New credit impact

[Anonymous]

I am rebuilding my credit. I've been doing well with a DIscover card, I never carry a balance and I make multiple payments a month so that my utilization is high. I have a significantly higher income now than when my credit was damaged and it is stable and not likely to go anywhere soon. I have two questions regarding credit cards:

1: Discover automatically raised my limit from 800 to 1300. In the credit score simulator getting an increase said it would drop my score. Is that calculating based on me inititating the increase? They did not ask me about raising it and as far as I can tell they did not preform a Hard inquiry. I first got this card in March. Should I request them to remove the limit increase?

2. Before finding this tool I applied for a Capital One Platinum card as my shell loyalty program offers special incentives for using a Master card in conjunction with the program. They requested I verify my income, which I can do easily, so I assume if that information is acceptable  I will be approved. There is no reason it shouldn't be since I didn't include my non-taxible income on the application but it will be on the bank statements I'm sending in, so higher than the estimate I gave on the application. What worries me is that when I run the simulation for getting a new credit card and it drops my score. The hard Inquiry is already on my report. I don't know if the simulator is accounting for me having another one or if it would just be the overall possesion of another active credit card. Should I complete the process and get the new card or no?

Thank you for any advice you are able to provide.

-Heather

[Anonymous]

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@Anonymous wrote:

I am rebuilding my credit. I've been doing well with a DIscover card, I never carry a balance and I make multiple payments a month so that my utilization is high. I have a significantly higher income now than when my credit was damaged and it is stable and not likely to go anywhere soon. I have two questions regarding credit cards:

1: Discover automatically raised my limit from 800 to 1300. In the credit score simulator getting an increase said it would drop my score. Is that calculating based on me inititating the increase? They did not ask me about raising it and as far as I can tell they did not preform a Hard inquiry. I first got this card in March. Should I request them to remove the limit increase? - no idea why the simulator would say that getting an increase would lower your score.  Most often a credit limit increase raises your score because it gives you more overall credit available and when a creditor increases your limit this is a positive development.  I would leave your increase alone.  You'll find that most people here actively seek credit limit increases.

2. Before finding this tool I applied for a Capital One Platinum card as my shell loyalty program offers special incentives for using a Master card in conjunction with the program. They requested I verify my income, which I can do easily, so I assume if that information is acceptable  I will be approved. There is no reason it shouldn't be since I didn't include my non-taxible income on the application but it will be on the bank statements I'm sending in, so higher than the estimate I gave on the application. What worries me is that when I run the simulation for getting a new credit card and it drops my score. The hard Inquiry is already on my report. I don't know if the simulator is accounting for me having another one or if it would just be the overall possesion of another active credit card. Should I complete the process and get the new card or no? - Some of what may cause your credit score to drop when you app,y for new credit is the hard inquiry which has already occurred so there is nothing you can do about that.  Your score can also drop because your Average Age of Accounts (AAoA) is lowered and this is a component of credit scoring.  On the other hand if you're approved your overall credit available increases and this is something generally positive on your report.  I would go ahead and finish the process and accept the card if approved.  You may find that your score actually goes up but either way having a second card will be good for you in the long run.  It's generally known that you need a minimum of 3 revolving credit accounts to maximize your scores so in time you might even want to apply for a  third card.

Thank you for any advice you are able to provide.

-Heather

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Welcome to MyFico

[jacetx]

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@Anonymous wrote:

I am rebuilding my credit. I've been doing well with a DIscover card, I never carry a balance and I make multiple payments a month so that my utilization is high. I have a significantly higher income now than when my credit was damaged and it is stable and not likely to go anywhere soon. I have two questions regarding credit cards: I think the term you are referring to is usage. You do not want high utilization on your credit cards.

1: Discover automatically raised my limit from 800 to 1300. In the credit score simulator getting an increase said it would drop my score. Is that calculating based on me inititating the increase? They did not ask me about raising it and as far as I can tell they did not preform a Hard inquiry. I first got this card in March. Should I request them to remove the limit increase? Credit limit increases DO NOT affect your score negatively regardless of what the simulator says.

2. Before finding this tool I applied for a Capital One Platinum card as my shell loyalty program offers special incentives for using a Master card in conjunction with the program. They requested I verify my income, which I can do easily, so I assume if that information is acceptable  I will be approved. There is no reason it shouldn't be since I didn't include my non-taxible income on the application but it will be on the bank statements I'm sending in, so higher than the estimate I gave on the application. What worries me is that when I run the simulation for getting a new credit card and it drops my score. The hard Inquiry is already on my report. I don't know if the simulator is accounting for me having another one or if it would just be the overall possesion of another active credit card. Should I complete the process and get the new card or no? New cards will hurt your score temporarily as you AAoA (average age of accounts) will take a hit, however, your score should recover in a few months. You already took the inquiry on all 3 bureaus, might as well finish the process.

