New credit

[Anonymous]

Right now my score is 585. It was 632 couple months ago, until i opened like 4-5 new account ( lowes, furniture, conns, best buy, GE cc ) as i bought a home.  The AMOUNT OF NEW CREDIT on my report is showing as BAD. and i am trying to fix this.

1. if i pay off all my new accounts ( $5k)  will this BAD go away. or

2. do i need to pay off and Close all  those accounts too for this BAD to go away ?

Please advice.

[MarineVietVet]

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@Anonymous wrote:

Right now my score is 585. It was 632 couple months ago, until i opened like 4-5 new account ( lowes, furniture, conns, best buy, GE cc ) as i bought a home.  The AMOUNT OF NEW CREDIT on my report is showing as BAD. and i am trying to fix this.

1. if i pay off all my new accounts ( $5k)  will this BAD go away. or

2. do i need to pay off and Close all  those accounts too for this BAD to go away ?

Please advice.

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Your score dropped some because of the new inquries and new credit accounts showing up. Also all those new accounts lowered your AAoA (Average Age of Accounts). That is normal and happens to everyone. Paying them off or closing the accounts will not help at all. As they age your score will increase.

I would not be concerned about what your report says. In about a year all these accounts will no longer be considered "new". I would concentrate on making timely payments, keeping utilization low on any credit cards (1-9% of credit limits), and stop applying for any more new credit. Let everything age.

From a BK years ago to:

9/09 EX pulled by lender 802
3/10 EQ- 800
4/10 TU -772

You can do the same thing with hard work

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[RobertEG]

I dont know what the "bad" is that you want to go away.

FICO does not care one whit about your CL on your accounts, it cares about your % util of that CL.  Overall, and on each individual account.

Closing any account does not ever make anything go away.  Closed and open accounts still remain in your CR.  The debt remains.  Closing an account only causes you to immediately lose its CL and thus increase your % util until the balance on the closed account is zero.

[Anonymous]

Stop applying for new credit.  When your accounts age to 12 months, your amount of new credit will no longer be "bad."  

Closing the accounts won't change this.  You're getting dinged because you opened them, and they will continue to show up on your credit reports for about ten years after they've been closed.  (Which is a good thing, by the way).

Now that you've got several accounts open, wait for a year and then keep it down to 1 or 2 apps a year -- always check the impact of a new account on your AAofA before app'ing for new credit.

If you're carrying $5,000 on your new cards, utilization is likely causing more of a score impact than your new cards.  PIF'ing or getting your utilization down will bring your scores up.  It won't impact the "bad" on "amount of new credit", but it will affect your utilization - which in turn will affect your scores.

Congrats on your new home!

[Anonymous]

Thanks for all the input. I have paid off  three of my new loans with the 8K first time home buyer credit that i finally received.  I only have 2 more new loans/cc left and which i ll pay them off too completely next month. This will take my CL utilization form 93% to 6%.  My scores should go up.  I am not sure if THE AMOUNT OF NEW CREDIT on my fico report will still show BAD or GOOD after all these pay offs???

What i am trying to find out is if I need to close all these accounts/CC's that  i have opened with in the past 6 months, or just keep them open, as they have zero balances now. They are all CC from best buy, furniture city, Lowes,sears.....etc.

Please help.

[honeybunnygal]

King82,

First of all...congrats on the new home! 

Now, to answer your question about the "amount of new credit" ding. Closing these accounts WILL NOT remove the "new credit" ding. Paying the accounts off WILL NOT remove the "new credit" ding (although it would improve your utilization, which helps your FICO score & is also a financially sound move). The only thing that will remove the "new credit" impact is TIME. Once the accounts reach 1 year old they will no longer be considered "new" accounts.

Since you've already gotten the "new credit" ding & closing the accounts won't change that, I'd suggest keeping the accounts open. I don't see a reason to close a CC account unless you've got an AF or insane fees/APRs (for those that don't PIF...and I DEFINITELY suggest PIF'ing to avoid interest/finance charges). There's a really great stickied thread on the CC forum on choosing when to close a CC: Closing Credit Cards  .

Lastly, you mentioned the types of cards you have. Are these all store-only cards, or are they bank cards (VISA/MasterCard/AMEX/Discover logo)?

Just to reiterate what other posters have stated, once your utilization is in the 1-9% range, a clean payment history & time seem to be the biggest helpers to your score.

Hope that helps!

[Wolf3]

Keep those accounts as they are building more credit history for the future.   Once your new accounts and mortgage age a little and you get your utilizaition low, you will have a very nice FICO score.  

Unless you a need to apply for more credit soon, it does not matter that your FICO score dropped some for new accounts.  

[Macroman]

You can't "UNDO" the new accounts. It might have been better to use more restraint but that is water under the bridge now. Pay down the balances and don't get lates and your scores will improve quickly.