topic Re: Too Many Accounts? in Understanding FICO® Scoring

Too Many Accounts?

Anonymous — Tue, 01 Apr 2008 02:25:13 GMT

I think the MyFICO wizard might be lying to me.

When I look under "Understanding your FICO Score" for my TU report, it says:

[paste]
You have too many credit accounts with balances.

Number of your accounts carrying a balance
4 accounts
FICO High Achievers have an average of 3 credit accounts carrying a balance.
[end paste]

And what are those accounts?

Installment: auto lease
Card 1, Amex: $85 balance
Card 2, BofA Visa, $15 balance
Card 3, BofA Amex, $4 balance

Is it pulling my leg? Having 4 accounts with balances is bad?

Or did it just not know what else to tell me?

Re: Too Many Accounts?

Anonymous — Tue, 01 Apr 2008 02:42:33 GMT

i Just posted this in another thread-

My .02 cents-

I a have

Open accounts-

1 mortgage

1 heloc (igored)

1 Auto (under 50% utl)

2 SL's

1 Charge card (amex green)

2 Store cards ( Kay and an Home depot not yet reporting)

Amex Delta, Blue Cash

Wamu 1 Visa 1 MC

Cap one 1 MC

Junny 1 MC

2 CU Visa's

15 of 16 Open accounts reporting- I don't get "too many accounts with a balance until 10"

So if you subtract the mortgage and Heloc -

14 - 9/14 =64% of accounts with balance

Just cards = 10

So the <50% of CC's rule still applies=

Re: Too Many Accounts?

Anonymous — Tue, 01 Apr 2008 03:21:38 GMT

watchnerd wrote:
I think the MyFICO wizard might be lying to me.

When I look under "Understanding your FICO Score" for my TU report, it says:

[paste]
You have too many credit accounts with balances.

Number of your accounts carrying a balance
4 accounts
FICO High Achievers have an average of 3 credit accounts carrying a balance.
[end paste]

And what are those accounts?

Installment: auto lease
Card 1, Amex: $85 balance
Card 2, BofA Visa, $15 balance
Card 3, BofA Amex, $4 balance

Is it pulling my leg? Having 4 accounts with balances is bad?

Or did it just not know what else to tell me?

Fewer than half of your open accounts should be reporting a balance for optimal scoring results.

This includes revolving as well as installment loans. Every installment loan that is open is an account with a balance.

How many total open accounts do you have?

Re: Too Many Accounts?

Anonymous — Tue, 01 Apr 2008 03:51:47 GMT

TU thinks I have 5 open accounts, including installment.

It should be 6, but they accidentally deleted one.

Either way, it meets the criteria. I wasn't aware of the 40% rule.

Re: Too Many Accounts?

Anonymous — Tue, 01 Apr 2008 04:01:31 GMT

watchnerd wrote:
TU thinks I have 5 open accounts, including installment.

It should be 6, but they accidentally deleted one.

Either way, it meets the criteria. I wasn't aware of the 40% rule.

The rule isn't 40% exactly, it's "fewer than half."

So since you have five accounts, you can only let two accounts report a balance at any given time in order to avoid the "too many accounts with balances" ding.

Since you can't control whether the installment loan reports a balance, that leaves you with only one card to play with. Let one card report a balance of 1-9% of its CL, and let the others report $0.

Do NOT let all your cards report $0, or else you'll be dinged for not having any revolving balances, and that ding is even bigger than the "too many accounts with balances" ding.

This is where it can be advantageous to have several cards. With only four revolving accounts and one installment loan, zero cards with a balance is too few, one is just right, and two are too many.

Re: Too Many Accounts?

Anonymous — Tue, 01 Apr 2008 05:04:54 GMT

How big of a ding is the 'too many accounts' ding, anyway?

Re: Too Many Accounts?

Anonymous — Tue, 01 Apr 2008 05:06:20 GMT

for me it's 11 points at last sw alert. think 10-15 is a pretty standard point range.

Re: Too Many Accounts?

Anonymous — Tue, 01 Apr 2008 05:08:45 GMT

dnm45227 wrote:

for me it's 11 points at last sw alert. think 10-15 is a pretty standard point range.

Yep, and the "no revolving balances" ding can be 20 points or more.

Imagine only having two CCs and one installment loan. In a case like that you have to pick your poison.

Re: Too Many Accounts?

Anonymous — Fri, 04 Apr 2008 06:25:28 GMT

i DO only have 2 cc's and one installment loan (auto) which reports a balance. are you guys saying the scores go up fastest (in my case) if i carry over 0 balances every month from both my credit cards since my car loan carries a balance? a high one..

i have a 500 dollar cap one

2000 boa

and a 16000 wachovia car loan balance..i got the car in january..and the 2 cards in july 07 and march 08, respectively..

when i bought the car it didnt seem to really affect my credit scores ..when i opened boa my eq dropped from 663 to 641..my tu is 666..only opened my first card in july 07...never a late pymt..just trying to understand how the scores work a little better...

