Equifax Reason Code (04) (Too many accounts)

I recently got my FICO score out of Equifax and a new reason code has come up for me not scoring well.

04 - Too many bank or national revolving accounts.

"Your Equifax credit file shows more bankcard accounts (Visa, MasterCard, Discover, American Express, Diners Club, etc.) than other consumers with credit histories of similar length. research has shown that consumers with a relatively large number of bankcard accounts appearing on their credit file represent higher risk than consumers with fewer bankcard accounts. Therefore, avoid applying for credit you don t [sic] need, or don t [sic] intend to use. (Note that closing your existing bankcard accounts will not make them disappear from your credit file immediately; therefore, closing many or all of your bankcard accounts will probably not increase the BEACON score.)"

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A quick review of my credit profile showed the problem immediately. I had a credit card through Banco Popular, which was reported lost/stolen multiple times. Now that Banco Popular has sold its portfolio of credit cards these items no longer show as "Lost or Stolen" but show as "Account Transferred or Sold."

Dispute time, I guess. I hadn't disputed them before because I didn't think it was hurting me.

Moved this to credit scoring.

According to Fair Isaac, "transferred" accounts are not supposed to be counted.

And as they say, closing accounts doesn't help - idiotic as that is.

For anyone who carries balances, never close accounts as it'll probably seriously lower your scores due to a higher B/L ratio.

How many accounts do you have?

I have reported 16 revolving tradelines and 4 installment loans. 7 of the revolving tradelines have balances. 5 show closed at consumer's request. One shows lost/stolen. One is open without a balance. Three show transferred/sold when they should show lost/stolen.

I want 7 open tradelines. I have 8 showing, but I don't count NextCard because NextBank is out of business. My oldest account was opened in 7/1998. 13 tradelines in 4 years is an average of 3 new revolving tradelines per annum.

Beacon 644 - 10/04/14/05

Even if you get rid of all three transferred/sold, you may very well still get reason code 4. 13 revolving trades in 4 years is still unusually high. I just checked one of our samples and 3.25 per year puts you in the 91st percentile. Just don't open any more revolving trades and eventually the closed ones will be deleted at the 10 year time limit, plus as your credit history gets longer, 13 revolving trades won't look so bad. Another 4 years should make sure this doesn't show up as an adverse action code for you even if your score gets into the mid-700s.

By the way, closing revolving trades doesn't help if the trade has a zero balance, but it does help if the balance is close to the credit limit, since that trade no longer counts towards your total balance to limit ratio. FICO's advice on this was a bit vague, and then the press reported it completely wrong. Closing an unused account can never help your score and may hurt it, but closing a high b/l account usually helps your score.

Is that I made a $4,500.00 payment against one of my credit cards and that information hasn't posted yet. The report was dated 12/6/2002 yet the information for that tradeline hasn't been updated since 8/02.

Similarly my mortgage, which I paid off earlier this year still shows open, not updated since 7/02. All the rest show updates of 10/02 and 11/02.

The other problem is that my credit history is longer than Equifax will acknowledge. I got an Orchard Bank card (back before Household bought them) in 1997, but Equifax suddenly (and for no apparent reason) deleted that item. That would be 14 tradelines in 5 years as opposed to 13 in 4 for an average of 2.8 instead of 3.25. My other two reports show that tradeline on it, so I should have less problems there.

I wasn't worried or surprised to know that 04 could be one of my factors, I was just astonished when it showed up in the top 2. I have four inquiries in the past 12 years (though in January 2 will drop off) yet inquiries wasn't in the top 4.

Once my $4,500 payment gets notated on my credit profile, I should soar above 680, which will mean that I'll start to get credit limit increases again, which will further mitigate the balance to limit ratio problem.

I find it very hard to resist running up my credit cards when they send me those promotional checks in the mail offering to lock me into 0% interest for the next 6 months if I'll cash the check. Interest rates on my cards range from 8.24% to 14.49% so an offer of $3,000 at 0% interest can be very yummy.

Anyone with an IQ above 50 would think that a 0% interest offer is a GOOD thing - of course Fair Isaac punishes people who take advantage of good offers.


M0ri4rty wrote:

"By the way, closing revolving trades doesn't help if the trade has a zero balance, but it does help if the balance is close to the credit limit, since that trade no longer counts towards your total balance to limit ratio."

That actually is NOT true. Fair Isaac DOES count closed account balances in the B/L ratio - as per myfico.com and the Beacon figures.

Do you have a reference on the myfico site or anywhere else that comes from FICO?

If they do, it represents a change from how I understood they were doing things when I worked at Experian. And it doesn't make any sense. A closed revolving trade acts like more like an installment loan since you can't charge any more to it. Certainly, revolving trades with a zero balance can't count toward the balance to limit ratio; most people have a number of closed trades with zero balances on their reports, so the balance to limit ratio would become useless as a predictive attribute. So the only way I can see that what you're saying could be true is if a closed revolving trade counted until its balance was paid off. But that would mean that as soon as it was paid off, the score would instantly drop!

I've got a bunch of data with FICO scores from our take-one business, so I will check it out and see whether the evidence favors one of these scenarios. If anyone has a closed revolving trade with a balance, please weigh in with what happens to your score when you pay it off.

