Number of accounts with balances

[Anonymous]

More evidence on the number of accounts with balances.  I'm starting to think it's the fewer the better, (as long as you have at least one revolving account with a balance, of course).

My EX report two days ago

Four out of ten revolving accounts reporting balances.  Individual util on the four was:

CC #1: 11%

CC #2: 9%

CC #3: 2%

CC #4: 1 %

Overall revolving util: 4%

Total open accounts: 11 (all CCs, no installment or mortgage)

Accounts with balances: 4

Score: 730

My EX report today

Same as above, except CC #2 = 0%

Overall revolving util: 4%

Total open accounts: 11

Accounts with balances: 3

Score: 737

Seven points for going from 4 accounts with balances to 3.

I never would have guessed.

[Junejer]

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@Anonymous wrote:

More evidence on the number of accounts with balances.  I'm starting to think it's the fewer the better, (as long as you have at least one revolving account with a balance, of course).

My EX report two days ago

Four out of ten revolving accounts reporting balances.  Individual util on the four was:

CC #1: 11%

CC #2: 9%

CC #3: 2%

CC #4: 1 %

Overall revolving util: 4%

Total open accounts: 11 (all CCs, no installment or mortgage)

Accounts with balances: 4

Score: 730

My EX report today

Same as above, except CC #2 = 0%

Overall revolving util: 4%

Total open accounts: 11

Accounts with balances: 3

Score: 737

Seven points for going from 4 accounts with balances to 3.

I never would have guessed.

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Found this one out the hard way--21 points worth.  That DID leave a mark.

[Lel]

Hi cheddar, interesting results you had there.

I recently decided to start using a long-idle credit card, because I wanted to reestablish a payment history and didn't want the CCC to involuntarily cancel this card (open since 1993).  When the $75 balance posted a few days ago, my EQ score went from 798 to 785.  The reason given for the drop was "1 of your previously dormant accounts reported recent activity".  Perhaps the computers at Equifax interpreted this as "Lel started using this card, therefore he must have a increased need for credit", which then dropped my score by 13 points.

I was told that once my payment posts, the score should rebound.  It was also suggested that I could trying paying off the CC balances prior to statement posting.  I'll experiment with this strategy, but maybe I should try reducing the numbers of cards in active use to see if this helps my score.  Currently I'm using a MasterCard, two Visas, a Discover Card, an American Express, and a Shell gas card, with a total utilization of about 5%.

http://ficoforums.myfico.com/fico/board/message?board.id=creditcard&thread.id=64766

[Anonymous]

Interesting analysis.  I took a beating when I used a dormant card for a purchase of $11 that had zero balance.  Slapped me with a 10 pointer (TU).  Experimenting to see what happens when I pay off this c.c.  Dying to see if I get my 10 points back.  Hopefully with interest.... 

[haulingthescoreup]

Back when I had 5 CC's and 3 installments, I once had 0 cards with balances on TU (due to their failure to update an account.) I actually got a score bump that one time on TU only, but everything else that I've seen agrees with the statement that one card needs to show a balance.

[Lel]

I've seen my EQ score change over the past 1.5 months that seems to illustrate the effect of having too many accounts with balances. However, for me there has also been a variation in the total utilization, which might make a difference as well, though my utilization has always been 5% or lower.

3/18/2008
Accounts with balances: 7
Utilization: 3%
Equifax FICO score: 798


4/11/2008
Accounts with balances: 9
Utilization: 5%
Equifax FICO score: 785

confounder: I used a previously-idle CC, which reported as negative by SW


4/28/2008
Accounts with balances: 8
Utilization: 2%
Equifax FICO score: 789



I had actually "zeroed" out 3 additional accounts prior to their statement posting dates, but alas, these credit card companies still reported balances. Obviously, there is a difference between when a statement posts and when a CC reports to a CRA.

Three of the those accounts are mortgage and student loan accounts, and the remaining are CCs. I'll sock-drawer a couple of those and keep using two, and try to keep the number of accounts with balances down to 5 or 6. If I can gain 5-6 points for each card, then I might just nose above 800 again.

