DO I REALY NEED THREE CC'S?

[Thomas_Thumb]

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@wa3more wrote:

Its the mix and making payments on time for a while.

I have a mortgage ( 18 years),home equity loan and 1 credit card with 5k limit and have an 800+ score.

Don't get caught up with a bunch of credit cards or loans just to manage a credit score. It always comes back to bite you.

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Hello wa3more, you are a good case in point for 800 plus scores with limited credit cards.

A well aged mortgage provides a nice buffer for score stabilization. However, many people don't have a "aged" mortgage or a new mortgage and thus lack that stability.

I am an advocate for limiting credit cards, particularly if they make a person uncomfortable. Nonetheless, having 3 to 5 cards does add flexibility and makes it easier to manage utilization.

Note: One poster reported having an 850 score (for a short period of time) with only four credit cards and a charge card. The cards were very well aged. This person reportedly did have a montage a long time ago that had aged off his report.

There is no one size fits all but a balanced portfolio generally scores well regardless of the model ... and the current models will be changing [example transactor/revolver designator]

[jamie123]

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@wa3more wrote:

Its the mix and making payments on time for a while.

I have a mortgage ( 18 years),home equity loan and 1 credit card with 5k limit and have an 800+ score.

Don't get caught up with a bunch of credit cards or loans just to manage a credit score. It always comes back to bite you.

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And just how long did it take you to get that 800 score? It probably took you at least 10 years with one mortgage, one HELOC and one credit card. People that follow the accepted advice on this forum which is 3 credit cards and a share secured installment loan can hit 800 in less than 4 years starting from scratch and if you do it right you can make money from it. (Cash back cards.)(Interest on a $500 share secured loan over 5 years is less than $30.)

Given enough time you might be able to reach an 800 score with minimum amounts of credit but you are building a very fragile credit profile. If you ever have the need to apply for an auto loan, credit card or other loan your score will crash quite a bit and it will take a long time to recover.

I mean what happens if the lender of your 1 credit card gets bought out or goes out of business or sells its credit card division? What happens when they don't carry the account history with them and suddenly you have a new credit card on your reports instead of a 10 year old card?

Credit scores are built on good credit behavior and time. Three credit cards generate 3 times the history of 1 credit card and it gives you diversification. The only way that you can have a strong AAoA is with time so the earlier you start the better. Giving people that are looking for credit advice the response that 1 credit card is good enough is giving bad advice.

[wa3more]

Don't know how long it took. I was never one to be held hostage by a credit score, which is really a debt score. The more debt you have, the better chance to manipulate to a  higher score.

Usually a 720-750 is all you need. For most, too many credit cards is asking for trouble. Most people will eventually get in a bad situation. I know millionaires who have basically minimal credit. Maybe a card or two at most.

My credit was in the crapper from the 2008/2009 depression,high 500's until 2 years ago. I'm in my 50's now and have learned my lesson. Buy car for cash. Borrow to buy depreciating asset ? Not me. I'm saving, spend less than I make and buy with cash. For most, credit cards are weapons of destruction.

[Anonymous]

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@CreditDunce wrote:

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DIYcredit w rote:

     Thanks! My thinking is that when that reason code didn't show up like when only one cc reports a balance to credit report that you could get away with only one cc.That's the reasoning.

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That reason code is the main reason why people say you need at least 3 cards for FICO.  It is based on the percentage of your credit cards with a balance.  If you only have one card, then letting it report a balance means 100% of your cards have a balance.  If you do not let any of your cards report a balance, FICO spanks your score even harder.

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What is your advise for someone who is rebuilding and only has 1 (unsecured card) at the moment?  I keep reading to pay before the statement cuts but then I see a comment like this and I feel stuck at this monent as I don't have the option to get another card just yet.

[Anonymous]

Hey Fig70!  Welcome to the Forum.

First thing is, congratulations on beginning your rebuilding journey.  The good news is that eventually you will get to a sweet and happy place.  All your derogs will fall off and you will have an amazing score.  But it is so important to remember that it IS a journey.  You should view it as something that may we take several years.  During which time you can still use VISA cards, but debit cards may be what you use more than credit cards (for a while).

OK, given that you are keeping in mind that you are on a journey and that you plan to have patience, then here are your steps.

(a)  Visit the Rebuilding forum here at myFICO.  Explain exactly what all of your derogs are.  They may be able to help get them removed.  Even when removal is a possibility, it can take a few years or even a bit more.

(b1)  If you have no open installment loans, you should consider adding a 4-5 year "share secure" loan for $500.  Alliant is a good lender for this.  You can get one with no hard pull.  There are many discussion threads here on the $500 SS loan idea.  It will only benefit you if you have no open installment loans, however.

