thesun63640 wrote:
I am working on rebuilding my credit too and just got this account for $2500. Does getting the account improve your score or does using the account improve your score? I imagine it is the later, but if that is the case does it matter how much of the $2500 you spend?
Thanks!
If this is your only open CC, then a few things will happen to your score. First off, will all new accounts, you will get dinged for new credit. On avg. it may be a 20-25 point loss when it reports, plus a potential minor hit due to the inquiry, if you have a high score. However, any loss will be offset by gains. One is due to the mix of credit. Adding a CC, when there were none before will increase your score because FICO likes to see a mix of credit. FICO may give you a several point jump due to that. Moreover, if you had no CCs reporting, FICO may be reading your utilization at $0 balance with a $0CL. Adding a CC will break that utilization and your score will really rise so as long as your balance is kept in check. So, in short, small hit offset by a large gain. Now if you have other CCs reporting and open, then the gains may be less depending on several factors. Once your balances are in place and you have the credit you need, then adding accounts will only drop your score in the short run.
It doesn't matter how much you spend. What reports is most important. Time coupled with positive history improves your score.
