A drink and an aspirin !!

Why are "experts" always telling us to close accounts?

Blame credit card marketing reps like NetKat for that spreading that misinformation. They have a conflict of interest and others are just misinformed.

Let Fair, Issac be your expert since they are the only one's who know the FICO formula:
"On the other hand, closing unused credit accounts that show zero balances and that are in good standing will not generally raise your score."

Healthy is probably at least 2 with 2 or more years of history. I would go for a few more than that though...

 

Great Quote!

Wow! A great quote! Straight from the horse's mouth, so to speak, and straight to the point as well.

 

I think it varies from lender to lender. They often give different reasons for turning down applications. Sears is the only creditor ever to mention that I had too many open accounts. There were probably 8 accounts listed on my Trans Union report at the time.

 

The million dollar question

I wonder if Regis knows. hehehe

I think there are so many differing "expert opinions" on this it's amazing.

I gave up on this question.

I just close accounts that rob me or give me headaches - aka first premier, FNB of M

Kelly

 

Erik wrote:
"Blame credit card marketing reps like NetKat for that spreading that misinformation."


That was completely uncalled for. NetKat has provided a wealth of useful credit information. Her posts are very welcome here.


"On the other hand, closing unused credit accounts that show zero balances and
that are in good standing will not generally raise your score."


GENERALLY? Tell it to those denied credit for 'excessive number of open revolving tradelines'.


Saar

 

Everybody seems to have a different take on this, now if you believe Fair Issac's theory being 3-4 major card and one retail card is their recommendation. While others have numerous accounts and great scores, and they still continue to get great offers. But in terms of potential lenders for mortgages, sometimes too much available credit will be a potential problem.

 

Actually, there's no conflict here. If one's credit history is long with little or no blemishes, one negative factor won't kill it. People with great credit can afford it.

Even FICO admits that not all factors are applied equally. For example, the same number of credit inquiries would hurt people with poor credit much more than it would people with good credit.

Although the chances of getting the exact FICO formula are zilch, I'm sure we'll soon know more about it. Once consumers' scores are made public, input will start flooding.


Saar

 

Not that it means anything but, I personally had at one time over twenty-five cards, and was never told I have too much credit. Now with about ten accounts, I have too much credit (ALL DENIALS IN PAST SIX MONTHS...even so called "pre-approved").

I was trying for 0.00% and 1.90% and 2.90% offers. I guess I am still dong ok, highest rate is 13.99% on a six month 9.90% deal.

I GUESS IT IS F.I.C.O.

 

Erik's quote deals with FICO scores, not with denial of credit. Creditors can use criteria of their own choosing in addition to FICO scores. That could explain why some creditors turn a person down for too many open accounts, while other creditors approve the same person in spite of too many accounts.

 

Sorry spelling police...

I guess I am still DOING ok,...

 

RichGuy wrote:
"Erik's quote deals with FICO scores, not with denial of credit."


Are you saying credit denials don't largely depend on FICO scores?


"Creditors can use criteria of their own choosing in addition to FICO scores."


True, but the # of revolving tradelines is a FICO factor as clearly indicated on FTC-FICO conference, which some may choose to ignore. And yes, I do find information given during an official conference more reliable than a general purpose Fair Isaac web site. Particularly when they use furtive language ("score generally won't increase..."). They use that kind of language to generate an impression that is not ENTIRELY false, because closing 1 out of 5 revolving tradlines will "generall not" increase score. I reiterate that per FTC-FICO conference, 2 revolving tradelines is best, 3-5 being second best.


"That could explain why some creditors turn a person down for too many open accounts, while other creditors approve"


Could it really? How about: Because they initially set different score requirements; Because some target the prime market while others -- the subprime; Because some provide human override discretion, and others don't.


Saar

 

I'd like to point out that when you use the phrase "largely based on FICO scores," that is furtive language as well. The fact that some people get turned down for credit based on too many open accounts proves nothing about the effect of those accounts on FICO scores. Those people could be the very exceptions that make approval "largely based," rather than "totally based," on FICO scores.

 

RichGuy wrote:
"The fact that some people get turned down for credit based on too many open accounts proves nothing about the effect of those
accounts on FICO scores."


We can all read plain English, can't we? As I said I'm not enthusiastic about relying on their web site, but since that is all you have, here goes:

http://168.230.129.57/servlet/SiteDriver/Content/1701/NextGenClassic1pgr.pdf

It's a list of FICO's (not lenders', not 3rd party's, but FICO's) risk score reason codes. Now look on page 3:

'NUMBER OF ACTIVE REVOLVING ACCOUNTS'.

Now if that doesn't convince you, then maybe a credit is indeed a matter of belief, rather than logic


Saar

 

Yes there are codes in FICO that say you can have too many accounts, too many accounts with balances, too many accounts recently opened, etc.

But approx. 30% of your score has to do with 'Amounts Owed' which includes balance / limit ratios

Approx. 15% of your scores has to do with 'Length of Credit History'. This considers the average age of your account as well as your oldest account.

Approx. 10% of your scores has to do with "mix" like number and type of accounts.

So perhaps if you have many accounts you *might* help yourself in that mix area (approx. 10% of your score) by closing an account but you're hurting yourself in the amount owed and credit history areas (approx 45% of your score). Hence, Fair Isaac's advice of saying "closing unused credit accounts that show zero balances and that are in good standing will not generally raise your score" makes sense to me.

http://168.230.129.57/servlet/SiteDriver/Content/1812

 

The top 10 score reasons from Fair, Isaac:

1. Serious delinquency
2. Serious delinquency, and public record
or collection filed
3. Derogatory public record or collection filed
4. Time since delinquency is too recent or unknown
5. Level of delinquency on accounts
6. Number of accounts with delinquency
7. Amount owed on accounts
8. Proportion of balances to credit limits on revolving accounts is too high
9. Length of time accounts have been established
10. Too many accounts with balances

 

The top 10 reasons may very well bring one to a 620 score. If that's all you need in the long run, good for you.


Saar

 

I have always been confused about the question that Brad had asked and am even more confused now.Erik,Saar and RichGuy seemed to be pretty knowledgable with their responses.My question is between the three of you guys,is there any way of combining your theories into one answer for those like myself that are new to the determination of the FISCO scoring? I am not afraid to say that my ignorance overwhelms me with the FISCO scoring system.Thanks for any kind of input you guys have.I have printed the responses from the three and the only one that I half-ass can make sense of is the 10 rules of thumb of FISCO scoring that Erik quoted in above post. response.

 

I have always been confused about the question that Brad had asked and am even more confused now.Erik,Saar and RichGuy seemed to be pretty knowledgable with their responses.My question is between the three of you guys,is there any way of combining your theories into one answer for those like myself that are new to the determination of the FISCO scoring? I am not afraid to say that my ignorance overwhelms me with the FISCO scoring system.Thanks for any kind of input you guys have.I have printed the responses from the three and the only one that I half-ass can make sense of is the 10 rules of thumb of FISCO scoring that Erik quoted in above post. response.

 

REops,sorry 4 double,was try

of FICO.