Something to consider before you app for another card

[AndySoCal]

The article relates to the number of credit cards and the FICO score.

http://www.debtorsunite.com/Articles/Credit-Scoring/Number-of-Revolving-Accounts.aspx

The ding most liklly is not a big one. The article gives another reason not to app.

[MarineVietVet]

I see one thing this site has incorrect right off the bat:

Age of Accounts. Selecting an account opened most recently for closure will probably have minimal impact on your scores. Alternatively, if you choose one of your oldest accounts for closure, you could see a drop in your credit scores.

Closing a credit card account will have no (immediate) effect on your AAoA or credit length history no matter what the age of the account is when closed.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Revelate]

I don't think that the individual who wrote that article truly understands risk analysis.  For that matter I don't either, but there's a simple counter-point to his entire theory:

10 $500 CL cards = $5000 total exposure

2 $5000 CL cards = $10000 total exposure

1 $20000 CL card = $20000 total exposure.

Which is a bigger loss to the lender(s) if that individual runs up to tha max and files chapter 7?

I don't care how the people who wrote the original or current FICO algorithms actually looked at it, but it's ignorance to the point of naivety to assume this wasn't taken into account.  Sure there's probably some limit to it, and I think it's probably changed with different models over time (it's far easier to pay 100 credit cards a month now with electronic payments than it used to be to do 20), and not all of the advice which comes back on a denial letter is something one should rush out to do anyway.  

Also like anything, it depends on what else is in the credit report.  Having say, 10 revolving accounts, is probably a higher risk for someone whose report has them in the 500 club (that would be me) than someone who's at 800.  Given composite risk factors, that's probably irrespective of total Credit Limit, but it's a stone cold certainty if we each had aggregage CL's of $5000.

[nomoore]

Wow! There are numerous inaccuracies in that article. I'm glad I have the myFICO community. 

[AndySoCal]

All,

No matter how you look at  in any of the scenerios presented the lender(s) lose money.  in the first case the loss is distrubuted to multiple lenders most likely 5 or more with 10 cards.  The second one could be bigger los between two lenders.  Lenders today are quicker to act when a consumer does not pay off a balance on a credit card for a prolonged length of time.  The action is usually a credit line decrease.

The FICO reason that has been referenced has been a part of the FICO score computation for at least 10 years that I know of.  The point is if you want higher scores you should only apply foi the credit you need.