*Confused* New CC hurt more than helped, even though its perfect payment history?

[Anonymous]

Thanks for the detailed explanation.

Can you clarify what is "2) new credit" and "5) other new and recent TLs", i.e., is there more to these quantitatively than 1, 3, and 4. I did not list 6 here as it seems implicitly determined by 3 (unless you implied that there is more to determining the bucket than 3).

[Anonymous]

Llecs, my question above relates to your following post.

--

Whenever there's a score change due to a new TL, there are basically 6 things are at play: 1) inquiry, 2) "new credit", 3) AAoA drop, 4) util change, 5) other new and recent TLs, and 6) your scoring bucket. And when I say 20-25, I try to make it a point to show that was my experience. I gained points when I added my first 3 and lost from 4-15+ (I forget how many CCs I have now). The 20-25 points isn't a blanket statement. Someone else may lose less, or none at all. It isn't a linear, catch-all result. In other words, adding 10 new TLs won't result in a 200-250 point drop. You might lose 25, but certainly no more than 2 digits.

I pull my FICO reports quite often and the easiest change to measure are inquiries. IME, I've lost no points when adding inquiries, with the exception of one or two verifiable times. Now I've had as many as 30+ within a given year in the past and that has a lot to do with the no score change. I measure the change by pulling my 2 FICO reports the day of application and the day after or when the inquiry was added.

After I get approved for the card, and before it reports, I pull my FICO reports again right before I think it is going to report. I'll look around on these forums to see when the card might report to time it just right. I'll also recalculate my AAoA to track if it falls by a whole number. If it does, then I expect a greater loss. Once it reports, then I'll pull my FICO report again to get an accurate change. I'll also make sure my util is super low (<9%) to make sure I can exclude util as part of the score change and to improve my odds for approval.

And that's how I came up with the 20-25 pt avg. It's been as low as 15 points and as high as 50. Last summer I applied for and received an Amex, Discover, and Penfed LOC and the combination of that, even with util staying virtually the same, I lost 50. A big part of that was my AAoA dropped by 3-4 months, but placed it just below 3 yrs and I was rebucketed since I hadn't received any new TLs in over a year prior to that. The pos/neg factors rescrambled in a big way.

[llecs]

---

@Anonymous wrote:

Thanks for the detailed explanation.

Can you clarify what is "2) new credit" and "5) other new and recent TLs", i.e., is there more to these quantitatively than 1, 3, and 4. I did not list 6 here as it seems implicitly determined by 3 (unless you implied that there is more to determining the bucket than 3).

---

New credit is just that. New credit. Everytime you add a TL , you'll get dinged in this area. IME, most points have returned within a few months (6 or so once it reports) with the remainder by a year mark. In fact, many see a slight increase when their TL turns exactly a year old.

#5 comes into play if you go on an app spree. Law of diminishing returns comes into play. You'll get dinged for new credit but if you went on an app spree and have a half dozen new TLs, for example, "new credit" really doesn't come into play because you were already dinged for that. Just like with inquiries. Not everyone gets pegged for it. Adding their 23rd or 30th inquiry won't matter one bit because they had so many already.

I have no clue what weighs more over what. Mystery of FICO scoring. If I had to guess, and only a guess, I'd say that mix is #1. Some see a 20-30-40-50 point gain when adding their first CC. Util has to be #2. If you have a solid mix, going from 90% util to 0% could easily net you 100+ points. Other TLs play into it. I'd guess #3 for reasons above. #4 would be AAoA in my mind, though you don't take a hit for every level (e.g. going from 1 to 2 may have a greater impact than going from 18 to 19 yrs). Inquiry ranks low in my mind at #5. Finally, I just spent 5 minutes typing this all out. #6, scoring bucket, voids all of this out. Why? Because the impact of the above 5 things will most certainly vary between someone who is stuck in a young bucket, vs. someone with 30+ yrs history, versus someone in a derog bucket. There's no way to predict the pecking order. The economy is changing and that plays a big role into FICO scoring.

[Anonymous]

Interesting. I have another question then. I recently went from 1 to 2 open CCs, both bank cards. The second CC will start reporting early next month. It is my only "new credit" in the last couple years. The inquiry cost me nothing and the AAoA will be hardly affected. I will keep the utilization at 0 on one of them and at 1% on the other. How much is the "new credit" factor likely to ding my score?

Is there any value added by going from my only open account reporting a small balance to one out of two reporting a small balance? If so, can this offset the "new credit" ding?

