Adding Additional Account vs Average Age

[Anonymous]

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@Anonymous wrote:

What about total amount of credit?  I have read online that your score will increase if you have a larger amount of total credit available.  I guess that's another reason someone might want an additional account (if true)...

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100% false.

Two people with otherwise identical profiles could have exactly 3 credit cards.  Cornelius has 3 cards all with $500 limits, where Rupert has 3 cards all with $30,000 limits.  Total credit limits therefore are $1500 for Cornelius and $90,000 for Rupert.  If all things were exactly the same with both of their profiles and they both reported a tiny (say $5-$20) balance on one of their 3 CCs with the other two reporting $0, their FICO scores would be identical.  The additional credit limits possessed by Rupert would not yield him a single FICO point more than Cornelius with his 3 tiny limits cards.

[Anonymous]

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@Anonymous wrote:

I thought that since I had few accounts, where half of them have a late payment, was a big problem for me...and having a couple more with 100% clean record would be positive. 

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Well, it can still be considered a big problem for you, as your dirty accounts land you no doubt in a dirty scorecard.  Having a couple more clean accounts won't hurt, but more positive tradelines aren't going to remove you from the dirty scorecard that you're in and your scores will be equally adversely impacted by the negative items present on your CR whether or not you open any new (positive) accounts.  Your best course of action would be spending some time in the rebuilding forum and looking for ways to get those negative items removed.  Doing so has the potential of positively impacting your profile/scores and possibly in a big way.

[Anonymous]

Thanks again....and will do.  I have been reading over in that forum.  Will read more for the best course of action.

[Anonymous]

The only problem occurs when Cornelius needs to carry a balance and utilization penalizes him. Whereas Rupert can spend quite a bit without his scores being affected, If Cornelius reports just $135, he will be penalized due to his low limits.

So while if one does not use their cards, or can always have less than $100 report, then, yes, they can score optimally. But watch out if the guy with low limits reports a $500-$1000 purchase!

I think this is important since many people like to use their cards and not stick to AZEO.

[Revelate]

Right but assuming people are PIFing or otherwise paying back the large (with respect to credit limits) adroitly the odds of it’s mattering are low anyway.

I take your point in the extreme case: I can carry 10’s of thousands of revolving debt and not really be that penalized for it credit wise: actually a flat 100k would bring me about to 50% aggregate, probably less actually given how HELOC’s score and I could go get a much bigger HELOC now too if I really needed to push it, even a conservative appraisal and 80% LTV would increase the HELOC to over 150k from 27k.

That would put my revolving balance carrying to around 200k with a nominal penalty.

That’s pretty absurd when I start thinking about it.

[Anonymous]

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@Anonymous wrote:
The only problem occurs when Cornelius needs to carry a balance and utilization penalizes him. Whereas Rupert can spend quite a bit without his scores being affected, If Cornelius reports just $135, he will be penalized due to his low limits.

So while if one does not use their cards, or can always have less than $100 report, then, yes, they can score optimally. But watch out if the guy with low limits reports a $500-$1000 purchase!

I think this is important since many people like to use their cards and not stick to AZEO.

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Most of the time, though, it's a self-correcting system.  If such a person did report $500-$1000 across their $1500 in total limits and then paid it off, sure they'd have a month of high utilization, but the chances of their creditor(s) giving them auto-CLIs would be pretty strong.  The bumping up of those limits would then cut back the high utilization spike the next time.

Either way this is a completely different argument all together.  The bottom line is that credit limits in and of themselves have no bearing on FICO scores, which is what the original question was.

[Anonymous]

There's also the "Few accounts paid as agreed" (not sure if that's the exact wording, but very similar).  You even see that one on MyFico, I think.