@iced wrote:
@Anonymous wrote:It's not clear that percentage of cards showing a balance is the sole metric used by FICO here. It's quite possible the raw integer number of accounts showing a balance matters as well. I received the "too many accounts showing a balance" reason statement back in April and I had 2 cards out of 12 showing a positive balance -- but I also had two open loans with a balance as well, making a total of four accounts. It may be that some FICO models look at both percentage of accounts and total integer number.
From a practical perspective....
Is your loan that is about the same age as the Barclays card an open loan? When do you guess it will close?
Any particular reason you don't want to keep the two cards that will be closing open? E.g. as no annual fee cards that you just sock-drawer and use once a year? Going from 4 cards to 2 with one of them being my oldest card by over 6 years would make me a little nervous as a long term situation.
You mention that AZEO will not be possible for you... why would that be? Not being critical... just curious.
The installment loan will likely remain open another 2 years or so until it's paid off. It could technically stay open until 2024, but I've been paying it off quickly and do not wish to keep it open any longer than necessary as it's interest I'd rather not pay.
As for the cards, I'm not in any particular rush to close them and am happy to keep them SD'd but eventually the banks will close them (as Barclays is doing now). What I'm not happy about doing is using them as even though they have no AF they're not worthwhile rewards cards either. I'd rather close them than waste spend on them, but if the point loss is going to be significant, I may re-assess.
AZEO is impossible because I can't reliably have a single card report a $0 balance when I'm using two daily and I don't have enough accounts to make reporting a balance on two cards a small enough percentage to approach the same benefits as AZEO.
I think that you should use them once every couple of months for a small purchase. Better to keep them open. If, e.g., you spend $15 on a card once every 3 months, how much are you losing in rewards realistically? 30 cents maybe. I think it's worth the 30 cents (10 cents per month) to keep the cards open.
CGID: curious, but where has it been shown under any FICO 04 and higher model that it's anything more than percentage? Lots of data showing breakpoints on percent of revolvers. Or are we talking in addition to as there's been some suspect reason codes indicating perhaps aggregate number of accounts (revolver + installment lines)?
I never tested 100% previously, but some that did reported a large drop; that said, there's been others where it's been somewhat meaningless too. Maybe I can try it in the new year at some point if I figure out what I'm doing.
Would suggest though iced that you really don't want to be on 3 revolvers, and certainly not 2 from a FICO scoring perspective or a potential future underwriting one. You're talking literally 5 minutes of your life to keep it open, less than that if you setup autopay on your accounts, so why let it lapse for inactivity? Swipe and dunzo instead.
@Revelate wrote:CGID: curious, but where has it been shown under any FICO 04 and higher model that it's anything more than percentage? Lots of data showing breakpoints on percent of revolvers. Or are we talking in addition to as there's been some suspect reason codes indicating perhaps aggregate number of accounts (revolver + installment lines)?
I never tested 100% previously, but some that did reported a large drop; that said, there's been others where it's been somewhat meaningless too. Maybe I can try it in the new year at some point if I figure out what I'm doing.
Would suggest though iced that you really don't want to be on 3 revolvers, and certainly not 2 from a FICO scoring perspective or a potential future underwriting one. You're talking literally 5 minutes of your life to keep it open, less than that if you setup autopay on your accounts, so why let it lapse for inactivity? Swipe and dunzo instead.
One could even set the accounts on total autopilot. E.g. take a small recurring charge and have that automatically debited each month, while setting autopay to pay the full balance each month.
@iced wrote:
@Anonymous wrote:Since you are happy to keep the two cards around, I'd really consider using them each for something small once every six months. Everybody buys groceries, so that's a simple approach: take them with you to the grocery store and use each one to buy something small, like a gallon of milk or a loaf of bread, with the bulk of the grocery purchase going on the better rewards card. The loss in rewards will be pretty small: maybe a dime each year.
Good for you that you are rapidly paying down your installment loan. If it could in theory stay open till 2024, you might want to chat with the loan handler and find out how they handle someone who is making payments way ahead of schedule. You might discover that once you pay it down to (say) $40, the due date for the next payment won't be till sometime in 2023. You can therefore keep it open till then and pay very little interest on it.
Extending the life of accounts, especially no annual fee credit cards, helps (in the long run) your Age of Oldest Account, your Average Age of Accounts, and your Total Number of Accounts. Total number of accounts affects your score -- since people with very few accounts are placed in a different scorecard that has a maximum scoring ceiling. Having several accounts also protects you down the road if and when you do need to open an account, by absorbing the hit to your AAoA.
Thus AZEO is not the only thing to consider -- those other benefits matter too.
Finally do be aware that the issue about AZEO and the number of accounts reporting a positive balance -- this is a conjecture explaining why FICO likes it best when a person has 3, 4, or 5+ credit cards. It's certainly part of the explanation but the details of the algorithm are hidden, and it's possible that FICO also simply looks to see of you have 3+ revolving accounts -- quite apart from other known factors.
If I have to choose between using the cards once every 6 months or closing them, I choose closing them. I would only choose keeping them open and using them once every 6 months if the credit hit from having 100% of my accounts (that is, the remaining 2 open cards) reporting a balance would cause a significant (more than 25) point hit to my score.
Same deal with the loan - if I have to choose between paying 1 cent in interest each month or taking a 10 point hit, I'll take the 10 point hit, but if it was going to be a 25+ point hit, I may re-assess.
My question is really around understanding if letting these cards go away (and dropping to 2 total cards) is going to cause a 25+ point drop in score. If yes, then it's a big enough drop that it warrants a second thought; if it's less, then I'm happy to take the hit and let attrition take its course.
Nobody can predict how many points.
But if you want my guess, no it wouldn't be as much as 25 points.