But wait, I just started the process of refinancing one of those mortgage accounts with a HELOC. That's going to mess things up a bit.

[smallfry]

This is a minor annoyance. It gets really strange when you get penalized for paying off your cars and mortgages. Now that makes NO sense whatsoever. You have shown you can handle your debts by paying them off. Not by borrowing money in perpetuity.

[Lel]

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@smallfry wrote:
This is a minor annoyance. It gets really strange when you get penalized for paying off your cars and mortgages. Now that makes NO sense whatsoever. You have shown you can handle your debts by paying them off. Not by borrowing money in perpetuity.

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Yeah, I've read about that happening - another thread documents a refi that resulted in a 99 point drop for one poor soul. I wonder if that will happen when my new HELOC hits, and another loan (an installment loan) is paid off. I also want to consolidate my student loan into the HELOC, because the interest that I pay on it is no longer tax deductible. That will result in another loan payoff, and a possible quizzical drop in scores.

[Anonymous]

My Equifax report 4/4

Overall total utilization--5%

Total open accounts--8

Accounts with balances--2

Score--802

My Equifax report 4/19

Overall total utilization--5%

Total open accounts--8

Accounts with balances-3

Score--804

Score Watch's explanation for this increase--

You received this alert because one of your credit accounts is showing activity after having been inactive for some time. The effect this has on your FICO^® score is hard to predict; it may cause your score to go up or go down.

This kind of alert often happens at the same time as other alerts on the same account. The other alert, perhaps a balance increase alert or an account change alert, likely has a greater effect on your FICO^® score. However, it is possible for new activity on an inactive account, by itself, to affect your FICO^® score.

Your FICO^® score may go up if most of the accounts listed in your credit report have been inactive recently and then new activity is reported on one of the accounts. Consumers who have recently used credit responsibly often have higher FICO^® scores than consumers who have not used credit at all recently. Therefore, showing new account activity on your credit report that previously had little recent activity can help your FICO^® score.

Your FICO^® score may go down if the new activity is reported on an account that was already in bad status. Accounts in bad status include those that are currently past due, have a history of missed payments, or are charged-off or sold to a collection agency.

[Lel]

Hi psychic,

When I experienced the drop from 798 to 785. This is the explanation that I received:



"1 of your previously dormant accounts reported recent activity

Why did I get this alert? This alert was sent because there is new activity on an account that was inactive for more than 56 months.

How newly active accounts impact your score: You received this alert because one of your credit accounts is showing activity after having been inactive for some time. The effect this has on your FICO® score is hard to predict; it may cause your score to go up or go down.

This kind of alert often happens at the same time as other alerts on the same account. The other alert, perhaps a balance increase alert or an account change alert, likely has a greater effect on your FICO® score. However, it is possible for new activity on an inactive account, by itself, to affect your FICO® score.

Your FICO® score may go up if most of the accounts listed in your credit report have been inactive recently and then new activity is reported on one of the accounts. Consumers who have recently used credit responsibly often have higher FICO® scores than consumers who have not used credit at all recently. Therefore, showing new account activity on your credit report that previously had little recent activity can help your FICO® score.

Your FICO® score may go down if the new activity is reported on an account that was already in bad status. Accounts in bad status include those that are currently past due, have a history of missed payments, or are charged-off or sold to a collection agency."


Just to be clear, no, I did not cut and paste your message!

The other major differences was that my utilization ratio went from 3% to 5%, and the credit card that I use most often went from 16% to 24% utilization. The balance of that card, however, actually went up by 150% (from $1460 to $3767), but the CCC gave me an increase in CL in the interim (which is accurately reported by EQ). However, the change in utilization was not cited as a reason for my score drop.

So, I think our collective experience really illustrates how finicky the FICO scoring system can be. Our starting scores were within a few points of each other, and we each used a previously-idle credit card. Your score went up, and my score went down. Obviously, there are confounders in this comparison, but I think it really shows how unpredictable FICO scores can be.

Message Edited by Lel on 04-29-2008 03:24 PM