[llecs]

---

@Anonymous wrote:

Interesting. I have another question then. I recently went from 1 to 2 open CCs, both bank cards. The second CC will start reporting early next month. It is my only "new credit" in the last couple years. The inquiry cost me nothing and the AAoA will be hardly affected. I will keep the utilization at 0 on one of them and at 1% on the other. How much is the "new credit" factor likely to ding my score?

Is there any value added by going from my only open account reporting a small balance to one out of two reporting a small balance? If so, can this offset the "new credit" ding?

---

If I had to guess, and only a guess, I would say you'll get zapped for the new credit since you haven't opened one in a while. If you're lacking baddies, then you could be rebucketed too. However, your mix is weak. Adding another CC will greatly improve that and I'd predict a small gain once it reports (assuming it reports $0). To offset the small ding from having $0 balances report, get one to report a very small balance.

[Anonymous]

To make sure I understand you correctly, you are predicting a net gain, i.e., you expect the mix gain to offset the new credit zap, right? Does the "mix" get helped just by going from 1 to 2 CCs even if they are both similar types of bank CCs? What about going from 2 to 3 CCs?

Fyi, I do have 1 to 3 accounts reporting 30-day late payments on different reports. I couldn't follow why if "you are lacking baddies, you could be rebucketed too". Can you explain?

Btw, the "ding from having $0 balances report" in my case was not small at all. When I went from $0 to a small balance on my only CC a few months back, my score got like a 50 point hike.

[llecs]

---

@Anonymous wrote:

To make sure I understand you correctly, you are predicting a net gain, i.e., you expect the mix gain to offset the new credit zap, right? Does the "mix" get helped just by going from 1 to 2 CCs even if they are both similar types of bank CCs? What about going from 2 to 3 CCs?

Fyi, I do have 1 to 3 accounts reporting 30-day late payments on different reports. I couldn't follow why if "you are lacking baddies, you could be rebucketed too". Can you explain?

Btw, the "ding from having $0 balances report" in my case was not small at all. When I went from $0 to a small balance on my only CC a few months back, my score got like a 50 point hike.

---

Yep. A net gain is my prediction in your example. If your CCs are revolving, then FICO sees it as much and really doesn't care where you got them (e.g. Citi, Chase, your CU, etc.). It doesn't matter if it is a Visa, MC, Discover, etc. It is still considered a revolving TL and adding a 2nd would certianly help. Adding a third would help too, IMO. Store cards may help in that mix, so if you don't need the revolving credit, I'd aim for a store card next (e.g. Target, WalMart store card, gas card, etc. ). I bet you'd see a gain with #3, but the gain would be minor considering that by #3, your mix is close to being satisfied.

We are each lumped into scoring buckets. You can get rebucketed if you haven't opened anything up in quite some time. You can only be in one bucket at a time, and if you have some serious derogs (90+ days presumeably), then you cannot get rebucketed for adding new credit (hence the hypothetical). I have no clue how 30 days enters into this. I guess it would depend if it were recent or not, if at all.

Once you have a solid mix with several CCs, you will find that going from all CCs, but one, reporting $0 with the remaining reporting >$1, to all $0s, will result in a score drop. Again, your scoring bucket comes into play. I suppose, based on your bucket at that time, having only one CC report $0 from $whatever, would result in a gain.

[Anonymous]

Yep. A net gain is my prediction in your example. If your CCs are revolving, then FICO sees it as much and really doesn't care where you got them (e.g. Citi, Chase, your CU, etc.). It doesn't matter if it is a Visa, MC, Discover, etc. It is still considered a revolving TL and adding a 2nd would certianly help. Adding a third would help too, IMO. Store cards may help in that mix, so if you don't need the revolving credit, I'd aim for a store card next (e.g. Target, WalMart store card, gas card, etc. ). I bet you'd see a gain with #3, but the gain would be minor considering that by #3, your mix is close to being satisfied. Is there any scenario when going from 1 to 2 (or from 2 to 3) CCs could hurt assuming that the inquiry cost nothing and AAoA and utilization are hardly negatively impacted?

We are each lumped into scoring buckets. You can get rebucketed if you haven't opened anything up in quite some time. You can only be in one bucket at a time, and if you have some serious derogs (90+ days presumeably), then you cannot get rebucketed for adding new credit (hence the hypothetical). I have no clue how 30 days enters into this. I guess it would depend if it were recent or not, if at all.

Once you have a solid mix with several CCs, you will find that going from all CCs, but one, reporting $0 with the remaining reporting >$1, to all $0s, will result in a score drop. Again, your scoring bucket comes into play. I suppose, based on your bucket at that time, having only one CC report $0 from $whatever, would result in a gain. But as I said above, with only one CC, going from zero to nonzero *increased* my score significantly.