topic Re: HELP!!!... Impact of New Accounts in General Credit Topics

HELP!!!... Impact of New Accounts

Anonymous — Fri, 04 Jan 2013 16:12:02 GMT

Hi All, I am in a bit of a pickle here, and hope you can help. I have finally worked my scores back up to 636 mid, and have been pre approved for a mortgage. I just found out that my student loan account holder picked up 3 new accounts on me, which were not on my credit report previously. The accounts are relatively small in amounts, totalling $860 for all three, which I could dip into savings and pay off, but would risk cutting into an asset in doing so. What kind of impact would it have on my score if I were to pay off all accounts, which would report as closed, or... allow the accounts to be reported open, in good standing?

Re: HELP!!!... Impact of New Accounts

pizzadude — Fri, 04 Jan 2013 16:20:56 GMT

@Anonymous wrote:
Hi All, I am in a bit of a pickle here, and hope you can help. I have finally worked my scores back up to 636 mid, and have been pre approved for a mortgage. I just found out that my student loan account holder picked up 3 new accounts on me, which were not on my credit report previously. The accounts are relatively small in amounts, totalling $860 for all three, which I could dip into savings and pay off, but would risk cutting into an asset in doing so. What kind of impact would it have on my score if I were to pay off all accounts, which would report as closed, or... allow the accounts to be reported open, in good standing?

Welcome to the forums !

Student loans are installment loans, and typically you won't see much of a FICO score boost from paying them down or completely.

The loans will be factored into your Average Age of Accounts ( AAoA ) either as closed or open, so I would just leave them open for now.

Re: HELP!!!... Impact of New Accounts

Anonymous — Fri, 04 Jan 2013 16:31:26 GMT

Thanks for the reply. This is what worries me, is that they are new accounts. So can I assume that I will offset some of the hit for being new by paying them in full? I worry about my score dropping below 620 when I go to close.

Re: HELP!!!... Impact of New Accounts

pizzadude — Fri, 04 Jan 2013 16:37:58 GMT

@Anonymous wrote:
Thanks for the reply. This is what worries me, is that they are new accounts. So can I assume that I will offset some of the hit for being new by paying them in full? I worry about my score dropping below 620 when I go to close.

No ~ I am saying that you likely shouldn't expect much ( if any ) FICO score gain from paying them off. You've already taken the AAoA hit since they are on your reports.

Re: HELP!!!... Impact of New Accounts

Anonymous — Fri, 04 Jan 2013 16:42:26 GMT

Ok, thanks for your help

Re: HELP!!!... Impact of New Accounts

Anonymous — Fri, 04 Jan 2013 16:44:43 GMT

Actually they haven't been reported yet, just got an email saying they obtained them...

Re: HELP!!!... Impact of New Accounts

llecs — Fri, 04 Jan 2013 16:46:28 GMT

CC (revolving) utilization is the fastest way to increase (or decrease) a score. Could you pay down CCs for a quick score boost?

Ditto. Even if paid off, the points gained would be very low. You might eek out a couple to a few points by getting more TLs to report $0.

Re: HELP!!!... Impact of New Accounts

pizzadude — Fri, 04 Jan 2013 16:48:55 GMT

@Anonymous wrote:
Actually they haven't been reported yet, just got an email saying they obtained them...

Ok ~ your AAoA will drop when they report, how much depends on the age of your other accounts.

If you offered to pay them off now would the creditor agree not to report them at all ?

Re: HELP!!!... Impact of New Accounts

Anonymous — Fri, 04 Jan 2013 16:56:23 GMT

I have a Lowe's card at 42% of my available credit. My other revolving lines are under 20%

Re: HELP!!!... Impact of New Accounts

Anonymous — Fri, 04 Jan 2013 17:04:02 GMT

Average ages are 2.8 yrs EX, 4.4 yrs EQ, and 3 yrs TU

Re: HELP!!!... Impact of New Accounts

pizzadude — Fri, 04 Jan 2013 17:16:36 GMT

@Anonymous wrote:
I have a Lowe's card at 42% of my available credit. My other revolving lines are under 20%

If you can apply money towards paying down your revolving utilization, then your FICO score should improve. Try to get all CCs reporting a zero balance, except for one card, which should ideally show less than 9% utlilization. This is generally the best starting point for optimizing your revolving utilization.