New Credit accounts

[ChetBrown56]

So in the process of re-building my credit I have paid all old debt off and started new credit lines. When I pull my credit report it went from, serious deliquencys and charge offs to accounts are too new and you opened a credit card recently.

I assume that it is alot better than having the ones that say chargeoffs and seriously deliquent accounts.

My question is, how long do accounts have to be open for them to not hurt my credit score. My oldest "new" account is 19 Months and my youngest is 2 months.

Thanks.

[CreditBob]

An account is considered new until it reaches 12 months of being on the credit report. Now let's say your new account is a credit card (revolving trade line). If you use the credit card & then pay it off, the reason code will only come back as a new account. Now if you use it, don't pay it off, & have a high balance, then the reason risk code will come back as new account with a high balance.

Your score will start to rebound after six months. I went through this with my auto loan. After I open my car loan my score went down from 668-624. As time goes by my score will go up.

Your average account age between your oldest account & your new account has been lowered to 10 1/2 months. You will need to allow your accounts to age. Do not be late on either account for any reason. If one or both is a credit card you can leave a $ 5 balance on each one. Then find out when the billing or statement date is each month. That is when the creditor reports the information to the credit bureaus. So for example if your statement date close on September 24, then on September 25 pay off the credit card. I have found out, through personal experience, that this works.

[ChetBrown56]

thanks for you answer.

So it is better for me to have my revolving trade lines to report something, lets say $5. Then to have them report with no ballance?

[GregB]

There seems to be a slight advantage in score to have at least one account report a small balance and not all report $0. This is primarily important for someone that is trying to squeek out every last possible point in order to qualify for a mortgage. If you barely qualify, one point might be important.

The reports will always show several reasons that hurt a score even if some of them are trivial and have little or no effect on score. They are simply the biggest reasons that your score isn't better even if they all add up to very little.

[CreditBob]

You want them to report the balance.

[Booner72]

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@CreditBob wrote:

You want them to report the balance.

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I respectfully disagree.  Too many accounts w/ balances is bad.  Only half or less should report a balance for optimal FICO score.

[Anonymous]

The general mantra is to have all accounts but one reporting a zero balance.  Let the remaining one account report a balance less than 9% for highest FICO score. 

This is because FICO scores on individual as well as overall utilization.  They also score on number of accounts reporting a balance. 

Once you establish this pattern of utilization/number of accounts reporting, you can play around and see if you can add an account or two reporting a balance; and how individual and overall utilization affect your FICO.  But the "general mantra" seems to work best for most everyone.