Need advice....

I got a Credit One (FNB Marin at the time) Visa a couple of years ago. I don't know how much it helped my scores because I got HSBC, Tribute, Orchard(HSBC), Capital One, and WaMu also in the last few years - HSBC being the first.

I do know that it's kind of a pain having the fee hit monthly so that you have to send them a check every month whether you've charged anything or not. In addition, they charge you $5.95 each time you want to pay online. Also, they've been slow to raise my limit, so they're still sitting at $750 while HSBC is at $1500 and WaMu is at $3500. Right now one of the items lowering my score (according to Experians PlusScam..er..Score), is the fact that I have low limits on my credit cards indicating that lenders don't trust me with more. Credit One moved from $300-$550-$750 over the last almost 3 years even though I've never been late on a payment and used them fairly regularly early on. The others have stepped on up although nearly all of them started in the $200-300 limit range.

Last point - I was talking to a mortgage lender the other week who seemed to be the most knowledgable person I've ever talked to about Credit Scores (or he was a good actor - what do I know?). He said that there are different 'classes' of credit cards. He said at the bottom of the pile is HSBC, Tribute, WaMu, Credit One, etc. In the lower middle are store cards like JC Penney, etc. and of course the big names are at the top like Citi, Chase, Discover, Amex, etc..

He said that if you have one of the lower tier cards and carry no balance, that it helps your credit more or less. Once you carry a balance, he claimed it was a hit to your credit much worse than carrying the same balance on a premium card. He said the logic was that people with those cards have credit problems, so it's a red light the moment they start carrying a balance because it's an indication that they've run out of money and are living on credit. Apparently if you have a Citibank card, you're statistically less likely to be in that position.

For what it's worth - hope that helps.

 

It would really surprise me if Fair Isaac could get away with evaluating the full range of creditors by company as part of calculating FICO scores. First, there would be competitive and fair trade issues (you think WAMU would sit still for Citi being scored higher?), second there is the problem of even constructing a scoring model to use this data from enough statistical data to be valid, and if you were caught doing so, being called on the carpet by Congress if some bank in some congressman's district doesn't like the scoring bias you build into the system.

I would expect that FICO would be lender-neutral, other than that it appears to recognize categories of debt such as revolving account (CC), installment loans (more often used by lower score borrowers), and mortgage debt (more associated with borrowers with more assets, stability, and credit history), since these categorizations are marked in credit files, and therefore accessible to the scoring calculation.

The ranking you are describing does approximately match the prime vs. sub-prime CC products, which is really based on what markets different lenders are going after, and on what terms. That is more of an issue of interest rates, fee structures, and credit limits, and what mix of different tiers of consumers a given lender wants to produce a mix of returns and risks for their portfolio. As viewed by your mortgage broker, he would have seen that borrowers with lower scores have tended to have lower rank, poorer term accounts as he described.

That would not mean that FICO scored them lower in it's calculation compared to more prime accounts, just that customers with better credit would tend to have lower rate, larger credit limit accounts with longer histories from those banks that offer them, such as Citi and Amex, compared to customers with poorer credit who would tend to be paying more on lower limit accounts including store cards, to banks who cater to them, such as FNMB, Providian (maybe WAMU is different now), HSBC, etc.

If you have a Citi card with large limit, you have higher scores not because your account is with Citi, but because you got that Citi account on those terms by paying as agreed on all your accounts a long time, having an account with Citi a long time, and otherwise meeting the profile that both FICO and Citi regard as a reliable borrower. It is not magic.


As far as how adding, or removing, a low limit card with a balance to a mix of higher limit cards might affect your FICO scores, I don't know. You could presumably just close the low limit cards with fees, probably with little effect particularly if their age was little different than your high limit cards. They may have served their purpose, and if the lender won't upgrade your terms to your improved credit status, what are you really paying for now?