Does approval matter on the impact of a hard pull?

[geekmama]

It's really almost the opposite in that if you receive an approval you are dinged twice. Once for the HP and one for the new account (Lowers AAOA). Of course the new account may bring benefits also such as improved utilization if you are carrying a balance.

[jawbrkr]

I got approved for the Amex PRG on Thursday evening. Until now I havent seen the HP from Amex and my card is on the way. The approval was off a 50K bonus mailer, no longer available,  that expires Aug 17. Maybe they dont HP you if you're already a member and are approved off a mailer. Who knows. People have been trying to figure that out.

[Anonymous]

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@geekmama wrote:
It's really almost the opposite in that if you receive an approval you are dinged twice. Once for the HP and one for the new account (Lowers AAOA). Of course the new account may bring benefits also such as improved utilization if you are carrying a balance.

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This is not necessarily true.  If you get approved for a new account, there are 3 factors that can adversely impact your scores.  It's possible that all 3 could impact your scores and it's equally possible that none of the 3 will impact your scores.  The more likely result is that some of the factors will impact score and some won't.  The 3 factors are:

1 - The inquiry.  Whether or not this impacts your score depends on your file and how many inquiries you have already.  Some believe that inquiries are "binned" in that each 2 for example are grouped together in terms of a threshold.  So 1-2 inquiries may be scored the same, 3-4 may be scored the same, etc.  For this reason, if you take 1 inquiry and you are going from the lower number in a "bin" to the higher number, you may not see a scoring drop if you are still in the same bin.  Another thing, once you get up to a certain number of inquiries, say 12-14, you are already maxed out in terms of the ding you can receive from inquiries, so an additional inquiry won't impact score at all at that point.

2 - AAoA.  AAoA will always drop with a new account, but that doesn't mean your score will drop.  Score drops from AAoA changes come from threshold crossings.  Most of these are believed to be at whole number year values.  All decimals are rounded down.  If your AAoA is 2.7 years and it drops to 2.1 years after adding a new account for example, your AAoA is viewed as "2" under FICO scoring in both cases, so there would be zero impact to your score.  If your AAoA was 3.4 years and it dropped to 2.8 years after a new account reported, it would be scored as "2" instead of "3" like it was before the new account, which crosses a whole number threshold, meaning there could be a scoring decrease.

3 - AoYA.  The threshold is believed to be exactly 1 year for new accounts.  If you have not opened any new accounts within the last year, your AoYA is > 1 year and opening a new account will drop that to 0, resulting in a score ding.  If your AoYA is already under 1 year because you opened an account say 4 months ago, dropping from 4 months to 0 months by opening a new account will not cross a threshold (1 year) so there would be no scoring ding.

[Thomas_Thumb]

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@Anonymous wrote:

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@geekmama wrote:
It's really almost the opposite in that if you receive an approval you are dinged twice. Once for the HP and one for the new account (Lowers AAOA). Of course the new account may bring benefits also such as improved utilization if you are carrying a balance.

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This is not necessarily true.  If you get approved for a new account, there are 3 factors that can adversely impact your scores.  It's possible that all 3 could impact your scores and it's equally possible that none of the 3 will impact your scores.  The more likely result is that some of the factors will impact score and some won't.  The 3 factors are:

1 - The inquiry.  Whether or not this impacts your score depends on your file and how many inquiries you have already.  Some believe that inquiries are "binned" in that each 2 for example are grouped together in terms of a threshold.  So 1-2 inquiries may be scored the same, 3-4 may be scored the same, etc.  For this reason, if you take 1 inquiry and you are going from the lower number in a "bin" to the higher number, you may not see a scoring drop if you are still in the same bin.  Another thing, once you get up to a certain number of inquiries, say 12-14, you are already maxed out in terms of the ding you can receive from inquiries, so an additional inquiry won't impact score at all at that point.

2 - AAoA.  AAoA will always drop with a new account, but that doesn't mean your score will drop.  Score drops from AAoA changes come from threshold crossings.  Most of these are believed to be at whole number year values.  All decimals are rounded down.  If your AAoA is 2.7 years and it drops to 2.1 years after adding a new account for example, your AAoA is viewed as "2" under FICO scoring in both cases, so there would be zero impact to your score.  If your AAoA was 3.4 years and it dropped to 2.8 years after a new account reported, it would be scored as "2" instead of "3" like it was before the new account, which crosses a whole number threshold, meaning there could be a scoring decrease.

3 - AoYA.  The threshold is believed to be exactly 1 year for new accounts.  If you have not opened any new accounts within the last year, your AoYA is > 1 year and opening a new account will drop that to 0, resulting in a score ding.  If your AoYA is already under 1 year because you opened an account say 4 months ago, dropping from 4 months to 0 months by opening a new account will not cross a threshold (1 year) so there would be no scoring ding.

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BBS - Time since most recent account being opened is a negative scoring factor as you say (also pasted below). However, I'm not convinced that a single new account necessitates a score drop even if age of youngest account were previously over 1 year age. I tend to think score response to this and other factors (such as % cards reporting balances) may be subject to conditioning. It may take multiple accounts under 1 year to trigger a drop depending on profile.

 

Some day next year I may test this by getting a car loan. My current youngest account is over 5 years old.

