Suppose you didn't care about hard pulls

[Anonymous]

Situation -- I have immigrated to the US from Canada, where I had excellent credit. I have been able to leverage my Canadian credit history to get a good strong start here, with a $10k AMEX, a $10k RBC VISA (a Canadian bank operating here), and a $10k BoA cash rewards signature visa thanks to the local BoA branch's relationship with my new employer.  RBC also gave me a $9k line of credit, but they don't seem to be reporting that to the credit agencies. I currently have five hard pulls on my credit report, three for the cards I got, one from the decline, and one from my landlord. 

Given that my short credit history is obviously the main issue, it occurs to me that I should have an 18 to 24 month horizon, namely, I shouldn't care what my score is at all, until I have 18 months of history, and my goal should be to have the highest score possible at the 18 month mark. I'm at the 3 month mark right now.

In other words, if I had 15 hard pulls this month, it seems to me that by the time they roll off my history, my short history will still be the dominating factor, and so in a way, the hard pulls right now don't matter at all. What matters is by the 18 month mark how many lines do I have open and have I used them responsibly.

Is my thinking right? If that's right, then I'm going to go blitz applications for as many bank credit cards as I can, targeting stuff I might actually get (no more pie in the sky dreaming that Chase will give me a card). I'll visit some local credit unions. I"ll try for an easier capital one card. I may get a few declines along the way but when I'm done I could have a few more credit lines, and then I'll sit and garden, letting the hard pulls roll away and establishing a broad long credit history.

Advice?

[RobertEG]

Your logic is generally OK regarding the pulls, but if the intent of the pulls is to obtain new credit, each will have some impact on score, and thus affect subsequent apps for credit, and if any inquiries lead to new accounts, the new account will necessarily ding your AAoA.

With three major bank cards, I question the compelling need for more CCs under your mix of credit.

I would definately open and maintain an account with a local credit untion, but not necessarily for immediate app for another CC.

They are a good source for future loans at good terms.

Is there something in your need for more CCs, such as additional spending flexibility or total CL, that is of primary importance?

[Anonymous]

I don't need more spending ability. I pay my cards off in full earlier than the due date every month. I guess the only argument is that assuming I should aim to keep my utilization at under 10%, there's a possibility that in rare but not unusual situations my spending will go over $3000 and thus over 10% of my total $30,000 available. For example, annual family vacation including plane tickets, hotels, on top of normal spending, could push me over that in a particular month. I suppose I could vigilently pay the balances down before they accumulate to 10%, but there is something to be said for setting yourself up in a situation where vigilence is not strictly required (i.e., automated payments take care of everything without extra thought).

That would be the only reason. Just building credit towards a mortgage application 15 to 21 months from now (i.e., after 18 to 24 months of credit history)

[Anonymous]

On AAoA, the AAoA on my accounts now is 3 months. I guess my thinking is also if I'm going to open up new credit, do it now while I'm screwed on AAoA and get it over with, then let it all age together.

[takeshi74]

---

@Anonymous wrote:

Given that my short credit history is obviously the main issue

---

If that's obviously the main issue then hard pulls are a concern.  Seeking out a lot of new credit without much of an established credit profile is a red flag.

---

@Anonymous wrote:

I guess the only argument is that assuming I should aim to keep my utilization at under 10%

---

It's under 30% generally and 1 balance at 10% or less if you're looking to eke out every possible point when applying.  You don't have to rely on spending control to manage reports utilization.  You can pay down accounts prior to report date.

[Anonymous]

---

@takeshi74 wrote:

---

@Anonymous wrote:

Given that my short credit history is obviously the main issue

---

If that's obviously the main issue then hard pulls are a concern.  Seeking out a lot of new credit without much of an established credit profile is a red flag.

Sure, so my credit score will go down, but with no significant consequences because with such a short credit history nobody is willing to loan me anything right now anyway. If I walked in to a mortgage center even though my score is nominally high I would be laughed out of the office. So yes you're right the credit score would go down, but what use is a credit score? Until I have a longer credit history, it is effectively meaningless. 

And by the time I have a longer credit history those hard pulls will have rolled off my credit history or at least off my scoring. At that point in time it'll have been over a year since my last hard pull, my score will go back up, and I'll have multiple lines of credit running. 

Am I missing something?

[CreditDunce]

Do you have 6 months of credit history?  Until you have 6 months, you do not have a credit score.  No credit score will mean you will get more denials than approvals.

Applying for more credit cards will not materially help your credit score.  Once you have more than 3 revolving lines, additional revolving accounts don't help improve your score.  The additional accounts may help make your AAoA more bullet proof in 10 years.  However, with your Amex MSD, I don't think it is worth the junk accounts. 

Adding a shared secured and/or autoloan may be a good idea to improve your score.  Improving your credit mix will help your credit score in 18 months.

Personally, I would wait for the 1 year mark.  Then apply for cards/CCC's I can see myself keeping long term.  At the 1 year mark, Chase et all becomes an easy approval.

[Revelate]

You can tack on a bunch of tradelines but it wouldn't help much; realistically for a mortgage which is the only thing truly expensive in the market, you want a minimum of 4 tradelines.

Hopefully for scoring purposes you have some tradeline diversity, but even in my case cards #6, 7, 8, 9 really aren't doing me a lick of good other than being a buffer for new accounts (which incidently scoring wise they'd do anyway as far as AAOA goes till they fall off the report though admittedly they had to be on the report to begin with to help) and being a buffer for when I get sloppy and stupid with my reported balances... which is typical for me, but when I app, I get clean beforehand so that's moot.

I agree that there's something to be said for taking a slew of inquiries right out the gate and establishing tradelines, just it's not really needed to have that many, and it will be obvious to future underwriting what happened even if the inquiries are gone from the scoring calculation or off the report.  That said, I'm a strong proponent of app sprees just for the reason you pontificate, I just do mine smaller.

As a sample of what I did rough dates:

1/12 - 6 accounts, 3 revolving, 3 installment

8/12 - 1 account, refinanced my original auto loan from the first round

1/13 - 5 accounts, 5 revolving

5/14 - 4 accounts, 2 revolving, 2 installment

If I did more, I would've wound up with more junk cards then what I already have, but admittedly closing them isn't a huge deal and they did serve a purpose for me.

[Anonymous]

Ok, so I won't go on a huge spree. I have three cards now, two of them pretty good (BoA and Amex). I will go for one more from a local credit union, an outfit I look at as a place I will go shopping for a mortgage in a couple of years. Maybe if I make use of their credit card for a year or so that will give me an edge in the future. And then I'll stop, that'll give me a total of 4 cards. 

Maybe in 6 months or so I'll go for an auto loan, and let that run for a year, then apply for a mortgage.

[TheGardner]

Get an Amex PRG, will help AAOA and overall profile. I would definitely work the Amex angle as much as possible, 3-4 cards. That will give you 7 cards? Increase your AAoA to 7-8 months.

I don't disagree with your thinking. Any new account will bring your AAoA down a few weeks? Lol. This is a good time to start beefing up your profile.

Good luck!