Re: how much effect does the # of open accounts have?
05-28-2010 08:25 AM
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 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?
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!