topic Re: Big drop in FICO Score After Getting AMEX in General Credit Topics

Big drop in FICO Score After Getting AMEX

Anonymous — Mon, 09 May 2016 10:08:13 GMT

Hi Everyone,

As of April 14th my FICO score, obtained from myFico, were 703 for Equifax and Experian and 713 for TU. I applied for both the AMEX Gold and Platinum cards, was approved. Then, a few days later, I had to buy a computer and was convinced to finance it through Barclays Apple card, which was also approved, but for some reason I think they ran my credit twice, once for the approval and once again for a different credit limit. Now yesterday I checked my FICO scores again and they are now 660 for EQ, 633 for Experian and 664 for TU!!

Why the huge drops? And how long will it take to recover from this? I would have thought getting the AMEX cards would have helped my credit, not damage it.

I am really frustrated by this.

Re: Big drop in FICO Score After Getting AMEX

Anonymous — Mon, 09 May 2016 15:52:09 GMT

The type of card you get has no relationship to credit score. In other words, score wise, an Amex is no better than a Credit One. Assuming there were no other changes in your files, your scores dropped due to the new inquiries. As the inquiries age, the scores will recover.

Re: Big drop in FICO Score After Getting AMEX

takeshi74 — Mon, 09 May 2016 20:06:01 GMT

@Anonymous wrote:

Why the huge drops?

You always have to carefully compare reports from before and after the score change to determine the cause(s). You can't just look at scores or your recollection of what happened. It's possible that it's just due to the credit seeking activity verus your profile but there are also possible other changes at play. We wouldn't know as we don't have access to your reports.

@Anonymous wrote:
I would have thought getting the AMEX cards would have helped my credit, not damage it.

I am really frustrated by this.

Impact depends on one's credit profile and how the specific changes impact that profile. Don't just assume that getting AmEx cards helps. All these factors matter:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

Re: Big drop in FICO Score After Getting AMEX

Anonymous — Mon, 09 May 2016 21:11:20 GMT

I would imagine that the 2 key factors would be AAoA and your inquiry count. 3 new cards is going to do some hefty lowering of your ages.

Re: Big drop in FICO Score After Getting AMEX

datrucking210 — Tue, 10 May 2016 06:57:29 GMT

Me thinks that AMEX hasn't reported the new accounts but Barclays may have done so already. Not sure what the OP's AAoA is but that might have drop significantly therefore the drop in score.

Re: Big drop in FICO Score After Getting AMEX

RonM21 — Tue, 10 May 2016 09:47:42 GMT

I think all of the posts above combined (in general) are on the mark. Several of those issues may have been at play at the same time causing the drop.

Re: Big drop in FICO Score After Getting AMEX

Anonymous — Tue, 10 May 2016 10:20:15 GMT

Thank you for the replies.

I don't see anything in my reports that has changed other than the card seeking activity. Does this imply that the scores can recover quickly? Like within a couple of months? Those are awfully huge hits.

Re: Big drop in FICO Score After Getting AMEX

Anonymous — Tue, 10 May 2016 11:41:18 GMT

What was your AAoA and how many inquiries did you have prior to these 3 or 4 new hits?

Re: Big drop in FICO Score After Getting AMEX

Anonymous — Wed, 11 May 2016 09:38:25 GMT

I'm honestly not sure what my AAoA is, if I calculated it correctly, which I *highly* doubt, it is 3y9m. I have noticed that the Barclay card is on my report, however Amex does not appear. Does that mean it will go down even further?

My history goes back 17 years to my oldest account, which is now closed, does that figure into it at all? Is there an easy way to figure out AAoA?

Re: Big drop in FICO Score After Getting AMEX

Anonymous — Wed, 11 May 2016 13:02:03 GMT

@Anonymous wrote:
I'm honestly not sure what my AAoA is, if I calculated it correctly, which I *highly* doubt, it is 3y9m. I have noticed that the Barclay card is on my report, however Amex does not appear. Does that mean it will go down even further?

My history goes back 17 years to my oldest account, which is now closed, does that figure into it at all? Is there an easy way to figure out AAoA?

Yes, the Amex will lower it even further when it reports which can take several months. Figuring out your AAoA is just a matter of adding up the total months your accounts have been open and dividing that number by the number of accounts.

Re: Big drop in FICO Score After Getting AMEX

Anonymous — Wed, 11 May 2016 13:05:18 GMT

Yeah just add up age of all the accounts you have on your credit report, whether they are open or closed and divide that number by the total number of accounts you just added up. So if you added up 9 accounts that totaled 52.3 years, your AAoA would be 5.8 years as an example.

And yes, to answer your question your AAoA will go down a bit more once the Amex shows up on your report. Do the math though to see what the impact will be.

Using the above numbers as an example, the 9 accounts simply becomes 10 but the number of years of 52.3 remains the same. Therefore AAoA drops to 5.2. Under FICO scoring, the decimals don't matter; it goes off the first whole number so in this example AAoA is 5 years regardless of the new account being added. It will simply take a little longer to get to 6 years now, but there wouldn't be any score impact due to the AAoA reduction in this example.

Re: Big drop in FICO Score After Getting AMEX

Anonymous — Wed, 11 May 2016 15:14:53 GMT

So now does that mean it is going to to take X number of years to get back to where I was just before I applied?

I didn't do the math yet for the AAoA, I will do that a little later and report back.

As an example, let's say my score was 713 and an AAoA of 5, and now because of the 3 additional cards it is down to 660 and an AAoA of 3. Given on time payments, and no new credit, does that mean it is going to take at least 2 more years to get back up to a score of 713?

If that's the case it definitely was not worth getting the cards and I just shot myself in the foot.

Re: Big drop in FICO Score After Getting AMEX

Anonymous — Wed, 11 May 2016 17:23:22 GMT

It wouldn't take you the full 2 years in that example to "get back" to the original score you had. Your score drop could have been from two factors. One, the AAoA reduction but two, the additional inquiries. Inquiries don't impact your score for more than 1 year (even though they are visible on your file for 2 years) so 1 year down the road assuming no more inquries you'd get those points back, and in that year your AAoA of course grows to 4 years (again, in this example) so 1 year down the road your AAoA is only 1 year younger than when you started. Of course during that year if you have no late payments across all those accounts, PIF every month etc. you are adding additional positive value to your FICO scores... positive value that IMO would yield greater points than the 1 year reduction in AAoA. My guess is assuming you have a positive credit history for the next 12 months your score 1 year from now when the inquiries fall off will be greater than it was before you got the new cards.

Re: Big drop in FICO Score After Getting AMEX

SlidingBy — Tue, 17 May 2016 04:44:39 GMT

Another possible reason for the large drop is your utilization. I don’t believe I saw it mentioned but depending on the cost of that shiny new computer and the CL on the new Barclay’s you could have "maxed out" the card which will hurt quite a bit more than a couple of inquiries and new accounts. The great part about this sort of drop though is it goes away as soon as you pay it down. From what I have learned here, Utility has no memory, meaning that as you pay it down your score will come back up. The biggest jumps likely around the 30% and 10% marks. The more you pay off at once, the bigger jumps you will see.

No matter what caused it, they will come back up and your profile will be that much stronger because of it.