Having Store Cards Necessary!!!

[Thomas_Thumb]

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@Anonymous wrote:

my contract at work requires a vehicle no more than 3 model years old and less than 100,000 miles.  I am usually in the 90s at 3 years.

I'm just under 80% on the auto loan

2 mortgages, 2 properties

1 at 40%

1 just under 90%

mortage installment "utilization" under 64%

overall installment "utilization" just over 65%

revolving less than 1%

as soon as all 3 are clean, I'm going to provide some data on utilization effect on my scores and number of cards reporting even though I only have 3

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Please confirm if you are purchasing these cars with a loan and then selling them/trading them in ... or alternatively taking out 3 year leases with an option to buy and/or trade in provisions for a new lease.

[Anonymous]

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@Thomas_Thumb wrote:

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Please confirm if you are purchasing these cars with a loan and then selling them/trading them in ... or alternatively taking out 3 year leases with an option to buy and/or trade in provisions for a new lease

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Purchase and sell/trade in.

[Thomas_Thumb]

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@Revelate wrote:

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Interesting, thanks for the information senor!  Guess there may even be more of a buffer at 850 than even I'd thought.

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It appears that multiple clean scorecards have an 850 score potential (4 of 8 scorecards?). 

Looks like amount and type of buffer may vary by scorecard. I can report balances on 6 of 6 cards with no Fico 08 Classic score change. It will be interesting if Inverse can now report balances on his 3 of 3 while holding score? Guesses anyone?

Another paradigm buster in the making

[CreditDunce]

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@Thomas_Thumb wrote:

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@CreditDunce wrote:

The only FICO model I know of that counts store cards differently than other credit cards is the NextGen score.  NextGen gives bonus points if you have both store cards and normal credit cards.  It counts as credit mix with NextGen.  I believe that is why so many people believe you need store cards help your credit mix.  IMO your NextGen score isn't important enough to add a store card.

Your auto insurance score is hurt if you have store cards (or at least too many store cards).  Not all states allow credit scores to be used in setting your auto rates and not all insurance companies use credit scores.  However, it is something to think about before you go on a SCT spree.

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I have both open and closed store cards on file. I do not have an open or a closed Auto loan on file. Negative impact, if any, seems to be very slight when comparing to Bankcard scores. I attributed the difference to lack of an Auto loan in my file history.

Fico 08 Auto scores are EQ 884, TU 897 and EX 889.

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I think we are talking about different things.  Your auto enhanced credit score is something you can buy.  Auto Enhanced FICO 08 credit scores are used by banks and CU's to help set auto loan interest rates.  You auto insurance risk score isn't something you would normally have access to.  Instead, it is something you see indirectly in your auto insurance rates.  According to the September 2015 Consumer Reports article on Car Insurance, having a bad auto insurance risk score is worse than having a DWI.   A few store cards will not give you a bad auto insurance risk score.  But they are a negative factor in your auto insurance risk score.  I don't know if it is a complete list, but the article lists: department-store cards, tire-dealer cards, auto-parts stores, service stations and finance company (retailer) cards.

Here is a link for the part of the article on auto insurance credit scores:

http://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm

 EDIT: I am changing auto insurance credit score to risk score to help avoid confusion. 

[Anonymous]

Thanks Revelate and Credit Dunce.  This strikes me as the most helpful part of the whole thread thus far.  The money quote from the Consumer Reports article, as it touches store cards:

Avoid certain types of credit that insurance company credit-scoring models penalize you for:

department-store credit cards, instant credit offered by stores to move big-ticket items; credit accounts from your local tire dealer, auto-parts store, or service station; and finance-company credit, including retailer credit cards.

My feeling is that the option of a store card is great for people who are need a more easily granted line (people rebuilding or just starting out).  It's also great if the card gives you a huge benefit that a major CC wouldn't -- may apply to someone who spends a lot of money at that store.  As a long range strategy, however, it strikes me as making sense to keep your total number of store cards small and also to keep them as < 25% of your total number of revolving accounts.  That's not a big deal, I can't prove it, it just seems like a reasonable thing to do, especially given articles like the one Revelate cited.

[Thomas_Thumb]

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@CreditDunce wrote:

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@Thomas_Thumb wrote:

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@CreditDunce wrote:

The only FICO model I know of that counts store cards differently than other credit cards is the NextGen score.  NextGen gives bonus points if you have both store cards and normal credit cards.  It counts as credit mix with NextGen.  I believe that is why so many people believe you need store cards help your credit mix.  IMO your NextGen score isn't important enough to add a store card.

Your auto insurance score is hurt if you have store cards (or at least too many store cards).  Not all states allow credit scores to be used in setting your auto rates and not all insurance companies use credit scores.  However, it is something to think about before you go on a SCT spree.

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I have both open and closed store cards on file. I do not have an open or a closed Auto loan on file. Negative impact, if any, seems to be very slight when comparing to Bankcard scores. I attributed the difference to lack of an Auto loan in my file history.

Fico 08 Auto scores are EQ 884, TU 897 and EX 889.

