topic Re: How to Add More Credit Accounts Wisely in Credit Cards

How to Add More Credit Accounts Wisely

Anonymous — Mon, 12 Dec 2016 15:34:00 GMT

My FICO scores are in the low 700's, which is nothing to complain about, but like everyone here I want to achieve the highest scores possible.

A significant factor influencing my scores is the fact that I have few active credit accounts. I recently applied and was approved for a Citi Double Cash Card with a $4,900 credit limit. That added substantially to my available credit. I would like to apply for one more credit card but not sure when to do this. How long should I wait before I apply for my next credit card?

Re: How to Add More Credit Accounts Wisely

Anonymous — Mon, 12 Dec 2016 16:16:02 GMT

There is no one formula, keep in mind people can achieve over 800s with 3 credit cards and one loan. If you are not going to do spree, and not tempted by signup bonuses here there everywhere not a bad idea thinking long term to just get one now and let it grow. If you still want to shop for one if you take a long time to do it you are still building months of history with what you already have. Can't go wrong either way.

Re: How to Add More Credit Accounts Wisely

Dalmus — Mon, 12 Dec 2016 16:20:12 GMT

@Anonymous wrote:
My FICO scores are in the low 700's, which is nothing to complain about, but like everyone here I want to achieve the highest scores possible.

A significant factor influencing my scores is the fact that I have few active credit accounts. I recently applied and was approved for a Citi Double Cash Card with a $4,900 credit limit. That added substantially to my available credit. I would like to apply for one more credit card but not sure when to do this. How long should I wait before I apply for my next credit card?

I predict two schools of thought in the responses you may get...

1) It depends on what the other card you want is. Some banks are more sensitive to multiple inquiries/new accounts in a short period of time. If you don't have many recent inquiries besides that Citi card you just got, you should *probably* be fine with just about anything. Unless you bump into the 5/24 rule with Chase. Assuming you don't carry (much of) a balance, the bump in available credit should help your score.

2) Do it now and get it over with, so all your new accounts and inquiries can start aging at the same time.

I'll add one from my personal opinion...

3) Are you going to be looking to buy a house or a car in the near future? If not, then your score doesn't really matter (within reason) right now. Let the Citi age for 12 months, then apply for another card.

What's your current card lineup? Any other loans? Giving us that info will help the gurus here tailor a better reply to your particular profile.

Re: How to Add More Credit Accounts Wisely

Anonymous — Mon, 12 Dec 2016 16:35:58 GMT

@Anonymous wrote:
There is no one formula, keep in mind people can achieve over 800s with 3 credit cards and one loan. If you are not going to do spree, and not tempted by signup bonuses here there everywhere not a bad idea thinking long term to just get one now and let it grow. If you still want to shop for one if you take a long time to do it you are still building months of history with what you already have. Can't go wrong either way.

I always thought, and often hear from people who help with credit that the highest credit scores are given to people with 1 current home loan 1 current auto loan 3 current credit cards and 1 installment loan history or current. That along with 20 years of credit history is how you get 840+ FICO's. It seems like it could be true because what creditors want is good little payers who are in a plausible and affordable amount of debt, not people who own all the things they have and reap the rewards without paying interest on their credit cards.

My question is there anyone who only has one loan with no requirement to which type (installment, auto, home) and 3 credit cards who has a FICO over 825?

Just my curiosity. That is my current situation, well I have 10 cc's but only 1 loan type, what hurts me is my AAoA (1y2m)

Re: How to Add More Credit Accounts Wisely

SouthJamaica — Mon, 12 Dec 2016 17:12:32 GMT

@Anonymous wrote:
My FICO scores are in the low 700's, which is nothing to complain about, but like everyone here I want to achieve the highest scores possible.

A significant factor influencing my scores is the fact that I have few active credit accounts. I recently applied and was approved for a Citi Double Cash Card with a $4,900 credit limit. That added substantially to my available credit. I would like to apply for one more credit card but not sure when to do this. How long should I wait before I apply for my next credit card?

I personally do not believe that that is a factor limiting your FICO scores.

I used to think that, based on misinformation I was getting from sites showing Vantage scores, but I now believe that you can achieve perfect 850 FICO scores with just a handful of revolving accounts.

If you have 3 or more bank or credit union credit cards, I do not believe you will gain any points at all from having more revolving accounts.

If you have no installment accounts, you probably would gain points by taking out a small 48 or 60 month share secured loan with a credit union and paying it down to 9% right off the bat.

Re: How to Add More Credit Accounts Wisely

Anonymous — Mon, 12 Dec 2016 17:45:39 GMT

I had an 802 in 2009 with no property. 6 credit cards and one chase auto loan. Then 2009 happened and all it entailed . Balance chasing, landlord default, so on.

