Too Many Accounts?

[Anonymous]

I think the MyFICO wizard might be lying to me.

When I look under "Understanding your FICO Score" for my TU report, it says:

[paste]
You have too many credit accounts with balances.

Number of your accounts carrying a balance
4 accounts
FICO High Achievers have an average of 3 credit accounts carrying a balance.
[end paste]

And what are those accounts?

Installment: auto lease
Card 1, Amex: $85 balance
Card 2, BofA Visa, $15 balance
Card 3, BofA Amex, $4 balance


Is it pulling my leg? Having 4 accounts with balances is bad?

Or did it just not know what else to tell me?

[Anonymous]

i Just posted this in another thread-

My .02 cents-

I a have

Open accounts-

1 mortgage

1 heloc (igored)

1 Auto (under 50% utl)

2 SL's

1 Charge card (amex green)

2 Store cards ( Kay and an Home depot not yet reporting)

Amex Delta, Blue Cash

Wamu 1 Visa 1 MC

Cap one 1 MC

Junny 1 MC

2 CU Visa's

15 of 16 Open accounts reporting- I don't get "too many accounts with a balance until 10"

So if you subtract the mortgage and Heloc -

14 - 9/14 =64% of accounts with balance

Just cards = 10

So the <50% of CC's rule still applies=

[Anonymous]

---

watchnerd wrote:
I think the MyFICO wizard might be lying to me.

When I look under "Understanding your FICO Score" for my TU report, it says:

[paste]
You have too many credit accounts with balances.

Number of your accounts carrying a balance
4 accounts
FICO High Achievers have an average of 3 credit accounts carrying a balance.
[end paste]

And what are those accounts?

Installment: auto lease
Card 1, Amex: $85 balance
Card 2, BofA Visa, $15 balance
Card 3, BofA Amex, $4 balance


Is it pulling my leg? Having 4 accounts with balances is bad?

Or did it just not know what else to tell me?

---

Fewer than half of your open accounts should be reporting a balance for optimal scoring results.

This includes revolving as well as installment loans.  Every installment loan that is open is an account with a balance.

How many total open accounts do you have?

[Anonymous]

TU thinks I have 5 open accounts, including installment.

It should be 6, but they accidentally deleted one.

Either way, it meets the criteria. I wasn't aware of the 40% rule.

[Anonymous]

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watchnerd wrote:
TU thinks I have 5 open accounts, including installment.

It should be 6, but they accidentally deleted one.

Either way, it meets the criteria. I wasn't aware of the 40% rule.

---

The rule isn't 40% exactly, it's "fewer than half."

So since you have five accounts, you can only let two accounts report a balance at any given time in order to avoid the "too many accounts with balances" ding.

Since you can't control whether the installment loan reports a balance, that leaves you with only one card to play with.  Let one card report a balance of 1-9% of its CL, and let the others report $0.

Do NOT let all your cards report $0, or else you'll be dinged for not having any revolving balances, and that ding is even bigger than the "too many accounts with balances" ding.

This is where it can be advantageous to have several cards.  With only four revolving accounts and one installment loan, zero cards with a balance is too few, one is just right, and two are too many.

[Anonymous]

How big of a ding is the 'too many accounts' ding, anyway?

[Anonymous]

for me it's 11 points at last sw alert. think 10-15 is a pretty standard point range.

[Anonymous]

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dnm45227 wrote:

for me it's 11 points at last sw alert. think 10-15 is a pretty standard point range.

---

Yep, and the "no revolving balances" ding can be 20 points or more.

Imagine only having two CCs and one installment loan.  In a case like that you have to pick your poison.

[Anonymous]

i DO only have 2 cc's and one installment loan (auto) which reports a balance. are you guys saying the scores go up fastest (in my case) if i carry over 0 balances every month from both my credit cards since my car loan carries a balance? a high one..

i have a 500 dollar cap one

2000 boa

and a 16000 wachovia car loan balance..i got the car in january..and the 2 cards in july 07 and march 08, respectively..

when i bought the car it didnt seem to really affect my credit scores ..when i opened boa my eq dropped from 663 to 641..my tu is 666..only opened my first card in july 07...never a late pymt..just trying to understand how the scores work a little better...

[Anonymous]

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joffogle wrote:

i DO only have 2 cc's and one installment loan (auto) which reports a balance. are you guys saying the scores go up fastest (in my case) if i carry over 0 balances every month from both my credit cards since my car loan carries a balance? a high one..

i have a 500 dollar cap one

2000 boa

and a 16000 wachovia car loan balance..i got the car in january..and the 2 cards in july 07 and march 08, respectively..

when i bought the car it didnt seem to really affect my credit scores ..when i opened boa my eq dropped from 663 to 641..my tu is 666..only opened my first card in july 07...never a late pymt..just trying to understand how the scores work a little better...

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It's kind of a lose-lose situation in that case.  FICO wants to see fewer than half of your open accounts with balances, but also wants to see a very small revolving balance.  With 2 CCs and one installment loan, you can't have both of those factors.

Obviously, since you're paying the installment loan off over many months, you can't control the fact that it wil carry a balance from month to month.  You can only control what balance reports on your CCs.

You lose more points for having no revolving balances than you do for having too many accounts with a balance (in my experience).  So it would probably be better for you to let one of your cards report a very small balance (9% of its credit limit or less) than it would be to let them both report zero.

Did that make sense?

Message Edited by cheddar on 04-04-2008 02:31 AM