would add this most lenders will not fund a loan with account(s) in dispute. The disputed account may not be the full reason for the change in the FICO score there could be other factors as well.