Opening a second CC

[Anonymous]

For a while I'd been wondering about whether and by how much it helps or hurts to go from 1 to 2 CCs. Well, it helped my TU score by 20 points. I had no other open (revolving or otherwise) accounts, an AAoA of ~7 years with many closed accounts, utilization of under 1%, and no other inquiries. Both cards are bank cards. The corresponding inquiry was on on EF, so TU didn't take a hit. Actually, neither did EF as it was the first recent inquiry.

I believe the new CC primarily helped my mix or "Types of Credit", but also helped "Amounts owed" as I went from using all of my open accounts to half. The "What's in your score" description below says that what matters is the "Number of accounts" carrying a balance, but I think it also looks at the proportion of open accounts carrying a balance as many others on this forum have suggested.  

  http://www.myfico.com/crediteducation/whatsinyourscore.aspx

So, if you have only one open CC, opening one more will likely increase your score provided your AAoA, utilization, and inquiries don't cost much (as was the case with me). Of course, your mileage may vary, and rather unpredictably so!

[RobertEG]

I think the other,longer-term factor, is that it helps to move you out of a categorization of a "thin" credit file to a "thick" credit file. More plainly stated, it is a step needed to move you into higher scoring "buckets."  Evn with a short-term reduction in AAoA, that is not as significant as longer-term building.

Congrats!

[Anonymous]

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RobertEG wrote:  it helps to move you out of a categorization of a "thin" credit file

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This is a very good point.

Those with several accounts reporting but only one of them being a CC, will not see the same point hike when adding a second CC.

Individuals who, like OP, only have one open account reporting, may be more likely to see the same type of results when opening their second account of any type.  You're giving some weight to your credit report and FICO is rewarding you for not being quite so thin.

Congrats on bulking up, OP!

[RobertEG]

Avenka, dont lose site of what FICO is, and what it isnt.

FICO is NOT an evaluation of your credit-worthiness.  Never has been, and was never intended to be.

It is primarily an evaluation of how you timely pay against credit you have willingly established, and thus a predictor of your risk of future payment delinquencies.

Past payment history is thus the most heavily weighted in FICO scoring.

But current util can raise flags on potential risks, so they also rank current util of existing credit as the seconf most predictor of risk of future payment delinquencies.

IF you were Donald Trump, with millions in income and assets, FICO would not even see that.  They only score his risk of timely paying obligtions.

When application for credit reaches higher levels of potential risk for the credtitor, FICO payment risk analysis is not all they look at.  It is just a part of their lending decision.  I dont know of many mortgage lendors who would grant approval without prior submission of information as to income, debts, and assets, that FICO does not even consider.  But they may use your FICO score to peg the interest rate they offer based on their assessed risk of timely payment.