Established Member
KatrinaE
Posts: 19
Registered: ‎07-15-2010
Do the Type of Creditors Affect your Score?

I remember back in the days of Norewest financial and American General (showing my age I know - lol!) that the type of creditor factored into your overall credit score.  Does this still ring true?  Does it make sense to close sub-prime cards (like Orchard and First Premier) and open a secured card w/ a CU?  How many and what type of tradelines are optimal now? 

 

Thanks for your input.

K

Community Leader
Valued Contributor
improvingmycredit
Posts: 1,402
Registered: ‎07-12-2011
Re: Do the Type of Creditors Affect your Score?

KatrinaE wrote:

I remember back in the days of Norewest financial and American General (showing my age I know - lol!) that the type of creditor factored into your overall credit score.  Does this still ring true?  Does it make sense to close sub-prime cards (like Orchard and First Premier) and open a secured card w/ a CU?  How many and what type of tradelines are optimal now? 

 

Thanks for your input.

K


Hey K and Welcome to the forums!

From a pure FICO perspective, the backers of the different types of revolving debt you have does not matter.  All FICO takes into account is how much credit you have and how you use it, how well you repay it and how long you've had it (plus other minor nuiances).  However, it has been noted from certain lenders that whom you have credit with can matter with regards to approval.  For example, Amex has listed on denial letters their dislike of certain lenders 

 


Starting Score: 642
Current Score: EQ 773, EX 780, TU 777 (All FICO)
Goal Score: 800+

Cards: NFCU Flagship 50K, DC 30K, BCP 28.6K, Arrival+ 25K, Citi DP 22.8K, CSP 20.5K, TotalRewards 20.5K, QuickSilver 20K

Established Contributor
jamie123
Posts: 907
Registered: ‎03-22-2012
Re: Do the Type of Creditors Affect your Score?

It seems to be the consensus on this forum that you need at least 3 credit cards to maximize your scores. The lender for the credit cards doesn't matter at all when it comes to your scores.

 

The problem comes in when you start applying for prime cards. Some prime cards will not approve you if you have some of the "bottom of the barrel" cards active on your report. The lenders you mentioned are not on that list.(Orchard,First Premier) Orchard and First Premier are both considered good sub-prime cards. Everyone has to start from somewhere!



Starting Score: EQ 658 6/18/12
Current Score: EQ 690 11/17/14 - EX 687 7/21/14 - TU 682 7/21/14
Goal Score: EQ 720+
Take the FICO Fitness Challenge

Moderator Emeritus
webhopper
Posts: 7,225
Registered: ‎09-16-2011
Re: Do the Type of Creditors Affect your Score?
One installment loan to 2 credit cards is pretty optimal.

Starting Score: 08/29/2011 TU 671 EQ 674
Current Score: TU 754 EQ 694 EX 697
Wallet: NFCU Visa Sig 25k, Amex Lowes 22k, NavCheck 15k, Amex PRG, Amex Zync, Discover It 13.5k, Amazon Visa 5k
Platinum Spade Garden Club Member: App Free since 1/1/13. No more apps til who knows when?
MyFICO Fitness Goal: 800s Club!



Take the myFICO Fitness Challenge
Mega Contributor
RobertEG
Posts: 18,211
Registered: ‎03-19-2007
Re: Do the Type of Creditors Affect your Score?
[ Edited ]

From my readings, all would seem to indicate that FICO does consider the type of creditor involved with various accounts.

Store cards, for example, appear to be assessed a bit differently than major bank cards, with recommendations in credit mix to have at least one major bank card.

Consumer credit loans also appear to indicate lack of creditor ability to secure a loan with a major bank at more favorable terms.  The same appears to be the case with secured vs unsecured revolving accounts, as secured accounts are not really the grant of a line of a discretionary credit limit based on proven history, but rather the revolving use of one's own deposit.

 

The answer lies within the hidden folds of the FICO algorithm, but all I have read indicates that creditor types have their own different indications of risk repayment and credit worthiness, and are thus scored differently.