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Too Few Bank Revolving Accounts
By Kenneth Long on May 20, 2010

"Too Few Bank Revolving Accounts" Credit Score Risk Factor Codes
Equifax 3
Experian 3
TransUnion Not Factored
NextGen R4
94773_9730-(1).jpgIf you have ever been denied credit because you have "too few bank revolving accounts," my response is "Congratulations!" You have so far avoided the head first plunge into credit card debt.

That being said, you may be unable to obtain certain lines of credit. Some types of revolving credit accounts may require that you demonstrate your creditworthiness through proper use of other revolving debt.

The good news is that this type of error message is usually limited to major credit transactions. It is possible to see this as a result of a mortgage application. You may also see it in response to an attempt to open a major line of credit or an elite credit card.
Certain higher profile lenders will require that you have proven that you can handle revolving debt responsibly before they are willing to approve your application for one of their accounts. In the case of a mortgage lender, you might find that having at least one or two major credit cards in good standing will strengthen your credit and improve your chances for approval.

If you are looking to open a major credit account and think that opening a revolving account or two will help, think again. It takes a minimum of 2 years of active reporting before a major credit card will provide any meaningful benefit to your credit scores.

Credit bureaus reward long-term use of credit accounts. In fact, about 15% of your credit score is composed of information about your account duration. This longevity of credit history is what allows for your scores to increase higher than the average scores.

Opening a revolving account months before applying for a mortgage is a mistake. If you did not already open the line of credit previously, then it is too late to do so right before applying for your mortgage.

Simply applying for a new credit account will lower your credit scores. It can take at least 2 years before that account is considered "seasoned" by the credit bureaus. Until then, you will not see any real benefit to your credit by having the account.

Store cards can build some credit, but they provide a fraction of the benefit of major credit cards. How many bank cards do you need? One or two major credit cards is usually all you need in addition to installment loans to provide a good mix of credit.
Join the Discussion at the Credit Forum: Too few bank or national revolving accounts

Too few bank or national revolving accounts is Code 3 on Equifax and Experian credit scoring products. TransUnion does not include this factor in its scoring products. Code R4 applies on NextGen scoring products. For more information about credit scoring, see the complete list of credit score factors.
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