@BluePoodle wrote:
@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.
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?
If you don't let time heal the application wounds, then the 1 application every six months might be to your advantage, but while not explicitly stated, I'm hugely against picking up credit cards just for the sake of having credit cards, in that unless you have a very complicated financial life, having 20 personal cards doesn't make much sense to me. I much prefer fewer, higher quality tradelines than spreading things out that thin, plus I'm fundamentally lazy and trying to keep even 9 cards active and utilized seems too much like work to me personally 
.
Also regarding the gardening for a year: short tradelines are always sketchy from an underwriting perspective, not certain where lenders fall some are likely 6 months and others 12 months, before they are comfortable with your taking on additional tradelines; also when building, you usually have to go in stages before you can qualify for the next tier of credit cards. I basically did 3 steps, secured / subprime, entry level rewards, decent rewards, with the glaring exception of my impulse Amex Zync application back in 10/12. Gardening makes you look more stable from an underwriting perspective, I like looking stable and "normal" when it comes to dealing with lenders personally... lot of good reasons to maintain application discipline, or gardening as we label it here on the forums.
When it comes to thick files, the standard: get any negatives out of the way as soon as possible still holds true, and given that AAOA is a cumulative calculation, the earlier the tradeline is established the better off it is. As a result thick files taken as a whole, spree methodology works there too. Thin files are the awkward case, both from an AAOA perspective (20 years on a single tradeline -> 5 years now with 4 tradelines, 3 new, though 5 years AAOA is still very good) but they also will get some benefit points wise from mix of credit by thickening their file (2 open revolving and 2 open installment apparently anecdotally to maximize things especially with FICO 8 and presumably newer models)
Regarding AAOA, my personal opinion and at least from what I've seen from approvals and what not, the most important AAOA benchmark is 2 years, and anything over 5 years is something of a wash (diminishing returns in the algorithm). Obviously longer is better, and likely lender underwriting opinion will vary wildly (Penfed I'm looking at you!), but in general for most things if you have a good file and an AAOA north of 2 years, there isn't a whole lot credit wise you can't be approved for... about the only cards I really want that I have no shot at now would be the JCB Makurai card and the Cash+, pretty much the rest of my use cases are covered, and my file isn't clean; it's not terrible from an underwriting perspective anymore but there's still several paid derogs on it which I'm stuck waiting for another 4ish years to age off.
That all said credit cards aren't that hard to obtain these days, but I was always trying to gain a mortgage for the past year and change, and there, stability is king.
The best scenario is to go on an apree spree then garden for two years.
@Revelate wrote:
@BluePoodle wrote:
@Revelate wrote:
That all said credit cards aren't that hard to obtain these days, but I was always trying to gain a mortgage for the past year and change, and there, stability is king.
Out of curiousity what credit cards do you own and at what limits?
@tonyjones wrote:
@Revelate wrote:
@BluePoodle wrote:
@Revelate wrote:
That all said credit cards aren't that hard to obtain these days, but I was always trying to gain a mortgage for the past year and change, and there, stability is king.
Out of curiousity what credit cards do you own and at what limits?
Stated in order of listed "Open Date" of still open accounts cut and paste from another thread, Zync listed at 1 as NPSL for calculation purposes though high balance on it is 11.3K. Note the BCP was acquired at the same time the USAA / Chase Freedom / Walmart cards were and backdated to the year earlier hence it's out of order. Also there's a now closed Cap 1 nee Orchard card which would've been slotted between the BOFA and Amex BCP on open date.
| Credit Card | Balance | Limit | Utilization (%) | ||
| BOFA Travel Rewards | 0 | 2500 | 0 | ||
| Amex BCP | 0 | 9000 | 0 | ||
| DCU Secured | 0 | 2000 | 0 | ||
| Amex Zync | 0 | 1 | 0 | ||
| USAA CC | 0 | 2600 | 0 | ||
| Chase Freedom | 0 | 1000 | 0 | ||
| Walmart | 42 | 1600 | 2.6 | ||
| Fidelity Amex | 269 | 7500 | 3.6 | ||
| Sallie Mae | 0 | 4400 | 0 |
@Revelate wrote:
@BluePoodle wrote:
@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.
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?
If you don't let time heal the application wounds, then the 1 application every six months might be to your advantage, but while not explicitly stated, I'm hugely against picking up credit cards just for the sake of having credit cards, in that unless you have a very complicated financial life, having 20 personal cards doesn't make much sense to me. I much prefer fewer, higher quality tradelines than spreading things out that thin, plus I'm fundamentally lazy and trying to keep even 9 cards active and utilized seems too much like work to me personally
Also regarding the gardening for a year: short tradelines are always sketchy from an underwriting perspective, not certain where lenders fall some are likely 6 months and others 12 months, before they are comfortable with your taking on additional tradelines; also when building, you usually have to go in stages before you can qualify for the next tier of credit cards. I basically did 3 steps, secured / subprime, entry level rewards, decent rewards, with the glaring exception of my impulse Amex Zync application back in 10/12. Gardening makes you look more stable from an underwriting perspective, I like looking stable and "normal" when it comes to dealing with lenders personally... lot of good reasons to maintain application discipline, or gardening as we label it here on the forums.
When it comes to thick files, the standard: get any negatives out of the way as soon as possible still holds true, and given that AAOA is a cumulative calculation, the earlier the tradeline is established the better off it is. As a result thick files taken as a whole, spree methodology works there too. Thin files are the awkward case, both from an AAOA perspective (20 years on a single tradeline -> 5 years now with 4 tradelines, 3 new, though 5 years AAOA is still very good) but they also will get some benefit points wise from mix of credit by thickening their file (2 open revolving and 2 open installment apparently anecdotally to maximize things especially with FICO 8 and presumably newer models)
Regarding AAOA, my personal opinion and at least from what I've seen from approvals and what not, the most important AAOA benchmark is 2 years, and anything over 5 years is something of a wash (diminishing returns in the algorithm). Obviously longer is better, and likely lender underwriting opinion will vary wildly (Penfed I'm looking at you!), but in general for most things if you have a good file and an AAOA north of 2 years, there isn't a whole lot credit wise you can't be approved for... about the only cards I really want that I have no shot at now would be the JCB Makurai card and the Cash+, pretty much the rest of my use cases are covered, and my file isn't clean; it's not terrible from an underwriting perspective anymore but there's still several paid derogs on it which I'm stuck waiting for another 4ish years to age off.
That all said credit cards aren't that hard to obtain these days, but I was always trying to gain a mortgage for the past year and change, and there, stability is king.
Thank you for sharing this. I agree that I would prefer to have less cards for the simplicity of keeping track of them and utilizing spend. I also just want to give my daughter good advise when she graduates as to how to deal with these issues. My experience has been from error and trial, literally. But I'd like to steer her in a direction where she makes better choices and uses common sense. However, I feel like common sense in some ways is an oxymoron in regards to credit and scores (pay off a loan = score goes down) kind of issues. Thank you again for sharing. I think my situation is similar to yours with a couple od derogs in am suck with through May of 2020. Only one by then, but one is enough!
