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

[Revelate]

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@elim wrote:

Regarding consumers with many (10+) low limit store cards. Let's say they spree'd and got a bunch of these cards, 1 year later 3 of them have 3k to 4k limits on them while the others stayed the same (300 to 500). If they close the 7 cards that weren't able to CLI, their AAoA would be exactly the same as if they only applied for 3 cards. The difference in the scenario would be the 7 "closed by consumer" TL's on there CR's. I have seen quite a few people that have found this place and their first post is "look at my 12 new cards" all low limit store cards. What should they do???

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It's not quite the same equation from an AAOA perspective, as the more accounts you have, the more buffer you have against changes in AAOA when you add new tradelines.  If they don't have an AF I'd consider using them as tradeline farms personally which is what I do that with my DCU / USAA cards.  I don't read too much in the "closed by consumer" or "closed by credit grantor" remarks, in the second case usually the tradeline wasn't positive anyway and if it was, was probably closed due to non-use which also shows up on a modern credit report, so the remarks section is sort of superfluous in my estimation.

Personally I think opening a slew of store accounts isn't a fantastic idea, but if you want to build a really thick file / large AAOA buffer right from the get go, that's certainly one way to do it, though what lenders might read into it is potentially a different story (some anecdotally ignore store/retail cards); however, if someone winds up opening a bunch, and then closing them call it six months or a year later, it's not a difficult recon: "I started building credit when I didn't know what I was doing, and after learning a few things, realized I didn't need or want those cards, but here's why I want your card lender XYZ..." may even be beneficial, a credit educated customer should be a lower risk looked at in aggregate.

Opening up a bunch of useless cards (in the assumed scenario) likely isn't the best option, but it's nowhere close to a death sentence or even a boat anchor like a state tax lien, DMP, short sale, repo, or BK.

[BluePoodle]

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@Revelate wrote:

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@Open123 wrote:

It's an excellent idea if done strategically, in my view.

When it comes to "app sprees," I prefer 3 cards per quarter.  For example, an Amex, Barclay and a Chase card resulting in one HP per respective CR.  The Amex won't count as a new account, and will mitigate somewhat the AAOA increase caused by the new Barclay and Chase accounts.  App sprees should ideally be planned to maximize existing sign-up bonuses.  And, all the HPs will fall off at the same time, which is a huge benefit for applying for multiple TLs simultaneously.  

On the other hand, an app spree with cards without compelling rewards/bonuses and/or all HPs in a single CRA should be avoided.

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Unless one lives in an area where Chase pulls EQ the example sadly falls short: virtually every major credit card issuer other than Barclays wants to see my EX file having lived in S. Cali for the past 9 years.  I have to go out of my way to not take a HP on EX for a credit card.

The edge case of bonus churners doesn't apply to the vast majority of consumers in my estimation, app sprees followed by a period of gardening (I do a minimum of a year) it really doesn't matter much where the inquiries land in the current credit market: likely was different earlier where even seeing a single inquiry back in the credit dark times (the financial crisis not long ago) would send any additional lenders screaming, we're just not in that market at the moment; however, since bonus churners have to strike when the bonus exists, I completely agree with your strategy of spreading inquiries out across the bureaus more adroitly.

@others: the AAOA confusion generally comes in from Credit Karma where forever reason they only count open accounts (AAOOA?  Average Age of Open Accounts): as someone correctly pointed out, FICO calculates both open and closed tradelines for AAOA.

I'll admit that app sprees require a certain amount of discipline and might not be appropriate for everyone including a 19 year old, but one of the goals for everyone should be to build a thick file where needing to use the report (for financial gain or emergency) doesn't result in a catastrophic drop in score much like the case I theorized before; when first starting out, every lender on the planet expects a bunch of inquiries to establish a couple of tradelines, and this course generally should be pursued.  The second tier lenders may want to see more than one tradeline, and in my case, on my recent app spree adding 4 more tradelines I only dropped 3 months AAOA, and that's with only 2.5 years real credit history (AAOA about to tick back over 2 years now), and that was a direct result of my having 12 or so tradelines established over the 2 and change years before the app spree.

College is a little bit of a odd case because most students aren't going to have sufficient income to support the higher tier cards, and as such can take it a bit slower as you really have 4+ years (assuming graduation) to setup the credit file, but in that instance I'd still suggest opening up 4-5 lines (2-3 credit cards and 2 credit builder style installment loans) and sitting on them for the 4 years and then be qualified for auto, mortgage, or additional credit cards for when 2 pay stubs can be dropped in front of the loan officer.  

My life wouldn't have necessarily been better had I known what I do now when I was 18, but it would've been different, and I assuredly would be a home owner even in S. Cali.  If I ever do have kids, they will absolutely be educated on how the credit system works and how to make use of it to their advantage.

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I did not know that about CK. Where is the best place to see your AAoA then for accuracy?

I regards to college years, wouldn't student loans meet the installment loan category sufficiently.  Granted they are in deferment generally but still report postive.  

[Revelate]

Generally most people just do their AAOA by hand (or Excel in my case,

=(YEAR(NOW())-YEAR(B2))*12+MONTH(NOW())-MONTH(B2) where B2 is a general date eg 5/1/08 = 74 months since opening)

Student Loans: theoretically yes, but we had an auto sales F&I guy that stated he saw the "first time buyer penalty" in the auto-enhanced industry option his dealership / lending circuit used, with people who had student loans on their report but not with auto or mortgage loans and was a bit of a gray area for personal loans.

I'd love to test it but that's sadly another thing I'm not in a position to do so.