[Anonymous]

Interesting TT, I've never heard of an AoYA drop from > 1 year to 0 not resulting in a score ding, although I'm not sure this factor is tested all too often.  A few things would need to be in place for the test to work.  One, no accounts can have been opened within the last year of course.  Two, you'd need someone that's going to open only 1 account test it (like you say you may be able to do) and last, the reporting of the new account cannot result in an AAoA threshold crossing, as it adds in another variable to the potential scoring change.

I guess if you do end up testing this at some point, you'll want to make sure that your AAoA doesn't end in a X.0 - X.2 years or so, of course depending on how thick your file is and how much a new account would drop it in months.  Then again, if your AAoA is > 7-8 years already, which it very well may be, it wouldn't matter anyway.

[Thomas_Thumb]

Yes, adding a new account will have a major impact on my AAoA due to my thin file and aged accounts. My AAoA would drop about 2.3 years by adding a new account. [17.8] years => to 15.5 years]. I doubt that is important. Worst case, if score did not drop with the new account, AAoA drop and going from 0 => 1 inquiry, then saying the addition of a new account not causing a score drop would still be valid.

Anyway, it's a long ways off for me. More data on this from others that don't have overly active files would be helpful.

[credit_endurance]

I was planning a "tiny" app spree today with all pulls more than likely coming on EXP (FNBO mailer, Chase 2for1.  My goal would be to of course app for Chase and have them combine pulls for both cards or (maybe EXP will see it as the same) and then single app for FNBO mailer with a single pull total=2. With 14 inquries alrady present on my file (9) are a year old or more (5) most recently in play. I am hoping there will be little to no impact with my scores.

So that I am understanding this...If you currently have between 12-14 inquires on your report, adding any additional inquiries will have little to no impact on your scores? In my case (9) have aged past 1 year. So with the (5) I have most recent would that put me in a negative "zone" to recieve a bigger "ding" in my scores? Or do they look at the total amount as a whole and include even the ones that have already aged? Hope this makes some sense.

[Anonymous]

FICO ignores the inquiries that are > 365 days old.  It's as if they were not on your report at all, from FICO's perspective.

So you have five inquires on that report, as far as FICO is concerned.

The idea that perhpas FICO assesses inquiries in "steps" (e.g. 0-1 = no penalty, 2-3 minus 5 points, 4-5 minus 5 more, 6-8 minus 5 more) is a helpful conjecture likely to be true -- but it is still a conjecture.  Suppose it is true though.  Those steps might be implemented very differently depending on the model.  Even within a scoring model, different scorecards could have different steps.

All of this is to say that predicting what will happen to any particular person (regarding inquiries) is still very speculative.  That's contrasted (say) with total CC utilization, where there is an extremely well tested breakpoint of 8.99%.

[credit_endurance]

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@Anonymous wrote:

FICO ignores the inquiries that are > 365 days old.  It's as if they were not on your report at all, from FICO's perspective.

So you have five inquires on that report, as far as FICO is concerned.

The idea that perhpas FICO assesses inquiries in "steps" (e.g. 0-1 = no penalty, 2-3 minus 5 points, 4-5 minus 5 more, 6-8 minus 5 more) is a helpful conjecture likely to be true -- but it is still a conjecture.  Suppose it is true though.  Those steps might be implemented very differently depending on the model.  Even within a scoring model, different scorecards could have different steps.

All of this is to say that predicting what will happen to any particular person (regarding inquiries) is still very speculative.  That's contrasted (say) with total CC utilization, where there is an extremely well tested breakpoint of 8.99%.

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I see know. So it is very well possible although not garunteed that with my (5) inquiries in the eyes of Fico a substantial "ding" is likely if a few inqiuries are acessed.

[Revelate]

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@Anonymous wrote:

Interesting TT, I've never heard of an AoYA drop from > 1 year to 0 not resulting in a score ding, although I'm not sure this factor is tested all too often.  A few things would need to be in place for the test to work.  One, no accounts can have been opened within the last year of course.  Two, you'd need someone that's going to open only 1 account test it (like you say you may be able to do) and last, the reporting of the new account cannot result in an AAoA threshold crossing, as it adds in another variable to the potential scoring change.

I guess if you do end up testing this at some point, you'll want to make sure that your AAoA doesn't end in a X.0 - X.2 years or so, of course depending on how thick your file is and how much a new account would drop it in months.  Then again, if your AAoA is > 7-8 years already, which it very well may be, it wouldn't matter anyway.

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On dirty scorecards, public record variety I only ever took hits for AAOA and never new tradelines.  When my tax lien fell off TU, then I see age of youngest as a reason code.  This was concretely tested with how many accounts I've opened and testing for AAOA boundaries and I've gone twice with gardening for over a year.  This sort of makes sense as it has been suggested it's a scorecard segmentation factor for clean scorecards, but it isn't one for sorting in the bottom 4 (or 2 on older models).

TT: I'm not really posting much on the forum anymore but I will try to see if I can catch the reason codes as there's a month between my Chase Amazon and my First Tech approvals and that's right around the time I pull my annual 3B anyway.  Actually I should pull first of August too for TU explicitly as I'm ticking over six months on the most recent tradeline this month just to see, six months might be a thing.