Too many accounts with balances

[CreditBob]

As far as one of the effects on the Fico score, it seriously takes a look at four or more trade lines with balances. On self reported accounts, such as utility and rent payments, does it count when the payment made is showing up in the balance category? If so, any solutions? A perfect example is Experian Boost.

[FicoMike0]

Huh?

[CreditBob]

Too many accounts with balances is when you have four or more including revolving, installment, or a combination of both, But what makes no sense is, they are self reported such as Experian   Boost. Watch the following link from someone that actual worked at FICO & Equifax  . He mentions less than four accounts with balances. This method in the video does not have to be at an 850. It's also to get a higher score from the 500's to the 700's range.

https://youtu.be/M53wNlq6sro?si=Tc6lNxXrEm2bW-Wc

[Thomas_Thumb]

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@CreditBob wrote:

As far as one of the effects on the Fico score, it seriously takes a look at four or more trade lines with balances. On self reported accounts, such as utility and rent payments, does it count when the payment made is showing up in the balance category? If so, any solutions? A perfect example is Experian Boost.

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Cell phone, rental and utility bills are not included in the Fico assessment of accounts with balances. They are not secured or unsecured credit tradelines. Fico 9 and 10 may look at payment history on these types of accounts and penalize for late payments as may VantageScore.

BTW - John Ulzheimer is NOT a know-it-all with respect to credit scores and ability to reach and/or maintain 850 Fico 8 and Fico 9 credit scores. His presentation has some false statements.

Some credit profiles can ABSOLUTELY reach and maintain 850 scores with MORE THAN 4 credit accounts reporting balances.

I had 6 of 6 credit cards report balances along with a mortgage and held 850 on all 3 Fico 8 CRAs and all 3 FIco 9 CRAs multiple times. His statement on less than 4 accounts with balances reporting as a requirement for 850 is FALSE.

We know that Fico 8 and Fico 9 have buffers. Every scoring metric within the 5 main categories does not have to be optimized. When I reported 6 of 6 cards with balances, I received the "too many accounts with balances" negative reason statement on Fico EQ score 5. My "mortgage" Fico scores did drop - particularly EQ. HOWEVER, ALL Fico 8 and Fico 9 scores held at 850 even though # of accounts with balances was tagged with a negative reason code. 

Fico 8 and Fico 9 are significantly less sensitive to # of accounts with balances than the older Fico 98 and Fico 04 algorithms presently used by mortgage lenders. A metric being sub optimal does not equate to preventing score from reaching 850 in this case.

Two more things of note: I maintained 850 across the board with aggregate utilization in the 3% to 5% range on a regular basis. Also held 850 with one low limit card reporting over 70% utilization. So, again John was in error saying 1% utilization is a critical number. Generally speaking any UT under 9% on a card is more than sufficient as is aggregate UT under 5% - based on MyFico poster data over the years.  Even just staying under 29% on cards reporting plus under 9% in aggregate is sufficient for many profiles to achieve or maintain a Fico 8 or 9 score of 850.

Important factors in ability to hold 850 at somewhat higher utilization levels are file thickness and age of credit history. Obviously a thick, well aged, file is less sensitive to potential penalties from a less than optimal metric. Ability to achieve and hold 850 scores depends on scorecard assignment - Fico and VantageScore use scorecards.

Having 1 or 2 hard inquiries under 12 months on file won't necessarily prevent someone from reaching 850 or drop score from 850. I received 2 on EQ within 6 months for CLIs and both EQ F8 and F9 held 850. (Note VantageScore scores inquiries for 2 years). A big influencer in the new/seeking credit category on score is a new revolving credit account under 12 months age.

After listening to part of the video, I lost some trust for John as an objective credit expert. It is wrong to state things as absolute truths that are based on limited information. It looks like John filled in some data gaps with conjecture. A few members on the MyFico forums have even posted 850s with 8-10 accounts with balances.

I'd caution against taking everything in the video as gospel - even if you view John as a credit prophet. It has a lot of good points but some statements are not correct in absolute terms.

P.S. A search of old threads on minimum credit age for 850 yielded a data point at 14 years AoOA with 7 years AAoA and multiple posters reporting 850 at 17-18 years AoOA. So, we have yet another absolute from the video "20 years minimum oldest account age" being proven inaccurate by real world data.