Too many accounts with balances

[CoffeeLover]

Hi friends,

Would anyone be able to tell me why this is happening and what I can do?

I've always had 2~3 credit cards for a couple of decades. No auto loans, no mortgage, no debts. Credit cards are always paid off, never paid late on any bills. Never had too high balance toward the limit, under 10% always. I don't frequently open/close accounts. That had maintained my FICO score 800 or above for years, and it was 828 last January with 2 credit cards (both BofA).

And that suddenly changed when I opened up Amex Gold in March 2024, the third credit card, which brought it down sharply to 782. Understood, creating a new credit card would decrease the score for the moment. But I was expecting that would gradually rise back as long as I maintain the good activities like above. However, for last 8 months, the score never moved from 782 at all, no change, no up or down.

Since I got the third card, their notes explains the factors that affecting the score: "Too many accounts with balances".

I used to have 3 credit cards in past, and I've never seen such warnings and didn't affect to my score either. 3 credit cards are too many to have?? Do I need to keep my cards up to 2? That sounds a bit unreasonable.

What would you say/advice to take the score back to above 800 on FICO?

Btw it seems TransUnion gives me score 801, EquiFax 809. Just FICO is 782 and never recovered. 

[Patient957]

You lost ~20 or so points for having a new revolving account.  You will get them all back in one lump when the new account turns 12 months old.  Here is a good thread on that:

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Dropping-off-AoYRA-gt-12-month-scorecard...

Also, if you practice AZEO, you will maximize your score with respect to number of cards with a balance.  There are many threads on this if you do a search.  Others can give better details than I, but to maximize your score you essentially want to have 50% or greater cards reporting a zero balance and the rest under 9% utilization.  You never want 100% reporting a zero balance due to the all zeros penalty.  I think I got that right -- someone can correct me if I got the details wrong here.

In your case, you want 2 cards reporting zero and one at less than 9% for maximum points.

I think those two factors fully explain your score drop.  At 12 months and with AZEO, you should get all your points back.

[FicoMike0]

The too many accounts nonzero means more than 50%. In your case that's more than one. I'm not sure how the gold card is treated, since it's a charge card.

[Patient957]

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@FicoMike0 wrote:

The too many accounts nonzero means more than 50%. In your case that's more than one. I'm not sure how the gold card is treated, since it's a charge card.

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Oh, right, the new account is a charge card, so that may complicate things.  I'm not sure on that either.  Will need one of the big guns to explain.

But I am sure regarding the AoYRA < 12 months penalty.  You'll get that all back in 4 months if you don't open any new revolvers in the meantime.

[CoffeeLover]

Thank you guys, very helpful.

I will try the AZEO and wait for the 12th and will see!

But still sort of not making sense regarding the 50% thing.. I've had only 2 credit cards for a few years, and was using both.. So according to your explanation, I was using 100%. But I've never seen the "Too many accounts with balances" warning.

Anyway, thank you for the very prompt response and the information

[NoHardLimits]

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@Patient957 wrote:

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@FicoMike0 wrote:

The too many accounts nonzero means more than 50%. In your case that's more than one. I'm not sure how the gold card is treated, since it's a charge card.

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Oh, right, the new account is a charge card, so that may complicate things.  I'm not sure on that either.  Will need one of the big guns to explain.

But I am sure regarding the AoYRA < 12 months penalty.  You'll get that all back in 4 months if you don't open any new revolvers in the meantime.

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Amex charge cards are not considered to be revolving accounts in FICO8 scoring.  Charge account balances are not included in total revolving balances or utilization percentages.  However, charge cards do factor into the "number of accounts with balances".  So with 2 revolvers and 1 charge, you want 1 account to report with a balance.  Not zero (all zero penalty), not two, and not 3.

[NoHardLimits]

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@CoffeeLover wrote:

Thank you guys, very helpful.

I will try the AZEO and wait for the 12th and will see!

