Consumer credit scores take into account the “mix” of credit items the consumer has on their report. This part of the credit score is affected by what kinds of accounts a consumer has and how many of each. The bureaus will score someone higher if they have an open mortgage, 3 credit cards, 1 auto loan, and a small amount of other open accounts.
If they have a ton of credit cards, their scores will be lowered. If they have several mortgages, their scores will be lower. Any “unhealthy” account mixes lower their scores. The preferred number of credit cards is three. This means a consumer will actually have a higher credit score if they have three open credit cards than if they have more or less than three open.Tell your clients not to run out and cancel your cards just yet. Remember, 30% of their score is comprised of their balances in relation to their high credit limit. So insure your clients keep their cards open, but have them focus on having three large balance cards for maximum impact. Also insure your clients know to maintain a healthy mix of accounts and this aspect of their credit score will be golden.