[BluePoodle]

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@Revelate wrote:

Generally most people just do their AAOA by hand (or Excel in my case,

=(YEAR(NOW())-YEAR(B2))*12+MONTH(NOW())-MONTH(B2) where B2 is a general date eg 5/1/08 = 74 months since opening)

Student Loans: theoretically yes, but we had an auto sales F&I guy that stated he saw the "first time buyer penalty" in the auto-enhanced industry option his dealership / lending circuit used, with people who had student loans on their report but not with auto or mortgage loans and was a bit of a gray area for personal loans.

I'd love to test it but that's sadly another thing I'm not in a position to do so.

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Haha, I was just not wanting to do the math! 

Yes, I would assume at least for auto enhanced scoring there would be a penalty.  That is going to be my problem soon enough too. I have one auto loan left (my others have aged off) and 1 mortgage that will be aging off soon too.  I am not in a position to look at a new mortgage in the next year...I am worried that will cause a neg on my report. I will replace the auto loan though.  Auto falls off Jan 2015 and Mortgage Aug 2016.

[Kenny]

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@Revelate wrote:

Generally most people just do their AAOA by hand (or Excel in my case,

=(YEAR(NOW())-YEAR(B2))*12+MONTH(NOW())-MONTH(B2) where B2 is a general date eg 5/1/08 = 74 months since opening)

Student Loans: theoretically yes, but we had an auto sales F&I guy that stated he saw the "first time buyer penalty" in the auto-enhanced industry option his dealership / lending circuit used, with people who had student loans on their report but not with auto or mortgage loans and was a bit of a gray area for personal loans.

I'd love to test it but that's sadly another thing I'm not in a position to do so.

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I have tried like Hades to get the forumula to work for me in numbers. I can only tell mine on Equifax premiereor whatever that service is that I pay for.

[Revelate]

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@KennyRS wrote:

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@Revelate wrote:

Generally most people just do their AAOA by hand (or Excel in my case,

=(YEAR(NOW())-YEAR(B2))*12+MONTH(NOW())-MONTH(B2) where B2 is a general date eg 5/1/08 = 74 months since opening)

Student Loans: theoretically yes, but we had an auto sales F&I guy that stated he saw the "first time buyer penalty" in the auto-enhanced industry option his dealership / lending circuit used, with people who had student loans on their report but not with auto or mortgage loans and was a bit of a gray area for personal loans.

I'd love to test it but that's sadly another thing I'm not in a position to do so.

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I have tried like Hades to get the forumula to work for me in numbers. I can only tell mine on Equifax premiereor whatever that service is that I pay for.

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Or as I just found from one of Lexie's recent posts:

http://seemly.com/aaoa-calculator/

Technology improvement over Excel if I wasn't tracking other score things with my spreadsheet .  That calculator is nice for quick and dirty, though I need to see what they did for rounding from months to years as there's some wierdsauce there with FICO or my Excel is wonky which is entirely possible.

[BluePoodle]

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@Revelate wrote:

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@KennyRS wrote:

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@Revelate wrote:

Generally most people just do their AAOA by hand (or Excel in my case,

=(YEAR(NOW())-YEAR(B2))*12+MONTH(NOW())-MONTH(B2) where B2 is a general date eg 5/1/08 = 74 months since opening)

Student Loans: theoretically yes, but we had an auto sales F&I guy that stated he saw the "first time buyer penalty" in the auto-enhanced industry option his dealership / lending circuit used, with people who had student loans on their report but not with auto or mortgage loans and was a bit of a gray area for personal loans.

I'd love to test it but that's sadly another thing I'm not in a position to do so.

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I have tried like Hades to get the forumula to work for me in numbers. I can only tell mine on Equifax premiereor whatever that service is that I pay for.

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Or as I just found from one of Lexie's recent posts:

http://seemly.com/aaoa-calculator/

Technology improvement over Excel if I wasn't tracking other score things with my spreadsheet .  That calculator is nice for quick and dirty, though I need to see what they did for rounding from months to years as there's some wierdsauce there with FICO or my Excel is wonky which is entirely possible.

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Thank you! 

[elim]

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@Revelate wrote:

Generally most people just do their AAOA by hand (or Excel in my case,

=(YEAR(NOW())-YEAR(B2))*12+MONTH(NOW())-MONTH(B2) where B2 is a general date eg 5/1/08 = 74 months since opening)

Student Loans: theoretically yes, but we had an auto sales F&I guy that stated he saw the "first time buyer penalty" in the auto-enhanced industry option his dealership / lending circuit used, with people who had student loans on their report but not with auto or mortgage loans and was a bit of a gray area for personal loans.

I'd love to test it but that's sadly another thing I'm not in a position to do so.

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 So Rev, If I put this formula in A2, I assume it will return "months open to date" for 1 account.Then I add every account on my CR (opening date) to the other rows of column B and average column A for my AAoA. Then do the same with each report I guess?

I don't really know excell but I have written some stuff with google api in C# and Javascript, which uses Google Sheets (so i was forced to teach myself some formulas)

I think I will add AAoA to my spreadsheet tonight thanks for that

[elim]

I guess knowing before hand where the spree will bring your AAoA is a big factor in planning. If you are in need of a large credit purchase in 1 year then limit your spree to keep your AAoA where you need it to be (2 years min or whatever). It could be 1 card, 6 cards, or anything in between. Doing the math before hand seems to be the smart choice, rather than saying "uhhhhhhhg my AAoA took a huge hit after those 6 cards reported, I wish I would'nt have app'd for those last 3"

[longtimelurker]

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@Anonymous wrote:

. Doing them all the apps in the same day, of course, maximizes your chances of success, since the hits won't be reported until the next day, so none of the potential issuers will see the other dozen hits until after they've already approved you.

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This is a common misconception.   CRAs update in near-enough real time, so all the inqs can be seen by subsequent issuers.