First of all, thank you for your time in reading my question. I am looking to lease/buy a vehicle in Jan 2011. In the meantime, I have paid off several of my negative debts and according to my TransUnion report there is an inquiry and 2 other very old negative items that will be falling off. I know this will improve my FICO score, however, I was wondering if it would be wise to take out a secured/unsecured line of credit in the meantime, while waiting to get my car. I know that initially this may hurt my score, but is it wise to think that maybe a few months of on-time payments and and increase in my debt to credit ratio may help? Any suggestions would be greatly appreciated. Thank you!
Is it an installment loan, or a revolving line of credit?
On the negative side, it will of course cost you a new inquiry, and reduce your average age of accounts.
On the postive side, IF it reported as revolving credit, it may improve your revolving CL, and thus reduce your overall % util.
In very rough terms, I would expect a hit of around 5 pts from the new account and reduction in AAoA.
In my opinion, it would take an increase of close to 20% in your overall CL to offset this in the short term.
So, the factor for me, would be the amount of the additional CL this new LOC will report.
I recently opened a CC with my credit union; it has a $1500 credit limit. My only other CC I have has a $300 limit. I have 0% utilization; will opening this new account improve my score since my CL was so low before?