4 Credit Cards???

[Johnworker1]

I have 3 credit cards with credit limits of 2000, 2500 and 400 that I got in Oct and Nov after my discharge on 10/7. THe first 2 were easy to get in Oct but in Nov I was denied 3 times before I picked the one with the 400 credit limit (an annual fees lol). My bank (Chase) just told me on their app that I am preapproved for a credit card. I know it is stated here that 3 is optimum and I don't need more credit I just use the 3 now just to build credit but I was thinking that have a Chase credit card might help me in the future getting bigger loans from Chase such as car, boat or mortgage that I might need in the future.
Is there a downside to getting a 4th credit card?

Is my logic flawed that paying a Chase credit card off monthly will help build my credit relationship with Chase? I had some unsecured debts in my first filing for Bk in 2010 that were written off but they allowed me to keep my checking account with them (that I keep above 10K). I also had a mortgage with Chase long before that was sold to another bank during bankruptcy.

[justbroke]

I don't think it matters so long as they aren't all reporting a balance. Try to use the AZEO method. Paying off your credit card entirely every month, without revolving "something" less than 9% once in a while, does not show that you can manage revolving debt. This is why, for "high" FICO achievers, there is a penalty for having all of your bankcards reporting $0 in any given month.

Having an overall cushion for your credit is always a good thing. Your other cards are relatively low so if you needed to charge $2,000 on something you'd either be maxed out on one, or using 80% of the other. For that reason, I believe people should have at least one $5,000 card in their wallet. This $5K card could be a secured card or an unsecured card.

Do you know what creditors do when you maintain a $0 balance for months? You get what's known as an AA or adverse action. My score didn't drop and went up. I had been a customer of FNBO for 6 years. They closed my account because "I didn't use it." This is what credit card companies do when the economy is bad and they're trying to stave off a run-up of charges in a pinch. It's better to revolve one of your cards each month and stagger that amongst the cards. Also don't revolve more than 8% and you'll maximize your score.

[shipo]

A few comments:

• Having 3 cards is considered the minimum for optimal scores; adding another card won't really do much for your scores except may depress them for a bit because of the additional hard pull on your credit and the new credit line on your reports.
• As I understand it, getting a card from Chase will not help you when it comes to an auto loan as there appears to be a lot of anecdotal evidence indicating completely separate and distinct underwriting groups.

[justbroke]

I'll add to what shipo wrote as well. Having installment debt is a better barometer for a vehicle loan. This is why the FICO score blesses those with an open installment loan. Please look at shipo's rebuilding credit thread to look into a SSL (share secured loan) and do the steps exactly as shown. You want it to show on your credit report for 24-36 months without having to make but one payment at the beginning, to pay it down below 9% after it first bills, and the last payment or two won't be until the 24-month or 36-month mark!

[Johnworker1]

Thanks again! Chase gave me pre approvals then they disappeared for a week (my scores seem to be wavering up and down) then when it reappeared it included preapproval for 2 cards (9K the other 10K) and vehicle loan up to 66K. I took the 9K card because it has no annual fee and am awaiting it to arrive in the mail. I have one more question...

Is the less than 9% of the available balance I should stay under for that for that particular card (ex. $1000 card balance below $90) or available balance for all the cards combined ($1000 $2000 $3000 balance on one card less than $540)?

[shipo]

Thanks again! Chase gave me pre approvals then they disappeared for a week (my scores seem to be wavering up and down) then when it reappeared it included preapproval for 2 cards (9K the other 10K) and vehicle loan up to 66K. I took the 9K card because it has no annual fee and am awaiting it to arrive in the mail. I have one more question...

Is the less than 9% of the available balance I should stay under for that for that particular card (ex. $1000 card balance below $90) or available balance for all the cards combined ($1000 $2000 $3000 balance on one card less than $540)?

Both, there are two different metrics, one for individual accounts, and a second for total credit limit.

If you are trying to improve your scores, the best model you can use is to keep all cards reporting a $0.00 balance every month EXCEPT one; this is known as AZEO (All-Zero Except One), and for the one card reporting a balance, it should be a trivial balance of under $100.00.

[shipo]

So, as if to illustrate my point above about playing the AZEO game instead of the AZ (All-Zero) game, all of my revolving accounts were reporting $0.00 balances earlier this month, and just like clockwork, all three of my FICO 8 scores dropped, here's one of the reports I got when it happened:


Saturday one of my Chase cards reported a small balance and my FICO 8 score returned to where it was 8 days ago:


The moral of the story, if one is applying for new credit, regardless of whether it is another credit card, an auto loan, or a mortgage, playing the AZEO game for at least a month or two can make a significant difference in your FICO scores.

[Johnworker1]

Excellent Illustration. I found out the hard way which is why I will never do that again.

Is it important to rotate each card a month which has the <9% balance or it doesn't matter as long it is one credit card.

[justbroke]

I rotate them to avoid getting them close for not using them. My FNBO Visa was summarily cancelled because I hadn't made a charge in 2 years on a no-annual fee card. I also had Capital One do it to me twice. I would say at least once a year or maybe every six months to sprinkle some love on the other cards. Let them know that you are alive.

[shipo]

Excellent Illustration. I found out the hard way which is why I will never do that again.

Is it important to rotate each card a month which has the <9% balance or it doesn't matter as long it is one credit card.

I typically only use one card for my "reporting card", if you use a card and never let it report a balance, that doesn't qualify you for closure for lack of use; closure only happens when you go a year or more without making a single charge. I have two or three cards which are several years old and have never once had a balance reported.

[shipo]

Follow up on my "All-Zero" penalty which hit two weeks ago; as mentioned above, my TDCash card which usually reports a small balance every month reported zero this month. As also mentioned, I simply adjusted my payment for my Chase Freedom Unlimited to be short about $20, and that balance got reported last Saturday. Today I woke up to the following graph of my FICO 8 scores:


As predicted, my scores recovered back to where they were before I went All-Zero, errr, with one exception, Equifax somehow decided to throw an extra point in there; not sure why.

[justbroke]

Now there's the proof we all need.

[Johnworker1]

Does is matter how much I leave on one card that is less than <9% of total available credit among the 3/4 cards? Like should it be a calculate amount like 6% or can it be an arbitrary amount like $25?

[justbroke]

It can be any amount so long as it is below 9% of the card limit of the card that is reporting a balance. To be safe, keep it below 8% just in case.

[shipo]

Does is matter how much I leave on one card that is less than <9% of total available credit among the 3/4 cards? Like should it be a calculate amount like 6% or can it be an arbitrary amount like $25?

Just to be clear, if you want to play the AZEO game, the one card showing a balance should be < 9% of the limit of that card (which obviously is a fraction of your total credit limit of all cards).