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How to Add More Credit Accounts Wisely

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
Frequent Contributor

Re: How to Add More Credit Accounts Wisely


@wmweeza wrote:

@fordguy89 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.

Starting Scores 8/24/14 FICO TU:507 EQ:500
Scores as of 1/1/2016 FICO TU:633 EQ: 622
Scores as of 1/1/2017 FICO TU:759 EX:693 EQ:694
Scores as of 1/1/2018 FICO TU: 751 EX: 739 EQ: 735
Scores as of 1/1/2019 FICO TU: 786 EX: 801 EQ: 796
Message 11 of 24
New Contributor

Re: How to Add More Credit Accounts Wisely


@nikokonto wrote:

@fordguy89 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.

Message 12 of 24
Moderator Emeritus

Re: How to Add More Credit Accounts Wisely


@Dalmus wrote:

@fordguy89 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.




        
Message 13 of 24
Valued Member

Re: How to Add More Credit Accounts Wisely

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.

Message 14 of 24
Valued Contributor

Re: How to Add More Credit Accounts Wisely

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.

 

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Message 15 of 24
Moderator Emeritus

Re: How to Add More Credit Accounts Wisely


@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.




        
Message 16 of 24
Valued Contributor

Re: How to Add More Credit Accounts Wisely


@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.

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Message 17 of 24
Valued Member

Re: How to Add More Credit Accounts Wisely

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.

Message 18 of 24
Moderator Emeritus

Re: How to Add More Credit Accounts Wisely


@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.




        
Message 19 of 24
Valued Member

Re: How to Add More Credit Accounts Wisely

 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.


 

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.

Message 20 of 24