Multiple CC apps and my FICO score????

[NorCalKid]

Hi, I just signed up for this forum today. Hopping to get a little help from those of you in the know.

My mortgage broker told me to get another CC. I currently have 2. He said he wants me to have 3 lines of credit or more. I have a 770 FICO, 0% debt utilization, and nothing negative at all on the report. I was actually thinking about signing up for 3 cards at once. An American Express, A Discover, and a Capital One card. The reason I want to do it this way is so I have both an American Express and a Discover. The Capital One card is so I have a card with no foreign transaction fees.

My question is how much is this going to effect my FICO score? Will I just take one hit for 60 days then everything will return to normal. The reason I am concerned is I would like to get a mortgage next fall. Will my credit have fully recovered by then? Is it going to negatively impact me in any way when future lenders see I applied for 3 cards at once? I take my credit seriously and don't want to risk screwing it up. So I figured I better ask.

Thanks in advance.

[jIM_Ohio]

in general getting credit will help score if you use less than 50% of available credit.

I can tell you discover cancelled me recently because I did not use their card.
So it helps to have about 3-4 active accounts, and use each one once in a while, but do not use more than 50% of available limit.

[NorCalKid]

Thanks, I understand that having more accounts will help. I have never carried a balance so that doesn't concern me. I guess my question has more to do with are they and future creditors going to frown on me opening multiple accounts at once. I just really would like my credit to be fully recovered by Sept.-October.

[neatdesign]

I worked at Capital One a few years ago (left in 2006). I don't know if they still have this policy, but back then Capital One wouldn't report the actual credit card limits to the credit bureaus. Instead, they'd only report the card's highest balance, which would skew the usage percentage.

For example, let's say you got a Capital One card with a $10,000 credit limit, but the highest balance you ever had on it was $1000. Capital One would report your credit limit as $1000, NOT $10,000. If you then had a current balance of $100, it would show your usage as 10% (using $100 of $1000), not as 1% (using $100 of $10,000).

Again, it's been a few years since I worked there so this could have changed. But I recommend you contact Capital One and ask them what their policy is on reporting credit limits to the credit bureaus. I remember taking many calls from people who were incensed by this policy, that it was screwing up their attempts to get a good mortgage rate, etc, but it was perfectly legal and there was nothing that would be done about it.

[Seeker]

I worked at Capital One a few years ago (left in 2006). I don't know if they still have this policy, but back then Capital One wouldn't report the actual credit card limits to the credit bureaus. Instead, they'd only report the card's highest balance, which would skew the usage percentage.

For example, let's say you got a Capital One card with a $10,000 credit limit, but the highest balance you ever had on it was $1000. Capital One would report your credit limit as $1000, NOT $10,000. If you then had a current balance of $100, it would show your usage as 10% (using $100 of $1000), not as 1% (using $100 of $10,000).

Again, it's been a few years since I worked there so this could have changed. But I recommend you contact Capital One and ask them what their policy is on reporting credit limits to the credit bureaus. I remember taking many calls from people who were incensed by this policy, that it was screwing up their attempts to get a good mortgage rate, etc, but it was perfectly legal and there was nothing that would be done about it.

Anyone who finds a written "credit limit" (as in the example above of $1,000 "credit limit" when the real credit limit is $10,000) misrepresented on their Credit Report, ought to immediately dispute it with the Credit Reporting agency.

There's often a maximum used field (at least in TransUnion reports) that is a part of the history. To have the "credit limit" field reported as $1,000 not reasonable. To have the maximum credit used and reported as $1,000 IS reasonable.

If ANY Credit Report report shows such an inaccuracy in the proper credit limit (as defined in the latest update of their account), then it should be disputed immediately and in writing with corresponding written proof of the inaccuracy.

The above is a misinterpretation of "utilization." It's not something that the Credit Reporting agencies will propagate if they are made aware of this error.

[neatdesign]

Anyone who finds a written "credit limit" (as in the example above of $1,000 "credit limit" when the real credit limit is $10,000) misrepresented on their Credit Report, ought to immediately dispute it with the Credit Reporting agency.

I did a little digging and (thankfully) it appears that Capital One has changed this policy since I left the company:

Aug 15, 2007 -- Capital One gets a pat on the back from Clark on clarkhoward.com

"In the past, Capital One would not report how much of your credit limit you were using. That way it always looked like you maxed out 100 percent of your credit, effectively destroying your score. ...

Now the company has agreed to report credit limits to the bureaus. ... Capital One's change is huge because 30 percent of your credit score is based on how much credit debt you're carrying versus how much credit is available to you. So someone who has a card with a $5,000 limit and uses only $1,000 (20 percent usage) has a higher score than someone who has a card with a $20,000 credit limit and uses $15,000 (75 percent usage)."

[maat55]

I'm curious as to why you need other credit with an 770 score. Personally, I would find another mortgage company before I would open unwanted credit lines.

[JoshuaHeckathorn]

It's never a good idea to apply for too much credit all at once. The number of recently opened credit lines and credit inquiries accounts for approximately 10 percent of your overall FICO score. So be patient, open one card, and then wait a month or two before opening the next. Your scores will probably take a 5-point hit or so each time, and then bounce back, but it's tough to say exactly what will happen because there are so many other variables included in your credit profile.

And as the others have said, keep a close eye on your credit utilization ratio. Next to making on-time payments, that has the largest effect on your FICO scores.

[Seeker]

I did a little digging and (thankfully) it appears that Capital One has changed this policy since I left the company:

Aug 15, 2007 -- Capital One gets a pat on the back from Clark on clarkhoward.com

"In the past, Capital One would not report how much of your credit limit you were using. That way it always looked like you maxed out 100 percent of your credit, effectively destroying your score. ...

Now the company has agreed to report credit limits to the bureaus. ... Capital One's change is huge because 30 percent of your credit score is based on how much credit debt you're carrying versus how much credit is available to you. So someone who has a card with a $5,000 limit and uses only $1,000 (20 percent usage) has a higher score than someone who has a card with a $20,000 credit limit and uses $15,000 (75 percent usage)."

Regardless of what the actual CC company reports, if on the Credit Reporting Agency report, it showed "credit limit" as a lower number than the real credit limit, then I would contest it with the CRA and send a copy of the supporting documentation of my real credit limit.

If Capital One did that in the past, it was wrong. If any company does that (essentially misrepresent "maximum credit used" and actually tell the Credit Reporting Agency that that number is the users "credit limit"), then they commit a form of fraud. The number needs to be reported accurately, with the proper definition of what that number represents. If the number is not labelled correctly, it can and should be refuted.

I will repeat the fact that TransUnion used to "ask" for the "maximum credit used," they did not ask for the credit limit. This may also have changed.

What people read on their Credit Reports, needs to be understood and corrected if it's not true. Credit Reporting Agencies will correct their records when such an inaccuracy is made.

[neatdesign]

Regardless of what the actual CC company reports, if on the Credit Reporting Agency report, it showed "credit limit" as a lower number than the real credit limit, then I would contest it with the CRA and send a copy of the supporting documentation of my real credit limit.

The following article (which unfortunately is undated) discusses this CC industry tactic, and specifically singles-out Capital One.

Scroll down to the "Slanted reports" section on page 1:
Credit card companies' evil tricks - MSN Money