topic Re: Recent Accounts in Credit Card Applications

Recent Accounts

Anonymous — Sat, 20 Jun 2020 02:37:36 GMT

I have a question for the community I'm hope to gain some insight on. I completed a Discover prequal and received a denial (an actual paper denial mailed out) with "Recently Opened Accounts" as the stated reason. Reading through the forums I have seen this reported rather frequently.

So my question is, what, in general, do FI's consider a recently opened account? Obviously I know each institution is different where bank x is more stringent than bank y. But is there a general consensus on what would be classified as a "new" account? 3 months, 6 months, 12 months?

Thanks in advance!

Re: Recent Accounts

Brian_Earl_Spilner — Sat, 20 Jun 2020 03:32:16 GMT

6 months would be the most common with the bigger banks that are more stringent.

Re: Recent Accounts

Aim_High — Sat, 20 Jun 2020 18:58:17 GMT

@Anonymous wrote: I have a question for the community I'm hope to gain some insight on. I completed a Discover prequal and received a denial (an actual paper denial mailed out) with "Recently Opened Accounts" as the stated reason. Reading through the forums I have seen this reported rather frequently.

So my question is, what, in general, do FI's consider a recently opened account? Obviously I know each institution is different where bank x is more stringent than bank y. But is there a general consensus on what would be classified as a "new" account? 3 months, 6 months, 12 months?

Welcome to My Fico Forums @Anonymous !

There isn't a single standard and it can vary widely. Most benchmarks are tracked at either 6, 12 or 24 months and you'll see many members give data points on how many new accounts or inquiries they had over those time frames when they post updates about card applications or approvals. Don't try to ask the banks about their own rules. The customer service rep will just give you a blank stare. They generally aren't public knowledge and many employees who don't process the applications may not know the criteria. They are just "known" by collective data points assembled on message boards like My Fico.

In general, the more recent the new account, the more negative weight it will carry. Some issuers don't penalize much for accounts that have been open for over 12 months. Some do, such as the famous 5/24 rule used by Chase, which applies to (ALL) revolving credit accounts (mainly credit cards) you have been approved for in the last two years.

Bank of America has a few different rules. The first applies to how many new Bank of America credit cards you can open in a defined period. (2 in 30 days; 3 in 12 months; 4 in 24 months.) The other rule concerns how many total revolving accounts you've opened in the past 12 months to be approved for a new credit card. If you are a banking customer, you must be under 7/12. If you are not a banking customer, you must be under 3/12.

There are other guidelines about other lenders. And there are other lenders who are simply referred to as "new account sensitive." That doesn't mean there isn't some quantifiable number behind their approval process. It just means the data hasn't been compiled to give us such accuracy like we can get with the really large lenders like Chase and Bank of America.

Some lenders may have a little more leeway in approvals and they may be looking more at the overall credit file. So sometimes, a thick and seasoned credit file will get approved when a thin and developing file may get declined. So if you're just starting out, be more on the conservative side. Sometimes, the age of your credit file doesn't matter at all. I just got declined for an AMEX Gold card with a preapproval, 800+ scores, high income, low Debt-to-income, a 30+ year credit file, and as a previous AMEX cardholder in good standing: all because I had "excessive new accounts" (approximately 7/12.) But the new accounts didn't matter to AOD FCU during the month prior to my AMEX app when they approved me for a Visa Signature card with a $25K limit and their lowest 7.49% APR.

A good rule of thumb that will keep you safe with (most) lenders is not to apply for a new account more than about once every six months. If you follow that guideline, you'll find you rarely need to track it.

Re: Recent Accounts

Anonymous — Sat, 20 Jun 2020 12:41:08 GMT

@Aim_High thank you for the very comprehensive answer to my question. I know it took you some time to compose that.

I knew going in to the question that every lender would be different, but also expected there would be a general answer some where between them all. You took it to a different level, and for that is the reason I come to read the forums. Kudos to you.

Have a great weekend everyone

Re: Recent Accounts

CreditInspired — Sat, 20 Jun 2020 14:39:13 GMT

@Aim_High wrote:
@Anonymous wrote: I have a question for the community I'm hope to gain some insight on. I completed a Discover prequal and received a denial (an actual paper denial mailed out) with "Recently Opened Accounts" as the stated reason. Reading through the forums I have seen this reported rather frequently.

So my question is, what, in general, do FI's consider a recently opened account? Obviously I know each institution is different where bank x is more stringent than bank y. But is there a general consensus on what would be classified as a "new" account? 3 months, 6 months, 12 months?
Welcome to My Fico Forums @Anonymous !

There isn't a single standard and it can vary widely. Most benchmarks are tracked at either 6, 12 or 24 months and you'll see many members give data points on how many new accounts or inquiries they had over those time frames when they post updates about card applications or approvals. Don't try to ask the banks about their own rules. The customer service rep will just give you a blank stare. They generally aren't public knowledge and many employees who don't process the applications may not know the criteria. They are just "known" by collective data points assembled on message boards like My Fico.

In general, the more recent the new account, the more negative weight it will carry. Some issuers don't penalize much for accounts that have been open for over 12 months. Some do, such as the famous 5/24 rule used by Chase, which applies to (ALL) revolving credit accounts (mainly credit cards) you have been approved for in the last two years.

Bank of America has a few different rules. The first applies to how many new Bank of America credit cards you can open in a defined period. (2 in 30 days; 3 in 12 months; 4 in 24 months.) The other rule concerns how many total revolving accounts you've opened in the past 12 months to be approved for a new credit card. If you are a banking customer, you must be under 7/12. If you are not a banking customer, you must be under 3/12.

There are other guidelines about other lenders. And there are other lenders who are simply referred to as "new account sensitive." That doesn't mean there isn't some quantifiable number behind their approval process. It just means the data hasn't been compiled to give us such accuracy like we can get with the really large lenders like Chase and Bank of America.

Some lenders may have a little more leeway in approvals and they may be looking more at the overall credit file. So sometimes, a thick and seasoned credit file will get approved when a thin and developing file may get declined. So if you're just starting out, be more on the conservative side. Sometimes, the age of your credit file doesn't matter at all. I just got declined for an AMEX Gold card with a preapproval, 800+ scores, high income, low Debt-to-income, a 30+ year credit file, and as a previous AMEX cardholder in good standing: all because I had excessive new accounts (approximately 7/12.)

A good rule of thumb that will keep you safe with (most) lenders is not to apply for a new account more than about once every six months. If you follow that guideline, you'll find you rarely need to track it.

Excellent summarizing 😁

Re: Recent Accounts

Aim_High — Sat, 20 Jun 2020 19:06:57 GMT

@Anonymous wrote:
@Aim_Highthank you for the very comprehensive answer to my question. I know it took you some time to compose that.
I knew going in to the question that every lender would be different, but also expected there would be a general answer some where between them all. You took it to a different level, and for that is the reason I come to read the forums. Kudos to you.
Have a great weekend everyone

@CreditInspired wrote: Excellent summarizing 😁

Thanks @CreditInspired!

Thanks for the reply and compliment @Anonymous! I enjoy writing and helping others so those two things come together on My Fico. It's my pleasure but also nice to know my efforts are appreciated. I know we have a LOT more lurkers than members who post, and a single posting can reach a lot of people. Enjoy your weekend as well and stay safe.