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Sidewinder

Is diversity of underwriters important to you? And why?

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Since I was subprime for a long time, my List of Non-Subprime Lenders Who Like Me is important to me.  Venerable ol' BofA granted me their Platinum Plus Visa in 2012, it opened at $5,000 and they've given me a series of automatic CLI's so it's now at $16K.  Yay.  A few years later, after learning lots from CB, I went on an app spree and was granted a Platinum Visa from U.S. Bank, Citi AAdvantage World Elite, Chase Sapphire Preferred, AmEx SkyMiles Platinum and BCE.

 

Also in the CC underwriting business are Fifth Third, PNC, BMO Harris, TD Bank, Key Bank, FNBO (gross), SunTrust, and BB&T.

 

And because I'm just  SUCH  a non-subprime guy anymore, it's annoyingly important to me to get in with all of those banks.  And I think probably it shouldn't be important; I don't think any of them are famous for offering the kinds of high limits that make the AAoA hit worthwhile when apping (U.S. Bank gave me $15K, Citi $10.5K, CSP $13.9 (now $19.9K), SkyMiles $15.3K, BCE $5K).

 

SunTrust's and BB&T's proposed merger has created a ridiculous sense of "urgency" to get in with those guys, just to have more entries on my List of Non-Subprimes.  I think at the end of the day this is not a component of a sound credit-building strategy, but it nags at me.

 

Conventional wisdom is that it's good for your score to have a diversity of types of credit (revolving & closed term).  Is there any edge to being in with a greater number of issuers?  Is the person who has three $15K cards from BOA and two from Citi worse off than the person who has cards from eight or nine different underwriters?

 

(I would like my mind to be free of this if, in fact, it leads to bad apping decisions.)

 

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Forgive the observation, but this smacks a bit of making friendships merely for the sake of having "friends", with little concern about how they might specifically enrich your life.

 

It's a given that the best way to grow credit limits, as well as cement a stronger relationship with a credit card issuer, is a solid history of card use.   Consequently, I look to both a decent SUB and rewards on charging in deciding what card I apply for next.  And, because I like to revolve large purchases, I prefer having a couple of cards in my "portfolio" that reliably offer low fee 0% bt's.

 

The only benefit I see to a diverse set of card issuers is that one might unexpectedly offer a bonus to current cardholders (such as when Discover offered a strong cashback bonus to select cardholders for charging to a threshold over a few months).  From a credit scoring perspective, there's every indication that FICO is blind to issuers (certain "finance company" issuers the exception).

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Main reason to have a diversity in the credit card portfolio is to prevent damage when some new beancounter comes in and slashes lines across the board in response to some perceived fiscal crisis.  It has happened before and will eventually happen again.  By having multiple banks in the mix, damage from one bank making stupid decisions does not kill the overall credit picture...

 

As noted, the score models are blind to WHO has issued cards.  A manual review COULD raise some questions, but this is far less likely outside of the mortgage picture.  Few banks do manual reviews of loan applications for personal loans and even auto finance is mostly automated.  However, where such a review occurs, the diversity would help to prevent an underwriter with the same bank being concerned about the bank's exposure to the individual consumer...again, something that has occurred and will undoubtedly occur in the future. 

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Commenting again because it appears that I intended to slam "diversity" altogether ... which isn't the case.

 

For the reasons centex notes (or, in other words, "don't put all your eggs in one basket") issuer diversity is a desirable thing.  However, beyond ensuring that your key credit cards aren't all with the same issuer, generally speaking I haven't found it necessary to proactively seek "diversity".  Merely seeking out and taking advantage of the best offers (since first rebuilding 14 years ago) has landed me a prime portfolio of cards from diverse issuers.

 

What I'll caution against is taking the tack that Sidewinder appears to be contemplating:  Flagging one or more issuers for application, without any real compelling reason to app their cards other than the sake of "diversity".

 

I'm convinced the strongest credit portfolios are those that are built through the appeal of the cards held and, in particular, heavy use (at least in the first year after issuance).  Apping a card merely because the issuer seems like a good one to add is a recipe to building a portfolio that has negligible benefit and largely sees little use other than a token $10 charge once a year to avert closure due to inactivity.

