I need advice on what I should do with my credit

[simplynoir]

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@dlm0820 wrote:

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@simplynoir wrote:

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@dlm0820 wrote:

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@HeavenOhio wrote:

FICO doesn't care if you have retail cards. But they hurt your insurance scores. Closing them doesn't help until the accounts drop off your report.

I think the bottom line is that if there's a retail card that's useful, it's presence is going to offset the ding on your insurance. If you're a frequent Target shopper, for instance, you're likely to gain a substantial benefit from the card's rewards.

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How, pray tell, do they hurt your insurance scores and where did you hear that?  

Insurance scores are a totally different, and useless, kind of score since ones credit doesn't correspond to how one drives.

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Most states allow credit scores to determine your insurance rates.

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Yes, I know that.  My question was how does a retail card hurt your insurance score and not your FICO score.

Insurance scores are based on your payment history and some other mumbo jumbo that they only know.  Whether your pay history is good or bad, it counts the same whether it's a retail card or a bank card.  Just like your pay history counts for the good or for the bad on a retail card with FICO.  Further, the statement that FICO doesn't care about retail cards is grossly false that it's laughable.  FICO cares about all of your pay history on ALL of your cards, retail or not.

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Ah, gotcha. Well, I don't know about that either tbh so I agree with you there. The only way I can see it maybe an issue having many retail cards is if it went under a manual review and they saw the amount of small CL cards on their profile. Sort of how a when getting a mortgage the lender goes through the accounts to see if there are any red flags.

[K-in-Boston]

It makes no sense to us, but it has been established for sure that the mere presence of and corresponding credit mix when someone has "retail card" accounts on their reports lowers insurance industry specific credit models.  For whatever reason, when the models were created it was decided that people who have no retail cards are less of a risk than those who do. <shrugs>

Fortunately I live in one of the three states (California, Hawaii, Massachusetts) that do not allow credit scores to be a factor in insurance rates.  Whether there is actually a correlation between credit scores and driving risk is widely debated.

[Anonymous]

My Credit Karma auto insurance score dropped 40 points when my Williams Sonoma store card reported.

My Credit Karma home insurance score dropped 47 points the same time.

I know it's Credit Karma's insurance scores, but still interesting...

Also note that my home insurance score recovered and went up during my rebuild but my auto insurance score never recovered even with my rebuild gaining almost 200 FICO points in 7-8 months.

[Np1791]

Alright guys let’s just avoid all this insurance score stuff and have all of you guys move over to California and get insurance from me at Allstate where you’re in good hands lol

[HeavenOhio]

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@Anonymous wrote:

My Credit Karma auto insurance score dropped 40 points when my Williams Sonoma store card reported.

My Credit Karma home insurance score dropped 47 points the same time.

I know it's Credit Karma's insurance scores, but still interesting...

Also note that my home insurance score recovered and went up during my rebuild but my auto insurance score never recovered even with my rebuild gaining almost 200 FICO points in 7-8 months.

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The gurus in the scoring forum tell us that these are "real" TU insurance scores and that unlike VantageScores, they can be considered relevant.

[Anonymous]

Well that's good to know!  I actually DID get a homeowner's insurance break on 2018 but no idea if it was insurance score or FICO score or the fact that I never file claims on insurance ever, ever, ever.  Even when I had a $15,000 ice dam roof damage once, I fixed it out of pocket.

[Anonymous]

OP congrats on having such a good file at 21. Keep up the good work! I personally wouldn't close any accounts right now. Head over the garden, let them age then decide later.

[Anonymous]

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@Anonymous wrote:

There is (to my knowledge) no effect based on whether or not you have store cards vs. normal bank cards.

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FYI...

"Avoid certain types of credit that insurance company credit-scoring models penalize you for: department-store credit cards, instant credit offered by stores to move big-ticket items; credit accounts from your local tire dealer, auto-parts store, or service station; and finance-company credit, including retailer credit cards."

https://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm

"The ChoicePoint Attract scoring model, with dozens of separate factors, has the most complicated formula of any we analyzed. It dings you for having departmentstore charge cards and auto loans from automaker finance companies such as GMAC, for not having an oil company credit card, and for so much as touching finance-company credit, which may include incentive installment loans from appliance, electronics, or jewelry stores"

PDF warning and from 2006: http://consumersunion.org/pdf/CR-Aug2006.pdf

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

There is (to my knowledge) no effect based on whether or not you have store cards vs. normal bank cards.

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FYI...

"Avoid certain types of credit that insurance company credit-scoring models penalize you for: department-store credit cards, instant credit offered by stores to move big-ticket items; credit accounts from your local tire dealer, auto-parts store, or service station; and finance-company credit, including retailer credit cards."

https://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm

"The ChoicePoint Attract scoring model, with dozens of separate factors, has the most complicated formula of any we analyzed. It dings you for having departmentstore charge cards and auto loans from automaker finance companies such as GMAC, for not having an oil company credit card, and for so much as touching finance-company credit, which may include incentive installment loans from appliance, electronics, or jewelry stores"

PDF warning and from 2006: http://consumersunion.org/pdf/CR-Aug2006.pdf

 It must be a state thing... Just asked my dad, and he said the same thing there no effect. Disregard my post then. Sorry to get off topic.

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[Np1791]

So I’m keeping the JCPenney card. Got an offer for 0 percent in purchases and an increase from 600 to 3,500. Also one of the people that commented on my post earlier recommended that I move my credit limits over to the Amex BCP and I did. Partially since I can one do one every 30 Days. BCP is now at 7,000.