Re: Too Many Accounts?

Anonymous — Fri, 04 Apr 2008 06:31:33 GMT

joffogle wrote:

i DO only have 2 cc's and one installment loan (auto) which reports a balance. are you guys saying the scores go up fastest (in my case) if i carry over 0 balances every month from both my credit cards since my car loan carries a balance? a high one..

i have a 500 dollar cap one

2000 boa

and a 16000 wachovia car loan balance..i got the car in january..and the 2 cards in july 07 and march 08, respectively..

when i bought the car it didnt seem to really affect my credit scores ..when i opened boa my eq dropped from 663 to 641..my tu is 666..only opened my first card in july 07...never a late pymt..just trying to understand how the scores work a little better...

It's kind of a lose-lose situation in that case. FICO wants to see fewer than half of your open accounts with balances, but also wants to see a very small revolving balance. With 2 CCs and one installment loan, you can't have both of those factors.

Obviously, since you're paying the installment loan off over many months, you can't control the fact that it wil carry a balance from month to month. You can only control what balance reports on your CCs.

You lose more points for having no revolving balances than you do for having too many accounts with a balance (in my experience). So it would probably be better for you to let one of your cards report a very small balance (9% of its credit limit or less) than it would be to let them both report zero.

Did that make sense?

Message Edited by cheddar on 04-04-2008 02:31 AM

Re: Too Many Accounts?

Anonymous — Fri, 04 Apr 2008 16:23:02 GMT

I think I was hit twice for a total of -36 points because I exceeded too many balances on different account types. I need to do further testing. I have far too many things going on with my CR now to know what is causing what anymore. I guess I will get my answers as I pay off balances. I will post later. Good thread.

Re: Too Many Accounts?

Anonymous — Fri, 04 Apr 2008 17:44:03 GMT

I was wondering about this myself... but I think I have my answer.

Active Accounts:
4 CCs
1 car note
1 medical
5 Student loan accounts - same lender

My credit score is... really bad right now (TU:636, EQ:597,EX:606). Between unemployment and major medical issues, I ended up at 96% utilization on CCs, and a drop from 700+ each (no delinquents though - used the cards to pay all bills, including each other).

Ignoring the utilization issue (working on it, CCs will be $0 by Dec, medical by Jul 09), it keeps telling me that I have Too Many Accounts.

I have looked into Consolidating my student loans, but my highest rate on them is 5.6%, and the best I found for consolidation is 8.25% - willing to take the ding for 2.65% of $25k

If I am understanding this correctly:
-I would have to consolidate my student loans, and pay off 3 CCs to not get dinged?
-That would give me 3/7 with balances

Re: Too Many Accounts?

haulingthescoreup — Fri, 04 Apr 2008 23:05:29 GMT

@Anonymous wrote:
I think I was hit twice for a total of -36 points because I exceeded too many balances on different account types. I need to do further testing. I have far too many things going on with my CR now to know what is causing what anymore. I guess I will get my answers as I pay off balances. I will post later. Good thread.

Back when I had a mortgage, a HELOC, a student loan, and 5 cc's for a whopping total of 8 open TL's, it was an ongoing battle to stay under 50%, since 50% = 4 TL's, and that meant the loans could post, and nothing else. My 5 CC's included an AU card that was really my husband's, who liked to use it 2 days before the statement dropped, and a store card that never, ever updates.

I wanted to get a car loan, and I also wanted to do a BT of some of the money on the HELOC, so I went shopping and got 6 CC's and the car loan. I also paid off the CL.

So now I have a mortgage, a HELOC, a car loan, and a BT card, all of which automatically have balances, out of a total of 14 TL's. Half of 14 is seven, so I can now have 2 CC's with balances in addition to the 3 loans and BT card listed, and still be under 50% of accounts with balances. I can't tell you how nice it is not to be freaking out about TU dropping me 20 points for "too many accounts with balances." This has killed my average age, so I will have to do penance for a year, but that's OK. My overall credit profile is much better, and it will pay off in the long run.

Re: Too Many Accounts?

haulingthescoreup — Fri, 04 Apr 2008 23:18:48 GMT

@Anonymous wrote:
I was wondering about this myself... but I think I have my answer.

Active Accounts:
4 CCs
1 car note
1 medical
5 Student loan accounts - same lender

My credit score is... really bad right now (TU:636, EQ:597,EX:606). Between unemployment and major medical issues, I ended up at 96% utilization on CCs, and a drop from 700+ each (no delinquents though - used the cards to pay all bills, including each other).