Re: How to Add More Credit Accounts Wisely

Dalmus — Mon, 12 Dec 2016 19:42:40 GMT

@Anonymous wrote:
I had an 802 in 2009 with no property. 6 credit cards and one chase auto loan. Then 2009 happened and all it entailed . Balance chasing, landlord default, so on.

My Fiance had an 810 (FICO 9) two months ago according to our credit union. She has 3 credit cards and a car loan, nothing else.

Re: How to Add More Credit Accounts Wisely

Anonymous — Mon, 12 Dec 2016 20:08:17 GMT

[My original reply seems to be lost.]

My FICO scores were in the low 800's (802, 805, 810) with 2 credit cards, a gas card and an installment loan (auto lease.) Then I stupidly made a late payment on my Verizon Wireless bill and that killed my scores. I have read in many places that the impact on my FICO scores would have been reduced if I had more credit accounts. In fact, having few credit accounts is reported as a "negative score factor" on my FICO reports.

Two years after my late payment my FICO scores are in 700-teens, e.g., TransUnion is 714. I want to get to 740 so I'll be 'excellent' to most lenders. I've been approved for a third credit card and I'm wondering about applying for a fourth. I wonder if the lender will be put off by seeing two credit applications in a short time. I might get denied or get approved but with a low credit limit. On the other hand, the sooner I get the fourth card, the sooner it starts to age. What do people think is the better course of action - should I apply for a fourth card now or wait?

Re: How to Add More Credit Accounts Wisely

wmweeza — Mon, 12 Dec 2016 20:42:39 GMT

@Anonymous wrote:
There is no one formula, keep in mind people can achieve over 800s with 3 credit cards and one loan. If you are not going to do spree, and not tempted by signup bonuses here there everywhere not a bad idea thinking long term to just get one now and let it grow. If you still want to shop for one if you take a long time to do it you are still building months of history with what you already have. Can't go wrong either way.

I did it with 3 cards and no loan.

I'd keep in mind AAofA, I wait 2 years between apps OR I apply fo 2 cards on the same day/week, that way my accounts age at the same rate and I know exactly when the inquiries fall off

Re: How to Add More Credit Accounts Wisely

NRB525 — Mon, 12 Dec 2016 20:50:35 GMT

@Anonymous wrote:
[My original reply seems to be lost.]

My FICO scores were in the low 800's (802, 805, 810) with 2 credit cards, a gas card and an installment loan (auto lease.) Then I stupidly made a late payment on my Verizon Wireless bill and that killed my scores. I have read in many places that the impact on my FICO scores would have been reduced if I had more credit accounts. In fact, having few credit accounts is reported as a "negative score factor" on my FICO reports.

Two years after my late payment my FICO scores are in 700-teens, e.g., TransUnion is 714. I want to get to 740 so I'll be 'excellent' to most lenders. I've been approved for a third credit card and I'm wondering about applying for a fourth. I wonder if the lender will be put off by seeing two credit applications in a short time. I might get denied or get approved but with a low credit limit. On the other hand, the sooner I get the fourth card, the sooner it starts to age. What do people think is the better course of action - should I apply for a fourth card now or wait?

OP this additional information makes the earlier advice more pertinent: You should not expect a noticeable increase in your scores from another account.

Unfortunately the baddie is what is holding your score down. Others can suggest because I don't know if it is possible, but if you can somehow get that removed, it would be the best single action for your file. Aging it off is the next option.

You are free to app another card if the rewards or benefits align with your goals, just don't expect a score bump from that alone.

Good luck!

Re: How to Add More Credit Accounts Wisely

Anonymous — Mon, 12 Dec 2016 21:40:37 GMT

@wmweeza wrote:
@Anonymous wrote:
There is no one formula, keep in mind people can achieve over 800s with 3 credit cards and one loan. If you are not going to do spree, and not tempted by signup bonuses here there everywhere not a bad idea thinking long term to just get one now and let it grow. If you still want to shop for one if you take a long time to do it you are still building months of history with what you already have. Can't go wrong either way.
I did it with 3 cards and no loan.
I'd keep in mind AAofA, I wait 2 years between apps OR I apply fo 2 cards on the same day/week, that way my accounts age at the same rate and I know exactly when the inquiries fall off

what is your AAoA? It would be a dream to have 800 FICO for low interest home or auto loan but honestly I'll be happy when I'm at 750 and can get a decent rate, I am trying to get a mortgage in the next couple of years which is why I ask.

