The shopping card trick is what I used to apply for the card, and that does not result in a
@Anonymous wrote:
@Anonymous wrote:
WELCOME TO THE FORUMS! :-) My comment in blue below.
I am currently selling my home and will be applying for a new mortgage within the next couple of weeks. I learned about the SCT for Wayfair and immediately went for it, knowing I will likely have a new house to furnish in the near future. I was approved for $3500. My question is, how will activating this impact my credit and mortgage approval? I had thought activating it would help because it will lower my credit card utilization. Currently that is around $2800 out of $10200. I would love to just pay an extra $1000 towards my credit card balances and improve my utilization via that route, but right now I have to save all I can for a future house so I will be sticking to just paying $100 per month. It's my understanding that activating the Wayfair credit card will not result in an inquiry.
Activating a credit card will not result in an inquiry of any kind. But applying for one almost always does. If you pull your three credit reports a week after you applied for the card, you should be able to see which bureau the hard inquiry went to.
Thank you for the response! The application through the SCT is a soft pull (I did research this beforehand) so it did not result in an inquiry.
But will lower by AAOA. Currently my AAOA is 3 years, 7 months and it is impacted by 28 different lines (3 for my current mortgage, 4 for my credit cards, 1 for my car and the remainder are my student loans). Because I have so many different items impacting my AAOA, would the impact of adding the new credit card be fairly insignificant?
It sounds like you may not know how to calculate your AAoA. Since your AAoA is your average age of accounts, you just need to recalculate it with your current number of accounts + 1. Your current AAoA is 3.6. You have 28 accounts. The new AAoA will therefore be:
(28 * 3.6) / 29 = 3.47
FICO rounds AAoA down to the next whole number. Thus all AAoA values between 3.0 and 3.99 are treated the same.
Thank you for this, I was not aware it was that simple to calculate! That's a big help.
Additionally, beyond just the score alone, could a mortgage loan officer be look at a brand new account just a week or so before I apply for a mortgage as a negative factor? I am very new to this so any help will be greatly appreciated!
Yes, applying for credit cards just before you apply for the home loan could be looked at as a red flag. It depends a lot on the loan officer and also that lender and its own in-house policies. But it's certainly not as problematic as applying for the card between the initial loan app and closing. The general advice is to make sure your finances and credit are as stable is possible in the months before a loan app. That includes bank accounts and means avoiding applications for any new credit. But as I say it may be ok with some loan officers, or ok as long as you explain it.
Two more thoughts.
(1) You list a possible inquiry and the effect on AAoA and then say "beyond just the score alone...." That suggests that you think that the only possible ways you could take a score hit is from those two factors. There are other factors involved. For example the factor "Length of time since you have opened a new account." In your case that will now be < 1 month.
To clarify, what I was referencing was more along the lines of red flags (as you mentioned regarding applying for a new credit line right around the same time as a mortgage). I am aware of the numerous other factors.
(2) Your own description of your situation is one of hearing about a credit card and "immediately [going] for it." Only after you make that impulsive decision do you begin to wonder what effect that could have on your inquiries, on your AAoA, on your score in general, and whether your mortgage lenders in just a few weeks might view this as a bad thing. I am not giving you a hard time, but the hugest lesson you should be taking away from this is that you had a major financial event coming up in your life, and you engaged in impulsive credit card behavior. It's not the decision itself that was bad (you may find out that it was fine) but the impulsiveness of it, the failure to carefully assess all possible risk, all tied up with credit cards. This a dangerous mental habit to have. Grab a burger impulsively and regret it later -- that's fine. Don't do that with money, credit cards, and home buying.
Perhaps my logic makes more sense if we remember that it was a soft pull, which I confirmed beforehand. What I admittedly had not considered was the impact upon my AAoA (which, based upon your explanation, will not notably be impacted) or it being viewed as a "red flag." I was too focused on decreasing utilization at the time, as I know if I can decrease utilization my score will increase significantly before I apply for the mortgage. I've decided that although it would help my score quite a bit, it's not worth the risk of the unknown (if I can avoid it), as I am not sure how heavily my mortgage provider weighs these types of red flags.
Now what I am trying to clarify, is when/if the card will begin showing on my credit? I read in the forums that some cards show on credit right after application, whereas some that are a soft pull do not show until activation. It has been about 2 weeks and no signs of it on my credit report. I am wondering if it's a bit delayed or if it won't show until I decide to activate it. The wayfair card is through comenity.
Here's wishing you all the best. I am sure things will work out for you. Thank you so much for your help!
