What impact will new credit card have on credit score?

[avv7c0]

My fiance and I are considering the purchase of our first home within the next few months.

Several years ago, she naively agreed to sign for a credit card and vehicle loan in her name, on behalf of her boyfriend at the time. He proceeded to spend a great deal, and left her holding the bag. She worked very hard to pay off these debts ($25,000+) and currently has a 660 FICO score, with no debt other than a $150/month student loan payment.

My FICO is 786. I know the bank will consider the lowest score when reviewing our application for the mortgage. She does not currently hold any credit cards, and thus does not have a record of any credit available to her on her report. We are trying to determine the impact of applying and being approved for a new card in her name.

How quickly would we see this action reflected in her score? Is it better for us to wait a few months on the mortgage application (our leases are up in May), or will the impact of the credit card be minimal, and thus we should just proceed now?

Additionally, if I am able to add her to my oldest card, would that benefit her? Would it negatively impact me in any way? I'm not concerned about her financial responsibility, since those purchases were made without her knowledge, and she was amazingly able to pay down all the balances on her own.

[trumpet-205]

So your fiance has a FICO score of 660 and no negatives on her credit reports?

When you applied for a credit card your score will drop slightly due to inquiry and opening of a new account. You will recover the score very quickly if you pay on time and keep statement balance low. I say the impact is fairly low, easy to recover and start improving. You do want to wait for a few months after opening a credit card.

Most CCCs do report AU, but not everyone will. For those who do report, some will report your entire history while other report with 0 month history from start. Ask your lender about that. But AU does improve credit history, if it is reported.

[llecs]

Ditto to the AU suggestion.

[larinoriani]

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@trumpet-205 wrote:

So your fiance has a FICO score of 660 and no negatives on her credit reports?

When you applied for a credit card your score will drop slightly due to inquiry and opening of a new account. You will recover the score very quickly if you pay on time and keep statement balance low. I say the impact is fairly low, easy to recover and start improving. You do want to wait for a few months after opening a credit card.

Most CCCs do report AU, but not everyone will. For those who do report, some will report your entire history while other report with 0 month history from start. Ask your lender about that. But AU does improve credit history, if it is reported.

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Agreed with trumpet. Not only the scores recover quickly, but they will show some improvement. If she applies for a CC now, you guys should be ok for may. I would anticipate a 20-point gain in 5-6 months.

[avv7c0]

Should I have her apply for her own card first before adding her to my existing cards, or the other way around?

[Anonymous]

You could really do it either way.  I would do the AU first, check the FICO's and then decide which card she would be best qualified for.  You'll want to choose that one carefully because you don't want a lot of apps on her CR.

[avv7c0]

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@Anonymous wrote:

You could really do it either way.  I would do the AU first, check the FICO's and then decide which card she would be best qualified for.  You'll want to choose that one carefully because you don't want a lot of apps on her CR.

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I would agree, thank you for your insight!

[avv7c0]

For anyone who stumbles across this thread, I did as advised above and have posted a report of our successful results here:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Authorized-User-provides-dramatic-boost-t...

[Anonymous]

Nice work!

[Anonymous]

To improve my credit, I applied for a secured card with Capital One. While the maximum line is $3,000 (a $49 deposit got me $200-- anything beyond that you transfer yourself, much like a prepaid card), Cap still reports to all 3 bureaus with this type of card. A couple days after applying, the hard inquiry cost me about 4 points, but it quickly recovered. My EQ score, which was abysmal after some stupid college spending years ago, improved by nearly 30 points within a month. Keeping the balance low and paying it in full every month will improve the score over time.