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I think we are talking about different things.  Your auto enhanced credit score is something you can buy.  Auto Enhanced FICO 08 credit scores are used by banks and CU's to help set auto loan interest rates.  You auto insurance risk score isn't something you would normally have access to.  Instead, it is something you see indirectly in your auto insurance rates.  According to the September 2015 Consumer Reports article on Car Insurance, having a bad auto insurance risk score is worse than having a DWI.   A few store cards will not give you a bad auto insurance risk score.  But they are a negative factor in your auto insurance risk score.  I don't know if it is a complete list, but the article lists: department-store cards, tire-dealer cards, auto-parts stores, service stations and finance company (retailer) cards.

Here is a link for the part of the article on auto insurance credit scores:

http://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm

 EDIT: I am changing auto insurance credit score to risk score to help avoid confusion. 

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Thanks for the clarification. I misunderstood what you said. 

As a side note, I have been paying one of State Farm's lowest preferred car insurance rate for the last 10 years. (2 open store cards on file until 5 years ago - now just one). My rate has been lower than my wife's and she has a flawless driving record. Until recently I had a speeding ticket and one "$450 payout" parking lot accident on file.

My wife likes her store cards - maybe store cards were/are affecting her rate - which is still discounted from standard. 

Unfortunately, my rate just went up to a "standard" rate. Probably a result of parking lot accident #2. Payout was only $1450 but I guess that's enough. Thankfully I stayed below some threshold that would have triggered a surcharge.

[jamie123]

Guys...You need to take what I posted about what the "average" person with an 850 has on their reports with a grain of salt. If you read between the lines you can easily see what it takes to get an 850. You don't need the EXACT items that I listed but I think that we can all agree your reports should look something like this:

1. Clean reports.

2. Good mix of credit.

3. Well aged accounts.

4. Not much "new" credit.

I think that if your reports look like that, at some point in time you will age up to an 850. That's why I think that for a person just starting out, or starting to rebuild their credit, they should get 5 to 8 credit cards as soon as possible. Having 5 to 8 credit cards will keep their AAoA stable for the rest of their lifetime.

Now about auto insurance...

I live in Florida and am actually researching changing my auto insurance company. That was an AWESOME Consumer Report's article that you posted CreditDunce!

Do you guys think that price is the only consideration when it comes to auto insurance? I mean I know you need to compare apples to apples and make sure that you are comparing the same amount of coverage, but once you do that, is it just price?

In the linked Consumer Report's article for the State of Florida it mentioned GEICO as having the lowest rates for good credit and AMICA having the highest rates for people with good credit. I currently have insurance through AAA and was thinking of changing to AMICA because they offered me more coverage for less money.

I do belong to Consumer Reports and they have another article that lists the insurance companies by customer experience and GEICO was rated much lower than AMICA. AMICA was actually the highest rated company that I could qualify for. USAA and a couple of other military based companies were the highest but I don't have a military connection to be able to join those organizations.

Does anybody have any experience with AMICA?

Does anybody have any experience with GEICO?

How did you choose your auto insurance company?

[Anonymous]

Geico is my auto insurance provider, for three reasons I think.  Reasonable cost-effectiveness, good personal experience, and inertia.

Good personal experience is hard to overestimate.  The reason you need insurance is for when you get in an accident (or need roadside help or whatever).  And I have never EVER had to fight with Geico about any claim.  That doesn't mean another person might not have a different experience, but the key thing is you really need to be confident that whover you choose will totally be in your corner.

By inertia I mean in part that once you get a provider that is fairly cheap and is always in your corner, it's hard to summon the interest to shop around for the best deal.  But I also mean that, while I don't get a lot of speeding tickets, I do seem to get one every 2-3 years.  Geico often never finds out about them (the same might be true of any ongoing provider) but if I started with a brand new provider, they'd pull my driving record, see a couple tickets, and that would lose me any priciing advantage I might get with them.

[Anonymous]

Hey Jamie!  I totally agree with your four tips on the road to an 850.  The only one you left out is the Amounts Owed category.  My guess is that there's no way to get an 850 with a 10% or more CC utilization (overall).  And I am guessing that if your "installment utilization" is over 90% it is not  possible either.

[Revelate]

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@Anonymous wrote:

Hey Jamie!  I totally agree with your four tips on the road to an 850.  The only one you left out is the Amounts Owed category.  My guess is that there's no way to get an 850 with a 10% or more CC utilization (overall).  And I am guessing that if your "installment utilization" is over 90% it is not  possible either.

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We don't know how large the buffers are; TT's file demonstrates that you don't have to have uber pretty installment utilization to get to an 850, and 10% aggregate revolving utilization isn't exactly a big deal FICO wise, nor do you have to have an optimum number of cards reporting a balance (think he tested 4/5, which really should be a drop based on everything we've seen and JagerBombs had a confirmation in his data on that).

That's probably 15ish points right there on my dirty file even between the cards reporting a balance and the middle ground installment utilization, maybe 20-25 on a clean file... which suggests a non-trivial buffer north of an 850, and I think that'd be higher than 10% aggregate revolving.

Admittedly FICO doesn't quite work this way but given that aggregate utilization isn't a bucketable offense to the best of our knowledge, it is reasonable I think.