topic Re: Why three? in Understanding FICO® Scoring

Why three?

Anonymous — Tue, 11 Sep 2018 21:52:12 GMT

I've had 3 cards, one instalment loan drilled into my brain since I started this forum in Feb. Yet here I sit with only 2 cards and a loan lol.

The reason I only have two cards is because...
I started out with no credit score. I got lucky with discover secured and my credit union unsecured.
Another reason is I didn't want a bunch of subprime, high AF cards.

I have scores now. (Hit 6months this month.) However, DH and I want to buy a house in Jan.

How badly is NOT having 3 cards hurting my score? Would adding a third one now hurt my mortgage goal? I feel like it would drop my score in the short term and not recover in time for mortgage shopping. Is that correct?
Discover is 6 months old
OSCU visa is 4 months old

Re: Why three?

Medic981 — Tue, 11 Sep 2018 21:50:06 GMT

Three CC and one installment loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. Two CC revolvers are not "hurting" your FICO scores, it is just not maximizing the scores you could be getting.

Re: Why three?

Anonymous — Tue, 11 Sep 2018 22:20:25 GMT

Furthermore, you don't want inquiries or new accounts 6 months to 1 year out from mortgage closing, stay where you are until you get the key to the house.

Re: Why three?

Anonymous — Tue, 11 Sep 2018 23:49:07 GMT

Thank you. My gut was saying to wait, and that it would hurt more than help right now but I needed ti double check. ☺

Re: Why three?

Kforce — Wed, 12 Sep 2018 00:39:15 GMT

@Anonymous wrote:
Furthermore, you don't want inquiries or new accounts 6 months to 1 year out from mortgage closing, stay where you are until you get the key to the house.

+ 1

As a data point: I got my first mortgage with 2 cards and 1 auto loan and AAOA of 4 years.

Would not get another CC until after the mortgage.

Re: Why three?

Anonymous — Wed, 12 Sep 2018 00:43:20 GMT

I didn't get my first CC until 4 years after I got my mortgage (my oldest account after student loans dropped off my report).

Re: Why three?

Anonymous — Wed, 12 Sep 2018 00:44:22 GMT

Thanks Kforce

Our scores are good (not amazing) now. So I don't want to mess with that. Our big hurdle is thin files, but was told that shouldn't stop us.

Re: Why three?

Anonymous — Wed, 12 Sep 2018 01:06:45 GMT

@Anonymous
How badly is NOT having 3 cards hurting my score?

Not much at all. To attempt to quantify it, the average loss from not having 3 cards is about 8 points. Some report only 4 or so, where the most I've seen reported is 12. Overall, it's not a significant factor.

What is more significant is your total number of accounts. 3 revolvers is FAR less important than simply having a non-thin file, which most believe is 4+ accounts. Many people (I was one for 10-15 years) roll with just 1 CC and do just fine by their scores. Mine were in the 790-800 range for the better part of a decade with only 1 revolver, but I had plenty of other accounts on my CR, thus giving me a non-thin file.

Re: Why three?

Anonymous — Wed, 12 Sep 2018 01:34:51 GMT

Thanks BrutalBodyShots, ☺

4 points isnt worth stressing over but 12 sure is lol
DH and I absolutely have thin and young files. 2 cards one instalment loan. But hopefully having clean files, long employment history and 20% down will override that.

Re: Why three?

SouthJamaica — Wed, 12 Sep 2018 02:40:15 GMT

@Anonymous wrote:
I've had 3 cards, one instalment loan drilled into my brain since I started this forum in Feb. Yet here I sit with only 2 cards and a loan lol.

The reason I only have two cards is because...
I started out with no credit score. I got lucky with discover secured and my credit union unsecured.
Another reason is I didn't want a bunch of subprime, high AF cards.

I have scores now. (Hit 6months this month.) However, DH and I want to buy a house in Jan.

How badly is NOT having 3 cards hurting my score? Would adding a third one now hurt my mortgage goal? I feel like it would drop my score in the short term and not recover in time for mortgage shopping. Is that correct?
Discover is 6 months old
OSCU visa is 4 months old

It's not hurting your score. You're doing fine. You can get perfect scores with 2 cards, so don't sweat it. The best thing you can do when preparing for mortgage application is not to apply for anything.

Re: Why three?

Anonymous — Wed, 12 Sep 2018 14:07:24 GMT

@Anonymous wrote:
Thanks BrutalBodyShots, ☺

4 points isnt worth stressing over but 12 sure is lol
DH and I absolutely have thin and young files. 2 cards one instalment loan. But hopefully having clean files, long employment history and 20% down will override that.

Do you have any closed accounts? If you do, these also count toward FICO's assessment regarding whether your profile is thin or not. I.e. one closed account would bring your total number of accounts to 4.

Re: Why three?

Anonymous — Wed, 12 Sep 2018 16:49:04 GMT

Hey there CGID. I'm thinking that the OP doesn't have any closed accounts, as in their original post a reference was made of finally hitting 6 months or something and being able to get scores. I could be wrong though and you are correct that any closed account(s) would aid the OP in escaping thin file.

Re: Why three?

Anonymous — Wed, 12 Sep 2018 16:59:42 GMT

Nice catch BBS.

I am not sure if anyone has addressed this, but if our OP is willing to delay the house purchase until all of his accounts are at least 12 months old, he should get a significant boost there as well.

Having an Age of Youngest Account at > 12 months helps anyone, but since AoYA is also one of the three factors used in scorecard assignment, having an AoYA at > 12 might well boost him out of a scorecard with a sharply truncated score ceiling.

Delaying the house purchase would also cause any inquiries to stop hurting his score.

Re: Why three?

Anonymous — Wed, 12 Sep 2018 17:44:16 GMT

Great points above. Aside from the scoring benefit of reaching 12 months AoYA, it's also worth mentioning that upon a manual review (a definite with a mortgage app) the OPs potential lender would feel a bit better about the overall profile being examined.

Re: Why three?

Anonymous — Wed, 12 Sep 2018 18:01:50 GMT

Thanks for the insight BBB and CreditGuy. ☺
I'm a she, not that it matters lol
DH and I existed cash only until 6 months ago. Crazy I know. I had student loans back in the late 80s but those are looong gone now.

We might wait till March (1 year) to home shop, but home prices are lower here in the winter and rise back up in spring and summer

Mortgage folks in that part of the forum said no reason to wait a year, but we do want to maximize scores for best interest rates.

My middle mortgage score is 726, hubbys is 722 but that was before I implemented azeo and payed down my instalment loan. So who knows what it is now 🤔

Re: Why three?

Anonymous — Wed, 12 Sep 2018 18:12:07 GMT

I would certainly get all your accounts in perfect shape and then pull your mortgage scores again.

One possibility might be to ask your parents to add you as an AU to a very old clean card with a $0 balance -- if they have such a card. That would help your score a ton, plus get you one more tradeline.

Re: Why three?

Anonymous — Wed, 12 Sep 2018 18:21:30 GMT

CreditGuyInDixie,

Hubby's parents have both past on. I still have my Father but no clue what his credit history is like.

If anyone is bored and wants to view my full data points, they are posted here https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/We-finally-have-credit-scores-data-points-included/td-p/5347054

Re: Why three?

Anonymous — Wed, 12 Sep 2018 20:09:30 GMT

I agree with CGID regarding a potential au account. Taking your AoOA from 6-9 months to something > 17 years would be a huge scoring aid.