So, Moriarty if I say have two credit cards one with a 10k limit and a 10k balance and the other with a 10 k limit and no balance. If I just call up and ask them to close the high balance account will that really boost my scores? How do credit cards report accounts that you close but still owe money?

One last question I have is- how much do old inactive accounts (in particular credit card accounts)affect fico scoring? Is it better to try to get the accounts removed?

I appreciate your insight.

Keep the oldest one. If you can reactivate it so that it stays on your report, do it. Otherwise, you should keep the others so that when your oldest disappears at the 10 year limit, you will still have some old accounts.

I'm going to check into the other question. If Christine is right that the calculation is (all balances on revolving tradelines including closed) / (credit limits on open revolving tradelines only) then you should never close a revolving tradeline, period.

Since it's a little off topic here and sure deserves it's own thread, I started the B/L thread:

Fair Isaac includes closed and charged off accounts in B/L ratio (http://www.bayhouse.com/credit-forum/showthread.php?s=&threadid=1255)

I just had a little experience with that reason code on equifax. It dropped my score a fair bit about 20 points or so. Then it went away when a credit card corrected an old account. I also sent off a bunch of letters a while ago to FUSA USAA Citi and CITIUSA (also UNIVERSAL card which is citibank, too) saying I enjoyed their service and asking them to remove old tradelines that I had consolidated because I understand they hurt my credit, and I was amazed with the results. Citi imediately removed one. And both FUSA and Universal card sent me letters saying they would remove others within so many days. One thing however, only request that one tradeline be removed per letter. I asked for two tradelines to be removed and every company seemed to only respond to one account mentioned.

Obviously you must have OTHER accounts that are at least as old as the deleted accounts. Got to be very careful there.

I have never recommended that someone have closed accounts deleted.

But I'm suing to get a deleted account back on, and one of my clients might sue too.

If finance company accounts such as Household Finance reduce scores, wouldn't it make sense to close them AND get them
deleted from the bureau reports?

Maybe, but probably not.

Depends on the reporting of they account and the REST of your report.

Have an unusual question.

I opened a Mark Shale charge account (back in 1980) and bought I think one shirt for $42.00. Paid the balance off and never charged anything again.

This tradeline is still showing up on my credit reports. There has been no activity since 1980 and I am being reported as paid as agreed.

However, the account is reported as closed.

Since I am 2 years now from filing BK7, should I try and see if they will reopen this account? I eventually ended up with a $1,500.00 credit limit according to the CRA's (What a Joke) I wish I could get that kind of a limit now!!

I Don't understand why the account hasn't been deleted. However, I am not eager to lose a good tradeline.

Any advice?

I don't even know who they are - BUT I'd consider leaving it alone if there is no DLA.

I'm guessing that's what happened, please check and let me know what the DLA is.

Thanks for responding Christine,

The Mark Shale account ( its a clothing store), is only being reported on my Equifax report. The DLA is blank for this account. However, they are reporting 04/02 in the "Date Reported" column.

I agree that it is probably better to just leave it alone. I just don't understand why it has not been deleted by now.

Just like I thought. NO DLA = NO deletion.

They delete 10 years from the DLA, if it's not there, the account stays. Don't mess with it.

I am having a terrible time with the credit reports that I am receiving both online and in the mail.

I'll start with Equifax, every report I get from them is different. I have threatened them with a lawsuit as well because I believe they are in violation of FCRA. For example, I disputed an item and Equifax would send me the investigation results that say" Key Bank and Trust" this item has been deleted from the credit file", then when I look at the attached file the account is still there as a "Charged off Account". Wait, there's more! I have a two student loans that are in repayment status, they were originally reporting as "Student loan deferred", so I had Equifax to investigate to show them as "Paying as agreed", when I got the investigation results, they deleted one account and updated the other one to show "Included in Bankruptcy", I was furious!! I called the creditor to find out how they were reporting and they told me that they were reporting "pays as agreed", they even sent me a letter verifying what they were reporting!!

On top of all that, when I get my scores from myfico.com, they r lower than the scores I get directly from the bureau. Except for Transunion which gives me a lower score than the report I pull from Truecredit.com. So far Experian is the only bureau that is not giving me heartburn!!

1) Read Credit Scoring Basics (http://www.creditforum.org/showthread.php?s=&threadid=1248) and don't buy TrueCredit reports and don't waste your time on bureau scores.

And read my complaint about Nelnet (http://forum.creditcourt.com/discus/messages/803/1096.html)

And then of course sue!

I have ordered reports from myfico.com and they are incorrect. Once I order the report and score, I call the bureau to dispute the inaccuracies and they tell me that the information is different or that some accounts I mention are not reporting. So are you telling me that these scores are accurate?

Also, I ordered my report directly from Transunion and the information I received online is incorrect. The report I received in the mail has correct account information and seems to be the most accurate.

I know that you don't have time to be bothered with this, but I am really annoyed because it seems I will never get an ACCURATE score.

There've been a lot of problems with the various reports, all are incomplete.

There is NO accurate score! It doesn't exist. Does anyone have an "accurate" IQ?

Also, follow the links at Credit Scoring Basics and at http://www.creditsuit.org/ in the right column. There's enough material to keep you reading for days!

I know that's NOT a good thing, but unfortunately there's a LOT wrong with credit reporting and scoring.