Fico 4 Too Many or Too Few Accounts

[Anonymous]

All,

In reviewing my Fico 4 Mortgage score I’m being told I have “too many or too few accounts” as a reason for a decrease in score. I have 34 accounts on my report and 31 are open/reporting. What’s the number this score model is looking for? Is it worth the squeeze to close accounts to hit this sweet spot or will it only be a few points? This score is currently 709 while the other mortgage scores (Fico 5 and 2) are at 726 and 763. Only Fico 4 gives me this as a reason for my score being lower.

[Anonymous]

Are you planning to buy a house in the next few years?  If not, then improving your TU mortgage score should be a low priority.  Eventually (though it may well take years) mortgage lenders will no longer use those old models.

BTW, just because your EQ mortgage score does not indicate this as one of your four reason codes, it doesn't mean that it isn't affecting it.  EQ and TU use the same mortgage model, even though the name each CRA gives to it is different.

Can you describe your profile a bit better?  Of your 31 open accounts, how many are revolving?  And of those, how many are giving you a substantial benefit?  Would it really be a problem to close several of those that are young and of no use to you?

As far as what the different FICO models are looking for with this factor, it's hard to say.  I believe contributor Revelate has guessed that it is under 18.  If you feel like it, you'd be a perfect person to try closing 8 accounts and then closing 2 more every two months until the reason code goes away.

[Anonymous]

Yes, I’m buying a house and have the preapproval from Penfed. This is a new home so it won’t be ready until early 2019. Penfed will be pulling my credit again about 60 days outside of closing and I’m thinking there’s room for improvement on the Fico 4 score. 24 of the 31 accounts are revolvers. There’s a part of me that likes the account diversity and available utilization. If I have to take on debt, it doesn’t hurt my utilization very much as those revolvers really pad it (I have about $250k if available credit). I’m open to closing accounts I suppose but wonder if it’s just best to leave it alone for now since I’ll be getting my credit pulled again around October/November and don’t want any surprises for Penfed.

[SouthJamaica]

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@Anonymous wrote:
Yes, I’m buying a house and have the preapproval from Penfed. This is a new home so it won’t be ready until early 2019. Penfed will be pulling my credit again about 60 days outside of closing and I’m thinking there’s room for improvement on the Fico 4 score. 24 of the 31 accounts are revolvers. There’s a part of me that likes the account diversity and available utilization. If I have to take on debt, it doesn’t hurt my utilization very much as those revolvers really pad it (I have about $250k if available credit). I’m open to closing accounts I suppose but wonder if it’s just best to leave it alone for now since I’ll be getting my credit pulled again around October/November and don’t want any surprises for Penfed.

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My gut tells me it's best not to make changes during the period leading up to a mortgage.

The mere passage of time, without any new credit, will itself improve your score.

[Anonymous]

I tend to agree, thank you.

[Anonymous]

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@Anonymous
In reviewing my Fico 4 Mortgage score I’m being told I have “too many or too few accounts” as a reason for a decrease in score. I have 34 accounts on my report and 31 are open/reporting. What’s the number this score model is looking for? Is it worth the squeeze to close accounts to hit this sweet spot or will it only be a few points?

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Fellow member T. Thumb and I were just chatting about this reason statement in another thread yesterday.  His opinion is that the "sweet spot" is likely somewhere in the 11-20 account range, with number of open accounts below that range or above that range likely resulting in the statement you are seeing.  My opinion is that this negative reason statement likely only impacts most profiles about 4-5 points, so from where I stand I'll say it's quite insignificant.  I certainly wouldn't recommend you close down 15 accounts or something in order to make that statement go away just to pick up a few points.