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3 hours ago, hdporter said:

Commenting again because it appears that I intended to slam "diversity" altogether ... which isn't the case.

 

For the reasons centex notes (or, in other words, "don't put all your eggs in one basket") issuer diversity is a desirable thing.  However, beyond ensuring that your key credit cards aren't all with the same issuer, generally speaking I haven't found it necessary to proactively seek "diversity".  Merely seeking out and taking advantage of the best offers (since first rebuilding 14 years ago) has landed me a prime portfolio of cards from diverse issuers.

 

What I'll caution against is taking the tack that Sidewinder appears to be contemplating:  Flagging one or more issuers for application, without any real compelling reason to app their cards other than the sake of "diversity".

 

I'm convinced the strongest credit portfolios are those that are built through the appeal of the cards held and, in particular, heavy use (at least in the first year after issuance).  Apping a card merely because the issuer seems like a good one to add is a recipe to building a portfolio that has negligible benefit and largely sees little use other than a token $10 charge once a year to avert closure due to inactivity.

 

What isn't a benefit now may be one in the future.  I would prefer to have too much to too little 

 

Of any particular lender you have today, there's always a chance they could disappear from the playing field.  HSBC was a strong player until they decided to go home and schlep their customers off on CapOne (which for me turned out great, but for many others not).  Nationwide Bank has exited just a short while ago.  The next time Wells Fargo gets caught playing games, we might see them disappear.  Nobody knows what will happen.

 

For me, it's best to get while the getting is good.  As Centrex has stated, it's just a matter of time before the next real or imagined financial downturn hits and lenders could well start thinning the herd.  While some are here with big old crocodile tears and crying "Woe is me!" because a $10,000 vacation puts them at 30% UTIL, I'll be LMFAO because I'd be only at 1% UTIL.  

 

Managing 60+ accounts is easy as long as you have an IQ higher than 9 and can control your spending as well as you can your bowel movements.  God invented spreadsheets that can control everything with only a ten to fifteen minute per day investment that can make handling $10 charges 6 times per card / per year a piece of cake.

 

I have a To-Do list that currently has 10 targets on it that will get hit this year and after that I'll retire.  If anything interesting suddenly appears in the market that makes sense to me, I'll consider it.  Executed logically and carefully, I see nothing wrong with Sidewinder's plan.  

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It makes no difference as far as FICO is concerned, but you don't want to be one of those fools who has all their cards with one lender, and then is screwed when that lender suddenly gets stupid and decides to close all their accounts. 

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I'll concede to everything that PotO asserts.  Any differences in his approach and mine to managing credit pretty much come down to style.

 

I'm likely a tad too complacent when it comes to credit management.   After financial hardship c. 1999 that cut my card options to a Providian and a Cap One, with about $9k in CL, I finally succeeded in getting a prime Citi card in 2004.  By 2009, I had grown my credit limits to $350k, and they largely came through that credit crunch unscathed (BA did a 70% chop of about $30k, but I quickly restored that with CLI's from other issuers).

 

I'm now at $700k+ and my credit scores deviate from 850 (FICO 8 ) only to the extent that I choose to carry major purchases at 0% promo terms (currently about $30k) and I don't sweat the reporting of PIF balances (9-16 accounts report balances each month).

 

I have 37 revolving accounts.  I pretty much sweat only that they see use at least once every 2 years.  That "lax" management did cost me one closure in the last 5 years ... it was, in fact, that Citi account acquired in 2004.  It was a useless Citi Simplicity account; 2 seconds of remorse and definitely not a significant loss.

 

Finally, my card "portfolio" represents 16 issuers.  I've never opened a card for the sake of "diversity" or because I wanted "one of those".  It's all been about opportunity/value added.

 

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28 minutes ago, Sidewinder said:

Barclays.

 

 

 

(Forgot to say that Barclays is also in the underwriting game.)

 

Junami.

 

< Oops, thought this was a "word association" game.  And my response is certainly a "neck bone is connected to the ankle bone" association ;) >

 

Damn!  I've been around too long ... guess 13 years has me edging on veteran "old timer" turf.  (Note, I said "edging" ... I can only nip at the heels of the "legends" here ...)  Anyone spot george in his duo-Durangos lately ;)

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