Thank you for any advice you are able to provide.

-Heather

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[Anonymous]

Good advice already. I just want to add there will be small fluctuations with changes to your report. Don't get too hung up on the number right now while you are building. You will see a small dip with the HP and with the new card added. But in just a month or two it will begin to rise with your added card and good history.

Inquiries that you do not initiate (like the senario you mentioned) will ALWAYS be a SP. If you initiate an inquiry it may or may not be a HP. Ex: Cap1 does a SP if you ask for a CLI, Chase does a HP for the same situation.

[takeshi74]

Don't rely on simulators.  Invest the time and effort here and with other credit resoruces to learn to assess your report data and to get a rough idea of the impact of various actions for your credit profile.

Creditors and products don't all use the same scoring model anyway and even if a simulator was totally accurate it could not simulate every single scoring model used by creditors.

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@Anonymous wrote:

I am rebuilding my credit. I've been doing well with a DIscover card, I never carry a balance and I make multiple payments a month so that my utilization is high.

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Utilization around here generally referso revolving utilization which is balance(s) / limit(s).  You want low revolving utilization.  There is a popular meme that high usage leads to CLI's but don't rely on that meme.  With any creditor primary considerations for limits and CLI's are credit profile and income.

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@Anonymous wrote:

Should I request them to remove the limit increase? 

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Your call to make but I'd generally advise against it.  Again, revolving utilization is balance(s) / limit(s).  Assuming you don't have an increasing balance, a higher limit helps to keep revolving utilization low which is desired.

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@Anonymous wrote:

Should I complete the process and get the new card or no?

Not completing the process won't remove the hard inquiry though that's typically a small factor.  It may prevent the account from opening which can reduce your AAoA and there is an impact from having new accounts on your reports as well.  You really should decide on these things before applying and not after.  I'd recommend following through with it.  Again, don't rely on simulators.  And don't let score drive your decisions.  Don't just expecet your score to constantly increase.  You do want to avoid causing your score to severely drop but at the same time you have to break some eggs to make an omelette and you're going to have to take short term hits for long term gains.

[Anonymous]

Is should be "isn't" in regards to utilization. Sorry for the typo.

I'm fairly new to all this and it's a bit confusing. I did do searches in the forum first I just didn't  find anything that quite matched what I was looking for. as far as number of accounts I have 1 student loan, 1 auto loan 1 credit card and 1 store card. If I take the Cap One it will be 2 credit cards. My average age of accounts is 6 years 4 months and my oldest account is 12 years 8 months. 

When I look at my 3b report I have :

"Fair" payment history (which I know only time and good habits fix, divorce and unemployment do ugly things to your credit)

"Very good" Debt amount,

"Very good" for length of credit history and

"fair" for new credit, which I am unsure what this metric is

One of the negs on the report is :"You have few accounts that are in good standing." Which I assume means I need more accounts open but I don't want to open a whole bunch close together, what is a good interval to wait between applications? I only apply for cards that have the option to do a soft pull and recomend a card for me and that have no annual fee. 

My score is between 656 and 670 depending on the company. The 656 has errors on it that I am disputing, it shows a balance on thrree accounts that were paid in full and closed.  

[RonM21]

I wouldn't remove the icrease. The simulator is not really a tool to count on. Usually an increase improves your utilization situation.

[Anonymous]

I opened up a new Blue Cash Everyday card with a small ($2K) limit and my EX score dropped 7 points.  I closed my 13 month old $15K limit Everyday card (MR points) after moving the $14500 in credit over to the new card.   The ED wasn't getting any use and I still wanted to give biz to AMEX.  I took the hit and am getting $150 sign up plus the phone credit, 15mos 0% interest then 13.24% and the regular cash back that the card offers.  Maybe it wasn't worth leaving the 1 year of gardening but I got what I wanted.  Too bad AMEX just doesn't let you PC revolvers.  EX score now at 701.  New car loan hasn't hit yet.  Down to 6 cards.  4 of 5 cards left opened since Jan 2015.  AMEX senior gold 25 years back dated and a 4 year old chase freedom.  Back to the garden until I refi the home eq line next year (if possible).  Waiting for a student loan to be discharged.