FICO Increase With Third Card?

[Anonymous]

I understand that FICO scores should go up once you have three cards.  I thought that meant three revolvers but on another topic somebody pointed out that it might include charge cards such as Amex.  I've got two revolvers and an Amex Gold.  So I still need to open a third revolver to see this boost, or am I set with the two I have and the Gold card?

[rbentley]

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@Anonymous wrote:

I understand that FICO scores should go up once you have three cards.  I thought that meant three revolvers but on another topic somebody pointed out that it might include charge cards such as Amex.  I've got two revolvers and an Amex Gold.  So I still need to open a third revolver to see this boost, or am I set with the two I have and the Gold card?

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You need three credit cards AND an open stallment loan to get the optimal FICO scoring.  The loan should be at less that 8.9% UTL.

I can't authoritatively speak as to whether a charge card satisfies the need for a cc for FICO scoring, but beleive it would.

[Anonymous]

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@rbentley wrote:

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@Anonymous wrote:

I understand that FICO scores should go up once you have three cards.  I thought that meant three revolvers but on another topic somebody pointed out that it might include charge cards such as Amex.  I've got two revolvers and an Amex Gold.  So I still need to open a third revolver to see this boost, or am I set with the two I have and the Gold card?

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You need three credit cards AND an open stallment loan to get the optimal FICO scoring.  The loan should be at less that 8.9% UTL.

I can't authoritatively speak as to whether a charge card satisfies the need for a cc for FICO scoring, but beleive it would.

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Got the installment as long as an auto lease counts.  If charge card satisfies this then I'm all set!

[SouthJamaica]

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@Anonymous wrote:

I understand that FICO scores should go up once you have three cards. 

I don't know where you got that from, but it's not correct.

I thought that meant three revolvers but on another topic somebody pointed out that it might include charge cards such as Amex.  I've got two revolvers and an Amex Gold.  So I still need to open a third revolver to see this boost, or am I set with the two I have and the Gold card?

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If you have 2 revolvers, an Amex charge card, and an auto lease, you have everything you need to achieve a perfect score.

[Anonymous]

The [scoring] benefit of 3 cards over 2 IMO is one of the most overrated recommendations on this forum.  The scoring benefit referenced by most when talking 3 cards verses 2 is often to the tune of 4-8 points; It's really not significant the majority of the time.

[Anonymous]

I saw a significant scoring bump with 2 revolvers and an Amex gold charge. I don’t remember exactly but it was around 29-25 points.

But that was once my third card hit 3 months. Now technically my 2nd and 3rd cards both turned 3 months on the same day so that could’ve played into the scoring bump being more than expected. And my last late payment turned 3 years on that day as well. So I don’t know how much that played into it either.

Hope that helps a little.

[Anonymous]

It sounds like you had a lot of variables at play there, making it very difficult to actually pinpoint the gain from just the 3rd card.

There was a thread last year on this forum where we discussed the impact of a third card over two and 8 points was about the average score gain... where some people referenced as low as 4 and others as high as 12.  To me, those aren't insignificant gains, but if one wants to argue that to them it would be significant or "worth" adding a 3rd card they certainly can.

[Anonymous]

Hi BBS!  One thing that strikes me as a challenge in trying to test such a thing is that often a person is interested in long term benefit.

So in a way what we want to compare is (say) Bob with three cards and all other factors the same vs. Bob with two.  But the act of adding the third card causes other factors to change, notably age of youngest account and AAoA (and an inquiry).  So it seems as though it would be hard to quantify the extra card's value: even if it some significant long term value that might be harder to see mixed up with the other (very temporary) score harm.

[Anonymous]

Hi James.  This could be a purely practical question: what would help me out most long term, considering all the different pros and cons?  (And this would include reasons that are not confined solely to scoring benefit.)

Or you could be chiefly interested in it as a theoretical question about the FICO 8 model.

One question for you.... how many accounts do you have on your report?  (Closed and open.)  There are advantages to having more than just four accounts on your report.

Also, are you planning to buy a house in the next 13 months?  If so, there are disadvantages to adding a card.  (Same question for whether you plan to buy a car, but the disadvantage is softened quite a bit there.)

[Anonymous]

One more question for James.  It's a bit off-topic, but not if we construe James asking for advice on what kind of cards make most sense for him long-term, which is one reading of his initial post.

Have you carefully looked at the cost of that Gold card (i.e. annual fee) compared with a good no-annual-fee alternative?  A simple way to do that is to have two scenarios: one with the Gold card (over 10 years) and the other with a couple NAF cards that have benefits you like.  The Gold card costs $2500 over ten years plus gives you some rewards and benefits.  The NAF cards would cost $0 plus giving you rewards and benefits.