how much effect does the # of open accounts have?

[Anonymous]

I'm trying to understand "the other part" of credit repair to maximize my husband's score potential.  Working on the negative tradelines, but also wondering if he needs more positive tradelines.  He has enough old, positive (closed) accounts that one or two new ones won't change his 7 year AAoA by more than a couple months.

Currently he has open:

1 mortgage

1 CC (0% utilization)

1 AU CC (5% utilization)

1 student loan

We're looking to buy a new house, maybe 9-12 months from now, and potentially considering a short-term car loan within the next 9 months.  Obviously, recent inquiries could hurt his score.  He only has 2 at the moment.   We also might end up building a house.  In which case, we'd sell our current home (closing the mortgage) and rent for a few months, which would decrease his open accounts to 3 at the time we'd be looking for preapproval.

I was thinking we could start a savings account with a local credit union, which might give us a better chance on a good auto loan rate if/when we need it, but should we also consider trying for another credit card with them (or elsewhere)?  Would his score increase with another positive, although recent, tradeline?  If so, would the increase be outweighed by the decrease from an inquiry ding?

Thanks!

[Anonymous]

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@Anonymous wrote:

I'm trying to understand "the other part" of credit repair to maximize my husband's score potential.  Working on the negative tradelines, but also wondering if he needs more positive tradelines.  He has enough old, positive (closed) accounts that one or two new ones won't change his 7 year AAoA by more than a couple months.

Currently he has open:

1 mortgage

1 CC (0% utilization)

1 AU CC (5% utilization)

1 student loan

We're looking to buy a new house, maybe 9-12 months from now, and potentially considering a short-term car loan within the next 9 months.  Obviously, recent inquiries could hurt his score.  He only has 2 at the moment.   We also might end up building a house.  In which case, we'd sell our current home (closing the mortgage) and rent for a few months, which would decrease his open accounts to 3 at the time we'd be looking for preapproval.

I was thinking we could start a savings account with a local credit union, which might give us a better chance on a good auto loan rate if/when we need it, but should we also consider trying for another credit card with them (or elsewhere)?  Would his score increase with another positive, although recent, tradeline?  If so, would the increase be outweighed by the decrease from an inquiry ding?

Thanks!

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Hi path77,

Looks like you are on top of things and planning ahead!

Have you had a chance to pull your scores here?  That'll give you a good idea of where you're at.  And the scores come with a simulator that will help you determine what may best impact your scores moving forward. 

Your utilization is great!  DH had an 800+ EQ fico with only 1 mortgage, 1 installment and 1 cc, with an AAofA about the same.  And there's several other posters in the 800's that don't have a lot of open accounts.

He is fine with one cc.  Some folks like to make sure less than half of their accounts report a balance (and FICO likes to see that), so having three cc's would help him hit that goal.  It does matter what type of CC's you have - FICO likes to see one bank/or national cc reporting (store cards, for example, don't typically fit that category - it depends).  IMO - I would go for a third cc.  What cards does he currently have?

I'm not sure if opening a checking account at your CU will help you obtain a car loan with them or not.  It will be an inquiry (at least in our experience) to open that checking account, and then another inquiry later when you shoot for the auto loan.  We've never had a problem getting a car loan with CU's and have not always had a pre-existing account with them.  Especially if you select a CU that does the majority of car loans in your area.

Good luck with your good plans!

[Anonymous]

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@Anonymous wrote:

What cards does he currently have?

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The 0% utilization card is with HSBC, and the AU card is Home Depot/Citi.

The local credit union is CFCU, and they don't pull a hard inquiry to open a savings/checking account, so we would just be looking at (hopefully) one inquiry for the credit card and one inquiry for the auto loan.  Sounds like it might be in our best interest to get another revolving account in the mix.

Thanks!

[Anonymous]

Your time frame is the issue.

Too many balances is more than likely lowering your score. It is best to stay below 50% for accounts with balances in relation to over all open accounts.

1. I'd become an authroized user of your spose or family member for 2 open credit cards to add open accounts with zero balances *if* they don't pull a hard inquiry.

or

2. I'd apply for 1 cc and PIF student loan. (may not be an option for you and would not apply for the other cc if student loan will not be PIF before you apply for new mortgage) I'm just thinking of ways you can offset your number of balances in relation to over all accounts.

I think the best short term answer I can offer here is to become an authorized user of 2 revolving accounts if you can avoid the inquiries! If you had 12 months I'd just say apply for 2 more revolving accounts, but with less than 12 months not sure in this case.

[RobertEG]

My opinion. 

He now has both revolving and intallment loans. That is good.   At four open tradelines,  probably not a "thin" credit file for scoring bucket.  Credit mix shows use of both installment and revolving credit.  I dont see addition of more revolving credit as having a significant impact now.  Maybe for long term account establishment purposes, but little or no immediate gain.

Here are some negative factors to consider when applyying for or getting approval of a new CC, most of which you are aware of.  The new inq impact is small, and only lasts a year.  But it will have short term impact.  If he applies for a new CC, the inq will hit, regrdless of whether it is approved.  If approved, as you realize,it will lower, somewhat, his AAoA. Does it have an annual fee?

So, you decide to apply for a new..... how does it impact future FICO gaIns?  Two additionaly factors to consider, in my opinion.  What is the CL on the new card, and thus how much might it theoretically improve overall revolving % util?  Then, apart from overall % util, he weil then have three CCs that FICO will be looking at for each of their individual account % utils, and also in the scoring of the % of total revolving accounts reporting any balance..  Currently, with only two cards, and one reporting a monthly balance, that is 50% of cards showing a balance,  If he gets a new card, and only one of the three thereafter reports a zero balance, he drops to 67% of cards with a balance. With one ccurrent card being an AU card, he has no direct control over the balance or % util on that revolving account.

The "other part" you are referring to is, in my opinion, not that significant, and certainly does not assure an automatic gain.  It requires increased monthly montoring for even small gains.

PIF on installment loans, such as your student loan, wouild not be a major FICO recommendation that I would make.  % util of revolving credit is scored totally separate, and with much greater impact, than % util of installment balances.  Paying down on installment loans is more a financial consideration than a FICO consideration (i.e. reducing montly interest on the install loan).