Do you think App Sprees are a good idea? or bad?

[keithbward]

I recently spree'd and ended up with a few store cards. Not shopping cart trick but actually applying for them. Mainly because I shop at those places quite frequently and I love the extra precent off for card holders and the additional savings. But after looking at it from a different point of view should I not keep my store cards and just use my bank credit cards for those purchases?

[BluePoodle]

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@keithbward wrote:

I recently spree'd and ended up with a few store cards. Not shopping cart trick but actually applying for them. Mainly because I shop at those places quite frequently and I love the extra precent off for card holders and the additional savings. But after looking at it from a different point of view should I not keep my store cards and just use my bank credit cards for those purchases?

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I think it is personal choice. I only have the Target card. But I think it is worth having. Not only do we save 5% off (that is before state tax, so an additional savings there in less sales tax charged). But we found that they will ship free using the Target card when I order online. My Daughter is in college and as long as I order $50 in FOOD, they will ship in free!  That is a tremendous savings for me since I can order now bottled juice, cereals, canned food, any non-perishable and have it shipped for free.

I think as others have mentioned, to maximize for product mix, store cards may have some value. And for many, that may be the only credit you can get for a while. But some people have a lot of store cards (10-20 or so). Most have low limits and limited growth of CLI. They usually have higher APR's so you have to PIF.  

If I am being looked at in a manual review, I would rather have a couple decent limit bank cards than a lot of low limit/high apr store cards. It may or may not change anything, but that is just my personal opinion without any professional insight.

[Anonymous]

I think whether its good or bad depends on the individuals credit situation and also depends on how many cards determine a spree. Some people that I've seen here (not a lot but a couple) seem to be more excited about the thrill of seeing an approval message than the actual card their about to receive. Which I can totally understand after trying for my first two cards ever and seeing APPROVED given my credit history, or lack of history rather. It could easily become an addiction I'm sure. A spree for me at this point would kind of feel like gambling in Vegas but not knowing when to walk away before I crap out! I have specific future cards in mind that I've researched, would rather not just apply for the sake of applying, after 9 months or so if I feel like my credit situation has significantly improved I might try for three next time instead of two. We shall see! My personal maximum count for a spree would be 6, to me thats a lot of HP at one time. Everyones view is different though.

[tonyjones]

I heard FICO doesn't care about inquiries that are older than a year and I found out most CC lenders don't care either. I had 20+ inquiries on my Experian but when I recon'd they told me my inquiries count was good since I had only 1 in the last twelve months!

[bluedoggiant]

Depends, I have had my own credit card (delta gold amex, PIF every month) for only a year. This month marked the anniversary of that card and I applied for the CSP, got approved, applied for AMEX BCP 5 days later, got approved, and then applied for Chase Freedom 4 days later, got approved.

All with the generous limits you see in my signature.

I think a lot depends on income too.

[Revelate]

I pretty much only spree with long stretches of gardening in between.  Napkin math (making some simplifications) it's better for one's FICO, that said, spreeing without a plan is a receipe for short and possibly mid-term credit pain.  As a result I wouldn't bother with Shopping Trick and a slew of store cards unless I shopped there and the rewards associated with the card were better than I could get on a national bank card.  

Trying to keep the explanation simple: the FICO algorithm is completely time dependent other than a few instant in time things like utilization calculations, but this absolutely holds for payment history.  Inquiries are negatives, and arguably short accounts are too though that's somewhat debatable, but a longer tradeline is a better tradeline, so a tale of two different application strategies:

1) 1 new credit card every six months, starting today, looked at one year from now:

• 1 card, 12 payment entries, 12 months age
• 1 card, 6 payment entries, 6 months age
• 1 card, 0 payment entries, 0 months age

= 3 cards, 18 positive payment entries, an average age of 6 months, and 2 inquiries within the last year

2) 3 credit cards application spreed then gardening for said year:

• 1 card, 12 payment entries, 12 months age
• 1 card, 12 payment entries, 12 months age
• 1 card, 12 payment entries, 12 months age

= 3 cards, 36 positive payment entries, an average age of 12 months, and 0 inquiries within the last year

In this small isolated example, FICO wise it's easy to point at #2 and say spree's FTW, and in general this holds true for most people other than the edge case of long yet thin files where there's a harsh AAOA penalty involved with this (though have to rip off the bandaid sometime and establish a thicker file but I digress).

In any event, when it comes to FICO you want your tradelines established as soon as possible, and any negatives aging as soon as possible.  The exception to this is if you know you have a house or possible car purchase coming up, in which case hold off on comparitively trivial things like credit cards, but if you wind up having to impulse buy a car, on average you're better off with the spree methodology.  Oh, and also bonus offer churners where it's slightly different too. 

Generally for optimizing one's report: if you want a card, and you can reasonably expect to be approved, and if you don't have a big ticket item coming up, go out and apply for it right now given the time dependent nature of the algorithm.  This heavily favors spree-methodology, just make certain that the card is actually useful; again to reiterate, always have a plan before making any application as impulse credit-gathering is often a foolish exercise.

[Dalanar]

Wow, very helpful, Revelate,  with detailing the consequences of each scenario.  Thanks!

[elim]

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@Revelate wrote:

I pretty much only spree with long stretches of gardening in between.  Napkin math (making some simplifications) it's better for one's FICO, that said, spreeing without a plan is a receipe for short and possibly mid-term credit pain.  As a result I wouldn't bother with Shopping Trick and a slew of store cards unless I shopped their and the rewards associated with the card were better than I could get on a national bank card.  

