So how do multiple Current Accounts affect a credit score?

[Bradley]

This was a reply migrated from another thread, hence why it seems out of place as an OP.

[ralf]

I remember about a decade back when I cancelled about 5 credit cards I’d had from doing various 0% balance transfers over the years that had just been sitting unused since. I think that was £39,000 of credit that I’d never even asked for - all the accounts were max £2000 credit when opened and they’d all just kept on increasing the credit limit without asking me. No idea if that was “good” or “bad” for my credit score, but it was certainly a nice feeling getting rid of them all and just keeping one.

[GalaxyMergirl (eden)]

@anon23935806

But then again this “score” is just an imaginary number generated by whatever service you use to see your credit history - lenders use the info on your credit file (amount of debt, etc) directly and make their own decision. I don’t see why lenders would care about the number of accounts as long as the important stuff (history of regular repayments, etc) is good; so while your pointless “score” might briefly go down, I don’t think lenders actually care about how many accounts you have.

This is mixed truth. You don’t have one score, no, that’s a myth. But you are scored - there are numerous various scoring models. And lenders DO use them, though not necessarily the ones you buy unless you’re really lucky.

[DaveTMG]

Allie, the objection is to the credit bureau telling us their scores are important.

I believe you have experience in this field, perhaps you could enlighten us on what really matters?

[anon23935806]

I don’t think many people know, and if they knew (from working on the software a particular lender uses to assess applicants) they probably wouldn’t be allowed to say to avoid people being able to “trick” their system.

Security by obscurity basically.

[GalaxyMergirl (eden)]

@DaveTMG

I believe you have experience in this field, perhaps you could enlighten us on what really matters?

Very few people really know, but there’s some predictions out there that are pretty accurate. Scoring models definitely play a part (though they may be internal models, not commercially available ones). However, risk scoring is only one factor. They also want to see that you’ll be profitable, or could be - the dirty little secret that is rarely acknowledged.

This is where multiple accounts can really be a negative, not scoring. If they see you have dozens of accounts and you applied for one with a high sign up bonus, are you really going to be long-term profitable?

The short version is no one really knows other than the people who set up the bank’s underwriting system. Risk scoring matters, but is one factor. The risk score you buy could be very different from the one your bank uses but generally make payments on time, have a few accounts, and hold accounts for a long time.