topic Re: 10% New credit in Understanding FICO® Scoring

10% New credit

Anonymous — Fri, 31 Jul 2009 13:07:21 GMT

When you look at a pie chart of how the credit score is calculated, it mentions 10% new credit. I have heard this explained that it means you should open up a few new accounts every year to help your score. I think it may have more to do with not having too much new credit. Can someone explain what this means?

Thanks

Re: 10% New credit

llecs — Fri, 31 Jul 2009 14:11:14 GMT

lrand wrote:
When you look at a pie chart of how the credit score is calculated, it mentions 10% new credit. I have heard this explained that it means you should open up a few new accounts every year to help your score. I think it may have more to do with not having too much new credit. Can someone explain what this means?

Thanks

Opening new accounts every year will hurt and not help your score. New credit is basically the damage you receive when apping for credit (inquiries), opening new TLs (I lose an avg. of 20-25 pts per new CC), and taking a hit in your AAoA if that drops by a whole number.

Re: 10% New credit

Anonymous — Fri, 31 Jul 2009 16:42:08 GMT

Thank you for confirming,

I didn't think it sounded correct.

Re: 10% New credit

Anonymous — Fri, 31 Jul 2009 22:41:56 GMT

What does AAoA stand for?

Re: 10% New credit

Lel — Fri, 31 Jul 2009 22:47:58 GMT

AAoA = Average Age of Accounts.

Re: 10% New credit

Anonymous — Sun, 02 Aug 2009 17:38:57 GMT

Thank you

Re: 10% New credit

RobertEG — Mon, 03 Aug 2009 07:27:28 GMT

Average age of accounts is:

Add up the time from the opening date of each account in your CR (open and closed) until today, and divide that by the number of accounts. That is your AAoA.

Re: 10% New credit

Anonymous — Thu, 06 Aug 2009 01:10:26 GMT

Thank you!!