Trying to keep the explanation simple: the FICO algorithm is completely time dependent other than a few instant in time things like utilization calculations, but this absolutely holds for payment history.  Inquiries are negatives, and arguably short accounts are too though that's somewhat debatable, but a longer tradeline is a better tradeline, so a tale of two different application strategies:

1) 1 new credit card every six months, starting today, looked at one year from now:

• 1 card, 12 payment entries, 12 months age
• 1 card, 6 payment entries, 6 months age
• 1 card, 0 payment entries, 0 months age

= 3 cards, 18 positive payment entries, an average age of 6 months, and 2 inquiries within the last year

2) 3 credit cards application spreed then gardening for said year:

• 1 card, 12 payment entries, 12 months age
• 1 card, 12 payment entries, 12 months age
• 1 card, 12 payment entries, 12 months age

= 3 cards, 36 positive payment entries, an average age of 12 months, and 0 inquiries within the last year

In this small isolated example, FICO wise it's easy to point at #2 and say spree's FTW, and in general this holds true for most people other than the edge case of long yet thin files where there's a harsh AAOA penalty involved with this (though have to rip off the bandaid sometime and establish a thicker file but I digress).

In any event, when it comes to FICO you want your tradelines established as soon as possible, and any negatives aging as soon as possible.  The exception to this is if you know you have a house or possible car purchase coming up, in which case hold off on comparitively trivial things like credit cards, but if you wind up having to impulse buy a car, on average you're better off with the spree methodology.  Oh, and also bonus offer churners where it's slightly different too. 

Generally for optimizing one's report: if you want a card, and you can reasonably expect to be approved, and if you don't have a big ticket item coming up, go out and apply for it right now given the time dependent nature of the algorithm.  This heavily favors spree-methodology, just make certain that the card is actually useful; again to reiterate, always have a plan before making any application as impulse credit-gathering is often a foolish exercise.

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  damn nice post.  big thanks for that.

[BluePoodle]

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@Revelate wrote:

I pretty much only spree with long stretches of gardening in between.  Napkin math (making some simplifications) it's better for one's FICO, that said, spreeing without a plan is a receipe for short and possibly mid-term credit pain.  As a result I wouldn't bother with Shopping Trick and a slew of store cards unless I shopped there and the rewards associated with the card were better than I could get on a national bank card.  

Trying to keep the explanation simple: the FICO algorithm is completely time dependent other than a few instant in time things like utilization calculations, but this absolutely holds for payment history.  Inquiries are negatives, and arguably short accounts are too though that's somewhat debatable, but a longer tradeline is a better tradeline, so a tale of two different application strategies:

1) 1 new credit card every six months, starting today, looked at one year from now:

• 1 card, 12 payment entries, 12 months age
• 1 card, 6 payment entries, 6 months age
• 1 card, 0 payment entries, 0 months age

= 3 cards, 18 positive payment entries, an average age of 6 months, and 2 inquiries within the last year

2) 3 credit cards application spreed then gardening for said year:

• 1 card, 12 payment entries, 12 months age
• 1 card, 12 payment entries, 12 months age
• 1 card, 12 payment entries, 12 months age

= 3 cards, 36 positive payment entries, an average age of 12 months, and 0 inquiries within the last year

In this small isolated example, FICO wise it's easy to point at #2 and say spree's FTW, and in general this holds true for most people other than the edge case of long yet thin files where there's a harsh AAOA penalty involved with this (though have to rip off the bandaid sometime and establish a thicker file but I digress).

In any event, when it comes to FICO you want your tradelines established as soon as possible, and any negatives aging as soon as possible.  The exception to this is if you know you have a house or possible car purchase coming up, in which case hold off on comparitively trivial things like credit cards, but if you wind up having to impulse buy a car, on average you're better off with the spree methodology.  Oh, and also bonus offer churners where it's slightly different too. 

Generally for optimizing one's report: if you want a card, and you can reasonably expect to be approved, and if you don't have a big ticket item coming up, go out and apply for it right now given the time dependent nature of the algorithm.  This heavily favors spree-methodology, just make certain that the card is actually useful; again to reiterate, always have a plan before making any application as impulse credit-gathering is often a foolish exercise.

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Thank you for posting this. Great examples. How would you view this same example for thicker files?  Also one important factor that you post in your example is 12 months of gardening for aging the accounts. 

What is considered a decent or good AAoA. We all talk about it, but what is considered preferred or excellent for underwriting?

[money_talks]

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@Revelate wrote:

In any event, when it comes to FICO you want your tradelines established as soon as possible, and any negatives aging as soon as possible.  The exception to this is if you know you have a house or possible car purchase coming up, in which case hold off on comparitively trivial things like credit cards, but if you wind up having to impulse buy a car, on average you're better off with the spree methodology.  Oh, and also bonus offer churners where it's slightly different too. 

again to reiterate, always have a plan before making any application as impulse credit-gathering is often a foolish exercise.

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Very good advice. Have a plan and know what cards you need/want and are within your reach. By going on a carefully planned app spree, you can increase your chances of getting approved for multiple cards before the new cards (if approved) hit your CR. The 2nd, 3rd lender will not know you just got a new account recently (assuming you do the spree in 1 to 3 days, preferably the same day). I know new accounts are only a % of FICO, but let's not underestimate new accounts in the eyes of future lenders. New accounts raise all sorts of questions: How will this person do on the newly added account? Will this person have enough to pay the new account and my account as well? Will this person be able to handle 2 new accounts in such a short time?...etc. For all accounts approved during your app spree, treat them well and the new accounts/inquiries will age together.

Of course, if there is a single specific card you want and you don't see a need for another card in the near future, it would be best to app for that single card ASAP rather than waiting for your next app spree. Like Revelate states, you want the TL reporting quickly for FICO purposes with the exceptions noted above. And like everything, YMMV.