(b2)  Get a 2nd card when you can.  It could be a secured card.

During the time that you have only one card, keep a small positive balance on it.  This is substantially better than having no balance on it.  Make sure the balance that reports is always small.  It should always be < 8% of your credit limit.  During the month you can use the card a lot (or not, up to you) just make sure that the amount that reports (typically the balance when the statement prints) is small.  When you finally get the 2nd card, I'd personally let both cards report small balances for at least three months.  Then you can start having one card report at $0 and the other with a small balance.  Eventually get a third card down the road.  Any time you need extra FICO points you can bring two of the three cards to $0 with the other at a small balance.

B1 and B2 do not have to be done in any special order.  Just don't be in a rush, do them as soon as you feel like you can.  And certainly see what you can do with your derogs, patiently.

[Anonymous]

Thanks for the welcome

The reason I say I can only get 1 card right now is becasue of my scores and I haven't used credit in a little over 7 years. Crazy I know but in 2009 it all came crashing down for us and I've laid low since. I did get approved for a Cap 1 unsecured card 2 weeks ago which I was shocked. It's only a $300 but I will take it! I really don't want to get a secure card as I'm afraid it just won't grow with me? I've seen the secure Cap 1 quicksilver card but with that annual fee..eek. I know I can't be choosy at this point in the game but man alive I hate to pay an AF.

My baddies (quite a few charge off's) are due to fall off some by March/April and most by June of this year. It's been a long 7 +years of waiting for this so I'm very excited.  I'm gearing up to start reporting as obsolete with Transunion (since I'm 6 months out).

Oh my report, I have a mortgage and a car loan reporting.

I love the rebuilding forum! I browsed in there for 3 hours last night. Such great info!

[Anonymous]

Wow!  You are in GREAT shape then.

Just keep doing what you are doing.  Use your one credit card, keep the positive balance on it and make sure it's a small balance that reports.  Pay your card in full every month.  Then, when everything falls off in July, your score will be much higher.  At that point you can begin adding a few more cards, slowly.  My personal advice is to always let a new card report a small balance for the first three months, just so you establish a clear history of use and payments in full.

In the meantime, you can have fun researching the kinds of cards you might want to have in July.  Just don't go crazy with adding new ones.  You will be well served by gradually building up to four or perhaps five really good ones that have no annual fee and which you can keep forever.

BTW, when is the DATE OPENED for your car loan and your mortgage?  If either one of them is a fair while ago, you will be in good shape with respect to the age of your profile.  Do the car and mortgage both report to all three credit bureaus?

[Anonymous]

For my mortgage we had to modify back in 2009 so that reset the clcok on that loan. Really hated that.

I have 2 closed car loans from the past but 1 recent one that opened last February. Not that good for aging, I know.

Yes they're on all 3 reports.

So for 3 months let a small balance report which means pay that balance once I get the statement in the mail (this would mean the statement was cut, correct?). In the past I would pay when my statements came in the mail so this is new to me.
So to be the statment cut..say you charge $100 today. You want to pay that in full say by next week so it's before the statement cuts.. Correct? Pay in full large purchase before statement cuts but let a small balance report. I may be reading more into it but just Making sure I understand this.

[syeb]

OP's actual question was "Do I need three cc's to have a high credit score?". And there were many intelligent responses focusing on that aspect.

But the headline title says "Do I need three cc's"? For that I would answer yes, not only for the varied benefits but primarily for the situation where a credit card is declined for fraud or other reasons or just does not work for some reason. A backup card (or two) would be necessary for peace of mind. I know when I am traveling and make a big charge there is alwayus the fear that it would be declined for fraud protection. So a backup is critical. You do not want a vacation ruined due to the lack of a credit card.

[Anonymous]

Hello Fig70.  When a person has a very small credit limit and only one card, then he's typically going to need to do one of the following:

(1)  Use the card to make only one small purchase a month, so that the balance when the statement prints is small.  Use debit cards for everything else.  A few days after the statement prints, pay the Amount Owed on the statement in full.

(2)  Use the card for whatever you want, more than just one small purchase.  In this case you will have to make a payment about a week BEFORE the statement prints, so that you have paid the balance down to a very small but positive number (like $5).  Then, a few days AFTER the statement prints, pay the Amount Owed on the statement in full.

With #1 you just make one payment a month.  With #2 you make at least two payments, possibly more (depending on how much you are charging on your card).

With either approach you are allowing a small positive amount to report to the bureaus, and you are paying that amount in full after it does report.  Almost all credit card issuers report whatever is on the statement to the bureaus and they do this a couple days after the statement prints.  A small minority of card issuers use a different system, like  reporting whatever your current balance is on the 1st (say).