Ignoring the utilization issue (working on it, CCs will be $0 by Dec, medical by Jul 09), it keeps telling me that I have Too Many Accounts.

I have looked into Consolidating my student loans, but my highest rate on them is 5.6%, and the best I found for consolidation is 8.25% - willing to take the ding for 2.65% of $25k

If I am understanding this correctly:
-I would have to consolidate my student loans, and pay off 3 CCs to not get dinged?
-That would give me 3/7 with balances

Hi, meauho, welcome to the forums!

Are your scores and the comments that come with them FICO scores, pulled from this site? FICO shouldn't ding you for plain old "too many accounts" (unless you have over 30 accounts.) FICO will ding you for "too many accounts with balances" (emphasis mine.)

If you got your scores from FreeCreditReports.com, or with your free annual credit reports, or from TrueCredit, these are what we call FAKO scores, and their advice is bogus, too. (But the report service is great.)

But if these are comments from FICO, and they're saying "too many accounts with balances", then yes, consolidating might help. But there's a good chance that it won't change your scores all that much, so I wouldn't do it just in hope of a score boost, unless it makes good financial sense for you, which it sounds like it won't.

Once you have your util back down, you're going to get a huge score boost, and fiddling with the SL's might not be necessary. In fact, others are reporting that they didn't get any change, so some of us are wondering if SL's are "bundled" in some way for scoring purposes. It's quite possible that if you can get only one of your CC's reporting a balance, that will do the trick.

Re: Too Many Accounts?

Anonymous — Fri, 04 Apr 2008 23:49:50 GMT

My TU hit 31 and EQ 30 Accounts this month-

Change on EQ was Zero points

Change on TU Zero points-

Re: Too Many Accounts?

Anonymous — Sat, 05 Apr 2008 01:06:20 GMT

Timothy wrote:

My TU hit 31 and EQ 30 Accounts this month-

Change on EQ was Zero points

Change on TU Zero points-

Interesting. Yet another piece of evidence against the conventional wisdom.

Re: Too Many Accounts?

smallfry — Sat, 05 Apr 2008 02:25:13 GMT

Four of my five credit cards will reach one year old status this May. I am going to pull a FICO in July to see what kind of score pop I will get once I reach the one year anniversary on these cards. TU is currently 717 with 1-2% utilization. It will be interesting.

Re: Too Many Accounts?

Anonymous — Sat, 05 Apr 2008 04:10:43 GMT

yes cheddar that made sense thanks.

its going to be a few months until i can get one of the cards (cap one of course) to 0 and keep the boa below 10 percent....blegh..not until about june will it look that good but thats right before im a year with my first card..so im hoping for some nice timing effect type deal. ha

but i have another question. when you guys say to carry over a zerio balance each month..is it okay to use the card at your will..max it out..do whatever..as long as its back to 0 before the statement ends?

or are we supposed to be trying to keep this util below 9 for all eternity?

i think i know the answer..just looking for a better understanding

Message Edited by joffogle on 04-04-2008 09:10 PM

Re: Too Many Accounts?

Anonymous — Sat, 05 Apr 2008 04:32:09 GMT

joffogle wrote:

yes cheddar that made sense thanks.

Happy to help!

joffogle wrote:

but i have another question. when you guys say to carry over a zerio balance each month..is it okay to use the card at your will..max it out..do whatever..as long as its back to 0 before the statement ends?

Yep. Charge it up over the course of the month if you want to (although actually maxing it out is never a good idea, and don't go over the limit!), just make sure it's paid back down before the balance reports to the CRAs, which is usually on the statement date.

joffogle wrote:

or are we supposed to be trying to keep this util below 9 for all eternity?

Well, remember that 1-9% is an ideal. You don't have to do this for all eternity. It's most important to have your utilization in this range when you are planning on applying for new credit, but as a general rule, it's also not a good idea to carry too high of a balance for an extended period of time to avoid freaking out your current creditors, too.

None of your creditors are going to freak out if your balance is in the 30-40% range, for example, but you will lose some FICO points for it.

Re: Too Many Accounts?

Anonymous — Mon, 07 Apr 2008 02:40:43 GMT

thanks again cheddar..

im having so much trouble with my capital one card and all these other credit report fraudulent charges..disputing one and just got smacked with some random 50 dollar charge from some experian joint..gonna call em tomorrow..it sucks tho i changed my card and was still being charged on the new card with a new number..its ridiculous

it was already maxed out..so im 34 dollars over the limit now..have 2 weeks for them to reimburse..man..if i can just make it to the end of april life will live on..lol