Re: How to Add More Credit Accounts Wisely

precision — Tue, 13 Dec 2016 00:04:07 GMT

@Anonymous wrote:
@Anonymous wrote:
There is no one formula, keep in mind people can achieve over 800s with 3 credit cards and one loan. If you are not going to do spree, and not tempted by signup bonuses here there everywhere not a bad idea thinking long term to just get one now and let it grow. If you still want to shop for one if you take a long time to do it you are still building months of history with what you already have. Can't go wrong either way.
I always thought, and often hear from people who help with credit that the highest credit scores are given to people with 1 current home loan 1 current auto loan 3 current credit cards and 1 installment loan history or current. That along with 20 years of credit history is how you get 840+ FICO's. It seems like it could be true because what creditors want is good little payers who are in a plausible and affordable amount of debt, not people who own all the things they have and reap the rewards without paying interest on their credit cards.

My question is there anyone who only has one loan with no requirement to which type (installment, auto, home) and 3 credit cards who has a FICO over 825?

Just my curiosity. That is my current situation, well I have 10 cc's but only 1 loan type, what hurts me is my AAoA (1y2m)

MY AAoA is currently 2.9 and I have a 833 TU FICO 08 with 6 credit cards and no home loan, car loan, or any other installment loan.

2 months ago I couldn't even generate a FICO at all. I got most of my AAoA from a closed AU account that is 14 years old.

Re: How to Add More Credit Accounts Wisely

Revelate — Tue, 13 Dec 2016 00:26:50 GMT

@Dalmus wrote:
@Anonymous wrote:
I had an 802 in 2009 with no property. 6 credit cards and one chase auto loan. Then 2009 happened and all it entailed . Balance chasing, landlord default, so on.
My Fiance had an 810 (FICO 9) two months ago according to our credit union. She has 3 credit cards and a car loan, nothing else.

Which CU is using FICO 9? My apologies if this has been answered previously.

Anyway in general you can have lots more accounts than 3 revolving and 1 installment to hit an 850 on FICO 8 and presumably FICO 9, really the minimum you want is 5 revolvers with how revolving utiliztion is calculated from my data but maybe it's different on clean files.

Also as has been noted by another you can get a FICO 8 of 800+ in 2 years if you build your file smartly from scratch (assuming no negatives that you're waiting for to come off like I am).

If it were me building a new credit report I'd go get a share secured loan, pay it 95% back, then go open 5 cards, unsecured, secured, store doesn't matter what type preferably from recognized lenders (less chance of something popping up as a consumer finance account) and then sit on my hands and let everything age for 2 years.... unfortunately most of us aren't blessed with that sort of credit opportunity.

Re: How to Add More Credit Accounts Wisely

Anonymous — Tue, 13 Dec 2016 00:38:50 GMT

All the great advice I'm hearing is terrific. Wow.

My A A of A (took me a while to figure that out) is 162 months.

The idea behind getting extra accounts is to decrease my utilization ratio, which is low already, but affected by the auto lease. I also read that more credit accounts is viewed favorably, up to a point, as it indicates greater acceptance of my credit-worthiness,.

I don't expect an immediate improvement in my scores from adding new accounts, but I do anticipate that after a few months my scores will start to climb at a faster rate than by aging alone.

I'm leaning towards applying for that second credit card now. Your advice has been helpful and I'm still ready to listen.

Re: How to Add More Credit Accounts Wisely

BronzeTrader — Tue, 13 Dec 2016 03:58:36 GMT

I think in general, banks like folks who have different lines of credit, multiple CCs, auto loan and house loan. Some decent charges (spending) and good payment history. Or they want to see that you have $$ to spend and you always pay on time. They want big spenders, but not payment problems.

The FICO scores are really mis-leading. There are various types of scores and some do not make sense at all. The consumer side scores are always higher than the bank side scores. So do not believe the 8xx score you see now. When you apply for CCs, banks normally send your real FICO scores they look at. They are always lower than the free ones.

Re: How to Add More Credit Accounts Wisely

Revelate — Tue, 13 Dec 2016 04:17:58 GMT

@BronzeTrader wrote:
I think in general, banks like folks who have different lines of credit, multiple CCs, auto loan and house loan. Some decent charges (spending) and good payment history. Or they want to see that you have $$ to spend and you always pay on time. They want big spenders, but not payment problems.

The FICO scores are really mis-leading. There are various types of scores and some do not make sense at all. The consumer side scores are always higher than the bank side scores. So do not believe the 8xx score you see now. When you apply for CCs, banks normally send your real FICO scores they look at. They are always lower than the free ones.

There's no correlation and this comment is honestly baseless.

Yes the only score that matters is the one the lender pulls hence worry about file optimization rather than what the resultant score is; however, lenders generally use one or two particular scores, and then the compare that with the rest of their customer data using the same scores. They're not picking random scores out of the wind to your detriment... fortunately we live in a free market society, if you get an absurd rate or fees you just go elsewhere. Banks are cognizant of that.

Re: How to Add More Credit Accounts Wisely

BronzeTrader — Tue, 13 Dec 2016 04:26:25 GMT

@Revelate wrote:
@BronzeTrader wrote:
I think in general, banks like folks who have different lines of credit, multiple CCs, auto loan and house loan. Some decent charges (spending) and good payment history. Or they want to see that you have $$ to spend and you always pay on time. They want big spenders, but not payment problems.