But still sort of not making sense regarding the 50% thing.. I've had only 2 credit cards for a few years, and was using both.. So according to your explanation, I was using 100%. But I've never seen the "Too many accounts with balances" warning.

Anyway, thank you for the very prompt response and the information

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With only 2 revolvers, it's possible that you were considered to be a "thin file" which could affect the priority of scoring factors compared to a thicker file.

[FicoMike0]

Also, keep in mind, it's accounts reporting a balance. What's reported is usually the statement balance. You can charge to the account, then pif the day before the statement and it reports zero. On the other hand, if you charge it to 50% and pif the day after it posts (long before due date) your utilization is still 50%.I

Try letting one card (not the gold) report <9%, with the others reporting zero. This should max your score as far as utilization.

[GZG]

when you were over an 800 score, you probably didn't even see negative reason factors

but yeah, you don't have 3 cards (with credit limits), so having balances on cards always technically breaks the rule of having a larger percentage of cards with a $0 balance compared to cards that do have a balance.  hence the reason code you're seeing now for too many accounts with balances.

and if all of your cards (with credit limits) have $0 balance, that's a credit score penalty in and of itself. 

tldr: don't worry about it, you're good, because your score dropped below 800, you're seeing nitpicky reasons your score isn't above 800 anymore, they're not saying anything is wrong, they're just telling you why it's not above 800 anymore 

the reason code you're seeing cares specifically about the percentage of cards with a balance, not the number of cards

so 10/30 cards with a balance = 30% = good

2/2 cards with a balance = 100% = bad

1/10 cards with a balance = 10% = ideal

[Thomas_Thumb]

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@CoffeeLover wrote:

Thank you guys, very helpful.

I will try the AZEO and wait for the 12th and will see!

But still sort of not making sense regarding the 50% thing.. I've had only 2 credit cards for a few years, and was using both.. So according to your explanation, I was using 100%. But I've never seen the "Too many accounts with balances" warning.

Anyway, thank you for the very prompt response and the information

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Yes, you were hit with the new account penalty. That typically costs 15-25 points and remains in effect until your youngest credit card reaches 12 months. This is the reason for your point drop.

As mentioned elsewhere your profile has always had multiple negative reason codes. Some score providers will only display negative statements when score is more than 50 points below Fico model max. Other score providers will list negatives if score is 1 point or more below max.

AMEX gold is a npsl charge card with 1 month terms classified as an "open" account. It is a credit card account. It is not a revolving account. If the AMEX is the only card reporting a balance, score is penalized 15-20 points for "no recent revolving activity" because all revolving accounts reported a $0 balance.

The AMEX card is obviously an account and is included in # of accounts, % of cards with balances. Some guidelines:

1) for those with 1 revolving account it is far better for the card to report a small balance than $0 balance. The % of cards reporting is essentially an ignored meaningless metric in this case.

2) for those with 2 revolving cards best case is 1 of 2  reporting small balances followed by 2 of 2 and then 0 of 2. For Fico 8:  2 of 2 may drop score 3-6 points vs 1 of 2. However, 0 of 2 typically drops score 15-20 points vs 1 of 2.

3) for a 3 card profile with  2 revolving and 1 open (charge) account best case is 1 of 3 with the reporting card being a revolver. Next best is 2 of 3 (say 2-5 point loss), then 3 of 3 (say 4-9 point loss) Worst is 0 of 3 and 1 of 3 with the reporting card being the charge card.

A small balance reporting is anything under 9% of the revolving account CL but atleast $5. NPSL charge card balance amount does not factor into revolving utilization. However, it is part of total balance and total balance is a minor scoring factor.

I'd recommend always having 1 revolver reporting a small balance. No need to micromanage to 1 card only reporting. Allowing 2 of 3 cards to report small balances should drop Fico 8/9 score 5 points or less vs AZE1. The 2nd card reporting could be another revolver or the charge card.