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Recently an old credit account that I've had sitting idle was closed due to inactivity. I get credit-score updates from the issuer (who still maintains the credit account that I actually use), and this event caused a small drop in my score (812 to 805, so -7 points) apparently because my total available credit decreased.

So we've got a drop in total credit from $25000 to $11000 (the fact that the bulk of my credit was with the card I never use came as a surprise to me, too), with a corresponding drop of 7 points to the credit score. That looks like (but probably isn't) 0.5 points per $1000 of available credit. And fair enough, I guess.

The part I'm wondering about is that the card issuer also provides a "simulator" tool that predicts what your credit score will do if you take various actions. I thought I could get my 7 points back by just increasing the limit on the card I still have up to $25000, but when I put that into the simulator it kicked the score down to an atrocious 780-something. Strangely, if I simulate adding a second card to bring my total credit up to $25000, instead of a plummeting score the simulator gives 5 of the 7 points back.

I guess the core question is, why does having $25000 in credit available across two accounts produce a significantly better score than having the same amount of credit in a single account? If someone is trying to max out their reported credit score, what's the optimal configuration of total credit and number of cards/accounts?

closed as primarily opinion-based by ChrisInEdmonton, Brythan, Pete B., Nathan L, MD-Tech Apr 26 '18 at 13:50

Many good questions generate some degree of opinion based on expert experience, but answers to this question will tend to be almost entirely based on opinions, rather than facts, references, or specific expertise. If this question can be reworded to fit the rules in the help center, please edit the question.

  • As the details of the credit score algorithm aren't public, any answer is going to be speculation. – ChrisInEdmonton Apr 16 '18 at 12:03
  • @ChrisInEdmonton But someone must know the details of the algorithm. Someone had to code it. Maybe they'll see the question and remember enough details to answer. – aroth Apr 16 '18 at 12:15
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    I have tried such a simulator(from Chase), and it is complete off most of the time. It might be useful for people with poor scores, but if your score is pretty good already, it is just reporting contradicting nonsense to me. – Aganju Apr 16 '18 at 12:42
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    Simulators are all notoriously inaccurate. – Norm Apr 16 '18 at 12:53
  • @aroth Yes, someone coded it but the exact details are proprietary so they can't share it. The best you can do is go by the rough guidelines from each scorer and anecdotal evidence. – D Stanley Apr 16 '18 at 13:26
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A drop from 812 to 805 will not affect you in the slightest. You are still in the "excellent" range and you should have no trouble borrowing money if you need to.

The exact formula for credit scores are proprietary, so you won't get an exact formula. Changes in overall credit used, number of accounts, and age of accounts are all significant factors.

Also, activities that will raise your credit score in the long run may drop it in the short run, so don't stress over a few points. You might get them back soon and more. For example, if you add a new card, that drops your credit utilization, but lowers the average age of your credit accounts, so the effects somewhat offset each other. As time passes, the average age of your credit will increase and your credit score will go back up (all else being equal).

Remember that your credit score is a mix of prior behavior (payment history) and expected future behavior (recent inquiries, new cards), so as long as your behavior indicates that you'll pay back credit you'll have a good score. Pay your bills on time (and in full to avoid paying interest), don't use more credit than you need to, and you'll be fine.

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