The FICO scores are really mis-leading. There are various types of scores and some do not make sense at all. The consumer side scores are always higher than the bank side scores. So do not believe the 8xx score you see now. When you apply for CCs, banks normally send your real FICO scores they look at. They are always lower than the free ones.

There's no correlation and this comment is honestly baseless.

Yes the only score that matters is the one the lender pulls hence worry about file optimization rather than what the resultant score is; however, lenders generally use one or two particular scores, and then the compare that with the rest of their customer data using the same scores. They're not picking random scores out of the wind to your detriment... fortunately we live in a free market society, if you get an absurd rate or fees you just go elsewhere. Banks are cognizant of that.

What you said is really baseless.

Banks look at different types of FICO scores, which are often different from the ones provided by the banks to customers. In essence, there are internal FICOs and customer FICO scores. Most of time, they are different.

This has been discussed so many times here at MyFICO. Go read it.

Re: How to Add More Credit Accounts Wisely

Anonymous — Tue, 13 Dec 2016 14:48:19 GMT

I weighed all the information I learned here and read on the web, and decided to apply for another credit card.

It's a gamble any way you look at it, because we'll never know the internal factors that a lender considers when extending credit, which go beyond 'the numbers' to include things like the lender's own financial situation and their competitive position in the market.

Anyway, I was approved for a Capital One Quicksilver card. Their post-decision disclosures included my Equifax FICO score (credit card version) which is still a bit over 700 after two hard pulls of my credit report. It seems crazy to me that my total credit line is now more than double what is was previously. On the other hand, my previous total credit line was not really impressive.

Going forward, I'm counting on the responsible use of my credit and the passage of time to return me to 'excellent' status.

I would never have done this without your combined wisdom. Thanks for sharing. I truly appreciate it.

Re: How to Add More Credit Accounts Wisely

Revelate — Tue, 13 Dec 2016 15:24:26 GMT

@BronzeTrader wrote:
@Revelate wrote:
@BronzeTrader wrote:
I think in general, banks like folks who have different lines of credit, multiple CCs, auto loan and house loan. Some decent charges (spending) and good payment history. Or they want to see that you have $$ to spend and you always pay on time. They want big spenders, but not payment problems.

The FICO scores are really mis-leading. There are various types of scores and some do not make sense at all. The consumer side scores are always higher than the bank side scores. So do not believe the 8xx score you see now. When you apply for CCs, banks normally send your real FICO scores they look at. They are always lower than the free ones.

There's no correlation and this comment is honestly baseless.

Yes the only score that matters is the one the lender pulls hence worry about file optimization rather than what the resultant score is; however, lenders generally use one or two particular scores, and then the compare that with the rest of their customer data using the same scores. They're not picking random scores out of the wind to your detriment... fortunately we live in a free market society, if you get an absurd rate or fees you just go elsewhere. Banks are cognizant of that.
What you said is really baseless.

Banks look at different types of FICO scores, which are often different from the ones provided by the banks to customers. In essence, there are internal FICOs and customer FICO scores. Most of time, they are different.

This has been discussed so many times here at MyFICO. Go read it.

I apologize as I came off more heavy handed than I intended but that doesn't invalidate my point.

The scores that are given for free are not necessarily the ones the use to UW an application. True enough.

That has no bearing on my statement though: they will use some given credit score (FICO or otherwise), and they use that in part to determine your credit worthiness based on their entire customer data set. You may pull an 800 on your FICO 8, but a 600 on your internal score, but you're likely going to darned close to the same rate regardless. It is a comparitive analysis, not an absolute one.

The financial market is not a monopoly, it's not even a mature one with how many players are in it certainly on the credit card side (mortgages not withstanding) and if one bank is charging usurious APR's the customers are going to go elsewhere. Ergo they can't, and your rate is not determined by your score alone.

There's nothing to the detriment of customers (well could argue the entire practice isn't in our best interests but what I mean is it's not purposefully done to harm us), it's just how the market works.

Worrying about absolute value of any given score isn't worth much: hence the common recommendation to simply create a pretty report, as that will create a pretty score regardless of algorithm selected.

Re: How to Add More Credit Accounts Wisely

Anonymous — Wed, 14 Dec 2016 12:55:12 GMT

Sorry, I can't agree with that.

For larger loans such as morgages I am sure that the lender reads and considers the entire credit report. For other purposes only the score matters. To give one example: both of my recent credit card applications were approved online in less then 30 seconds. No one was reading my credit report during that time. Moreover, computers don't have the discretion to approve credit requests that are 'on the border.' You either meet the pre-determined criteria or you don't. A few points of score could make all the difference.