Why having more cc's is better than not

[Anonymous]

I've never heard of a credit union that did not have a credit builder loan product of some type.  They go by different names so be sure to ask if interested.

The trick is to find a loan that will not bring forward the payment due date if you make a substantial first payment.  In other words, if you pay down the balance to 8.9% or less outstanding, you want a loan that will keep the next payment date in the distant future.  

The installment debt portion of your FICO score is optimized when you have 8.9% or less loan balance reporting.  So you want to keep it in that state for as long as possible instead of fully paying off the loan; interest is usually minimal.

[Anonymous]

I will likely have a mortgage again at some point, but I'm not in any hurry right now. I don't carry debt, unless it's a mortgage. I don't need anything that badly. I just wish my score would move faster than it is right now. I took my 800+ score for granted until my identity was stolen  I guess I just have to wait. I always pay off my cards, allowing a little to show up on my statements. Usage is always 1%, yet my score begrudgingly, moves bit by bit. Drives me crazy.

[Anonymous]

8.9% is the magic #. Would I pay the loan off depending upon where my credit score is? In other words, when my credit hits 850, I can pay off the loan?  

[SouthJamaica]

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@Anonymous wrote:
Hi all... I've been lurking here for quite some time trying to figure out how to improve my credit score. My identity was stolen and after I froze my credit file and let my cc's go, the police suggested I use cash or checks for a while. That turned out to be great advice because I had a target on my back. It was inconvenient, but it saved me from total destruction. After the dust settled, I thought it was time to get back into the cc world. With a limited cc history and a score in the 500's, I've now aquired 6 cc's with credit scores ranging from 756 to 787. 2 Amex, 2 Cap 1, Discover & Chase Amazon Visa.

My question: It appears that having only 6 cc's is hurting my credit score, at least according to one popular site. I thought the general rule of thumb was, fewer cards used routinely and responsibly was the path to 800. My credit score is on a lethargic climb right now. Will more cards (albeit mostly not often used) increase my score or hurt it? My AoYA (age of most recent cc) is 6 months.

Thanks for any guidance.

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6 cards is more than enough. The site you're referring to is full of baloney. They're just trying to sell you credit cards. The best thing you can do for your credit is NOT apply for any more.

[SouthJamaica]

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@Anonymous wrote:

Yes, ck. It's kind of a squirrely place with my scores moving in odd directions without apparent reason. They did help me get back into cc's, but now I'm done.  My identity was stolen, in part, because I had so many cc's. I try to fly under the radar now.  I can support more cards, but I don't need them.  

I love your story! 1 cc and an 820 score! That's what I'm after;-)  Thanks.

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Credit Karma is quite deceitful in my book. They are constantly trying to convince people that they will improve their scores by applying for more cards, which is the exact opposite of the truth.

[Anonymous]

Number of credit cards plays little to no role in FICO scores.  Someone can have 800+ credit scores with 1 card or 20, the same way someone else can have 600-650 scores with 1 card or 20.

I went 15 years with only 1 card in my wallet and my scores fluctuated between 790-810 for the majority of that span of time.  If I had 5 cards, 10 cards, 20 cards etc. chances are my scores would have still landed in that range (maybe less due to opening accounts constantly) during that span of time. 

[CramEiko]

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@Anonymous wrote:

Yes, ck. It's kind of a squirrely place with my scores moving in odd directions without apparent reason. They did help me get back into cc's, but now I'm done.  My identity was stolen, in part, because I had so many cc's. I try to fly under the radar now.  I can support more cards, but I don't need them.  

I love your story! 1 cc and an 820 score! That's what I'm after;-)  Thanks.

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She does have another open Porsche loan. It's been open almost a year and it's about 50% from original loan amount. Sure she saves the interest by making double payments but, it's the only other thing reporting besides her CC. Oh, and her CC only has a CL of $5k. So, her credit kind of baffles me.... 

Another kicker and I almost forgot: 

About 2 years ago her identity was stolen locally and bought a brand new car. I saw the drivers license that this dude used to buy the car. She is Asian and the dude that stole her identity was non White, non Hispanic. His picture was on the drivers license with her name, her address, her drivers license number just had a different picture. The Dodge dealer from which he purchased a brand new Dodge Charger had the license on file and gave her a copy. They've never found the dude or the car. This day and age I'm kind of shocked that they haven't been able to trace the car somehow.

[Revelate]

You would have been at 850 in a lot shorter time than 15 years with multiple cards BBS.

Personally I would recommend 4 (or more) cards on modern algorithms (FICO 8/9).

Large numbers of tradelines buffers AAOA but that’s about it. Might buffer installment loans on older FICO scores but it’s unnecessary to hit the highest scoring echelons on literally any algorithm.

[Anonymous]

I’m going to go against the conventional wisdom here just a little bit. Everyone says three cards is optimal. I think that statement is one of those generalities that can’t be thrown around, as BBS would say.

It might be true for FICO 8, but that’s not necessarily true for other algorithms such as the mortgage scores. I think when we recommend three cards as being optimal we have to qualify that as being optimal only for FICO 8.

3 cards and a loan can only produce 33% of revolvers at least and 25% of all accounts even at AZ. I don’t think that’s optimal for any of the mortgage scores to be quite honest is it? Its not for TU4 or EQ5.

Those recommendations are clearly designed for optimal FICO 8 scores, not mortgage scores.

As to the subject at hand the number of cards. By all means someone can hit 800+ scores with probably one card. Does that mean it is easiest with just one card? Not necessarily.

On a thin file everything is magnified, probably also on a non-aged file, and a new accounts file.

So while someone may be able to get 800+ scores with one card or even with three cards, that doesn’t necessarily mean it’s easiest nor is it optimal for other algorithms. Just wanted to point that out because I think it’s a little misleading not to make that clear. There’s definitely a difference between someone with a thin file and a thick file.

If someone were to accidentally slip and have a late, it would be absorbed much more easily by a thick file, whereas on a thin file, the score would suffer much more and probably longer. So there is definitely a benefit to having more cards. Number one it makes the file more resistant to negatives, and number two it may allow you to come closer to optimal for other algorithms, such as the mortgage scores. JMHO.

[Anonymous]

There must be an upside to owning many cards.  What is that?