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11-27-2016 06:27 PM
I've seen several opinions on this, however, say for FICO8 models, when is an account no longer considered new? 6 mos? 1 year? 2 years? Curious as I haven't monitored this data point closely on my reports and will have a few hit the one year mark in 2017 while I shed the 5/24 label.
11-28-2016 11:48 AM - edited 11-29-2016 06:13 AM
Just for the benefit of anyone reading this thread, our OP is asking about a few factors that are confined to the New Credit Category:
FICO's language there seems to imply that a given model has an "either/or" classification where it categorizes every account as either "new" or "not new." Then it says:
Your FICO® Scores look at how many new accounts you have by type of account. They also may look at how many of your accounts are new accounts.
My personal opinion is that the key is the second sentence, which is probably implemented as a percentage. I.e. what percentage of your total accounts are new? The model then probably has some different cutoffs where penalties begin. E.g. perhaps < 25% is no penalty.
The trouble is in guessing what the denominator is for that percentage. Is it all accounts, closed and open? Is the denominator just open accounts? The Lexis Nexis scoring model implements this as New accounts (closed or open) divided by Total Open Accounts. Thus the percent can actually go over 100%. (E.g if a person has 5 new accounts, but only 4 open accounts.)
Because the details of how FICO implements this factor are unknown (as I just mentioned) and because the timing of an account turning 1 year old often coincides with inquiries turning one year old, it's very difficult to analyze "data points" in a meaningful way here. You'd need a statistician with lots of information (total accounts, total open accounts, inquiries turning 1 year at the same time, etc.) on many different people and profiles before you could begin to attempt to backward-engineer what the FICO algorithm might be for a particular model.
All that said, I think the internal definition for FICO may be 1 year. (I.e. an account < 365 days old is "new".) For Lexis Nexis the definition is 24 months (we have explicit published reason codes that confirm this.) But in FICO's case one year may be right -- I think I saw some FICO white papers that clearly implied this last year (that somebody on the Forum linked to).
The either-or definition (either an account is new or it isn't) may also be used in the assigning a clean credit profile to a scorecard. Thus, if at least one account is new then your profile is categorized as having "New Credit" and that pushes you toward certain scorecards, whereas if none of your accounts are new that pushes you toward other scorecards.
12-02-2016 11:36 PM
New credit is my number one reason codes for FICO 08 and 04. For FICO 08 it says:
1. Time since most recent account opening is too short
2. Length of time accounts have been established (Not a new credit code, but my #2 code)
When I only let a couple of cards report a balance, my top two reasons codes for EQ-04 are
1. You recently opened a new credit account
2. You've recently opened too many new credit accounts
My EX-98 and NextGen EQ scores have never shown a code for new credit.
My limited data implies:
1) FICO considers accounts new for over 1 year. My guess would be 2 years. I spaced my last app spree at just over 1 year.
2) EQ-04 penalizes for having a new credit account and the total number of new accounts. .FICO 08 mostly penalizes you for having a new account, not the total number of new accounts. My FICO 08 scores don't see to be hurt by adding new TLs unless my AAoA goes down. If new trade lines hurt in EX-98 and NextGen then it is much less of a penalty.
1) I did my last app spree at just over 1 year from the previous app spree. It is possible I barely missed the cutoff for the new credit penalty. I would need to not app for two years to be test my theory.
2) I do not have any negatives on my CR. Dirty files could be handled differently
3) Reason codes are not infallible. I could be penalized and not have a reason code.
4) My EX-98 score is not very high (801 last time I didn't let a lot of cards report a balance). It is possible other factors are masking new credit codes. My last NextGen (886) was pulled just after I had added 4 new TLs. I don't think there is much room in my NextGen for much of a new credit penalty.
12-03-2016 12:35 AM
How many accounts do you have total? (Closed and open together)
How many were opened in the last year?
How many were opened in the last two years?
How many open accounts do you have?
12-03-2016 08:21 AM - edited 12-03-2016 08:22 AM
I currently have:
6 TL < 1 year
18 TL < 2 years - several are approaching 2 years, 1 just crossed
15 TL > 2 years. Not all of the older accounts are on all CRA's. Each CRA has 29 or 31 TLs. 23 are open on each CRA. Actually, EQ shows a closed LOC as open, making 24.
EQ-04 745 EX-98 775
EQ-08 843 EX-08 828 TU-08 835
EQ managed not to get any HP last app spree. The mortgage scores are low because I have 13 of 18 open CC's reporting a balance.
AAoA 5-6 years. Overall Util 1%.
Testing for code "Time since most recent account opening is too short" would be easy if I stopped app'g. It is my #1 code on all of my FICO 08 scores.
12-03-2016 09:24 AM
In the factor where FICO looks at the percentage of accounts that are "new."....
If the cutoff for that factor is one year, then only a small minority of your accounts are new. Therefore you wouldn't be seeing any impact there. And in general, even when you add accounts, you will tend not to see any impact from it, because your particular profile already has so many Where this factor would come into play, is when a person had a big chunk of his accounts having been opened recently.
LexisNexis is really transparent about exactly how they implement this in their model. I believe it is total number of new accounts divided by total number of open accounts (and thus the resulting % can go over 100%).
The other factor you've mentioned (age of youngest account) is very important because it is used in scorecard assignment. So I am not surprised that you are seeing it a lot. Because in your case you always have at least one account opened fairly recently, and therefore you are always being placed in a scorecard for people with recent credit, which may have a ceiling for its score.
12-03-2016 12:46 PM
It is possible I am not crossing the % number with FICO 08, but I am with FICO 04. One more thing to consider is I wasn't getting the too many recent accounts with FICO 08 before my last app spree. Only the time since your last new credit account is too recent. I believe I had 7 accounts under 1 year with a total of 23-25 total TLs. That would put the % of TLs under 1 year above 30% (at least on my TU CRA).
I do agree, yearly app sprees are going to make it impossible to get an 850. It is a good think 850 isn't one of my goals. Maybe I can try to go 13 months without an app to see if the new credit reason codes go away.
PS. Just because I don't see a code for the number of new TLs, doesn't mean my score isn't being hurt by it. It would imply the effect is minimum, though.
12-06-2016 04:31 PM
I know this isn't directly related to the topic in discussion, but upon pulling my CCT 3B scores today, for the first time in the reason codes section of "Factors helping your score" under TU I see "Not seeking credit."
I find this rather amusing as 5 months ago I added 3 new accounts (all of which reported to TU). Based on this reason code, I would be led to believe that TU doesn't consider accounts 5 months old to be "new" which to me doesn't make sense. I'm sure this is one of those cases where the reason codes by the monitoring software simply don't match the FICO scoring criteria, but I thought I'd share this anyway.
12-06-2016 04:55 PM
Hey BBS. Interesting piece of news. My initial feeling was exasperation -- this really means FICO's reason codes are complete fantasies if it can say this. I mean how recent does it have to be -- two weeks ago?
But then I had one thought. Is it possible that the code is looking at the percentage of your total accounts that are new? If so, and if you really have a relatively small percentage of accounts that are new, then this might be far less crazy.
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