Loose points for having more then 4 CC's?

Anonymous · ‎06-19-2007

I got this bit of info from someone who chatted with a FICO employee "You get points mainly for a healthy mix of credit - not just a number of credit cards. The numbers are something like 20 for Installment, margins, and car loans and 10 for credit cards up to 4, then you lose points (on CC's only)." Can someone validate this claim? 50 points for types of credit--I have 3 installment (student) loans and 4 credit cards...if I get one more is my score going to drop?

Anonymous · ‎06-19-2007

@Anonymous wrote:
I got this bit of info from someone who chatted with a FICO employee "You get points mainly for a healthy mix of credit - not just a number of credit cards. The numbers are something like 20 for Installment, margins, and car loans and 10 for credit cards up to 4, then you lose points (on CC's only)." Can someone validate this claim? 50 points for types of credit--I have 3 installment (student) loans and 4 credit cards...if I get one more is my score going to drop?

I have 5 CC's
Installment:
4 SL's - consolidated to 1 but not reported yet
1 mortgage - 2 paid mortgages(closed)
1 auto loan (3 paid and closed)
2 paid and closed unsecured personal loans

I think this is a good mix- can I have my 50 points now?

Anonymous · ‎06-19-2007

I don't think it's as simple as allocating a number of points to number of TLs.

We do know that mix of credit counts for 10% of your score. So 50 points would be 10% of a credit score of only 500. Therefore, the 50 points idea doesn't work, because someone with a credit score of 700 would theoretically earn 70 points for their mix, assuming they had the best possible combination.

Anonymous · ‎06-19-2007

yes--when can I get my 50 points?

Do store cards fall in the same catagory as credit cards? (meaning revolving credit)

Anonymous · ‎06-19-2007

@Anonymous wrote:
I don't think it's as simple as allocating a number of points to number of TLs.
We do know that mix of credit counts for 10% of your score. So 50 points would be 10% of a credit score of only 500. Therefore, the 50 points idea doesn't work, because someone with a credit score of 700 would theoretically earn 70 points for their mix, assuming they had the best possible combination.

10% is of 500--check this out

Now the 500 points (or 100%) is distributed as follows:
You start at 350 points - everyone gets that
35% (or 175 points) is 'payment history'
30% (or 150 points) is 'amounts owed'
15% (or 75 points) is 'length of credit history'
10% (or 50 points) is 'new credit'
10% (or 50 points) is 'types of credit'
---------------------------------------
100% or 500 points

So you see, that 50 is coming from the 500 points that you can earn--10% of 500 is 50.

Anonymous · ‎06-19-2007

rifleman wrote:
yes--when can I get my 50 points?

Do store cards fall in the same catagory as credit cards? (meaning revolving credit)

They fall in the same category of revolving credit, but bank cards (e.g., Visa) carry more weight than store cards (Victoria's Secret).

Anonymous · ‎06-19-2007

AMEX Blue, VISA, MASTERCARD = bankcards/credit cards, correct?
AMEX green, gold, platinum, black = Charge cards
GAS cards, Macy's, Kohl's = store cards

How are these weighted differently in the revolving credit catagory?

And also, if that catagory is worth 150 points, what kind of credit limits must you have in order to get 150 points?
i.e. a $500 limit from Orchard bank with 1-9% utilization is not going to get you as many points as a $10,000 limit on an American express Blue with 1-9% utilization.

What sort of credit limits do you need to get the most points?

Anonymous · ‎06-19-2007

I am a credit card junkie so I definitely have more than 4 cards. I'm not so sure about the limit of 4 cards for best score. I thought it was a limit of 4 cards that carry balances at one time; I am just testing this theory now. I exceeded 4 cards with balances and my score dropped -18 points. I can't really prove the score drop was directly from exceeding 4 cards with balances until my CR updates back to 4 cards with balances. I am waiting to see if I regain the +18 points.
Link to subject about -18 point loss

But either way I have seen credit reports in the 800s with well more than 4 credit cards. Whether these credit reports had balances on all or 4 or less cards I do not know.

And there is a mystery here too. Who knows, it might be a formula of age and other trade lines that determine how many credit cards ones limit is if there is a limit? These are things we most likely won't know. So what works for me, might not work for all.

Message Edited by ilovepizza on 06-19-2007 10:39 AM

Anonymous · ‎06-19-2007

@Anonymous wrote:

@Anonymous wrote:
I don't think it's as simple as allocating a number of points to number of TLs.
We do know that mix of credit counts for 10% of your score. So 50 points would be 10% of a credit score of only 500. Therefore, the 50 points idea doesn't work, because someone with a credit score of 700 would theoretically earn 70 points for their mix, assuming they had the best possible combination.

10% is of 500--check this out

Now the 500 points (or 100%) is distributed as follows:
You start at 350 points - everyone gets that
35% (or 175 points) is 'payment history'
30% (or 150 points) is 'amounts owed'
15% (or 75 points) is 'length of credit history'
10% (or 50 points) is 'new credit'
10% (or 50 points) is 'types of credit'
---------------------------------------
100% or 500 points

So you see, that 50 is coming from the 500 points that you can earn--10% of 500 is 50.

Rifleman - Perhaps I'm not understanding. How does anyone get a score over 500?

Again, I don't think the factors are considered in isolation. It's a complex algorithm that considers, for example, if you have 3 TLs AND their average history is 10 years AND you have no lates on those accounts in the last 7 years ... THEN you're in a score bracket of ...

Anonymous · ‎06-19-2007

@Anonymous wrote:

@Anonymous wrote:

@Anonymous wrote:
I don't think it's as simple as allocating a number of points to number of TLs.
We do know that mix of credit counts for 10% of your score. So 50 points would be 10% of a credit score of only 500. Therefore, the 50 points idea doesn't work, because someone with a credit score of 700 would theoretically earn 70 points for their mix, assuming they had the best possible combination.

10% is of 500--check this out

Now the 500 points (or 100%) is distributed as follows:
You start at 350 points - everyone gets that
35% (or 175 points) is 'payment history'
30% (or 150 points) is 'amounts owed'
15% (or 75 points) is 'length of credit history'
10% (or 50 points) is 'new credit'
10% (or 50 points) is 'types of credit'
---------------------------------------
100% or 500 points

So you see, that 50 is coming from the 500 points that you can earn--10% of 500 is 50.
Rifleman - Perhaps I'm not understanding. How does anyone get a score over 500?
Again, I don't think the factors are considered in isolation. It's a complex algorithm that considers, for example, if you have 3 TLs AND their average history is 10 years AND you have no lates on those accounts in the last 7 years ... THEN you're in a score bracket of ...

here is the deal--EVERYONE starts with 350--so if you have a 350 fico score that's about as bad as you can get. Everyone starts with 350. Then the 500 comes from 850-350 = 500. 850 is the highest score you can have. All of fico's score weighting is based on that number 500. does this make sense?