topic Re: Adding Additional Account vs Average Age in General Credit Topics

Adding Additional Account vs Average Age

Anonymous — Thu, 16 May 2019 07:38:21 GMT

I have the problem of average age not being old enough with some of the bureaus, but I also have the problem of needing more accounts paid without any late fees or problems (trying to repair from a disaster that happened a few years back in order to hopefully buy a house in about a year).

I currrently have 3 credit cards (one I have had since 2011, one since 2015 - it has one time late in 2015, and the last one I just got a month ago). I also have a Self-Lender installment loan - it is 1 month old also. As far as credit accounts, that's all I have that are active, and most of the closed accounts have problems (either derogatory or a late fee). Would it do me more good to add the additional account (in this case, I was thinking to use Fingerhut since I have already been approved for it but have never actually used it - always thought too expensive...I won't get the additional inquery since it's already on there). The reason I changed my mind on possibly using Fingerhut is because I found one thing that's not quite as overpriced, and I can get $25 off, which will go towards their insane shipping cost. Anyway, it's the FreshStart option...so, it appears that it would be considered as an installment loan.

In MyFico, it says my Length of Credit History is "Very Good", but in other calculation platforms, it gives the age a D rating, saying the average is only 3 years, 1 month.

Thanks much in advance for the advice. I appreciate it.

Re: Adding Additional Account vs Average Age

Anonymous — Thu, 16 May 2019 14:26:33 GMT

Adding a new account cannot affect your length of credit history. That would be Age of Oldest Account (AoOA).

Adding a new account will affect AAoA (Average Age of Accounts) -- by lowering it. That in itself is harmful, not helpful, though the harm can be very minor in the bigger scheme of things.

Adding a new account will affect AoYA (Age of Youngest Account). Prior to your mortgage pre-approval you'd ideally like your AoYA to be > 12 months and your inquiries to all be > 12 months. The new account will reset your AoYA to 0 and give you a new inquiry.

If you are certain that you will NOT go through pre-approval in the next 13 months, then I don't see a problem with adding a revolving account now, though I am skeptical of the need to do it, since you have four open accounts in good standing.

If, however, you think there is any chance you might go through preapproval earlier than 13 months from now, don't do it.

Certainly you should be huddling with the people in the rebuilding forum and working with them on getting your derogs completely removed from your reports.

Do you have a plan for getting all your CC debt paid off (including closed accounts with balances)? The place you should be trying to get to is exactly one card reporting a small positive balance (e.g. $15).

Re: Adding Additional Account vs Average Age

CreditInspired — Thu, 16 May 2019 14:43:45 GMT

@Anonymous wrote:
I have the problem of average age not being old enough with some of the bureaus, but I also have the problem of needing more accounts paid without any late fees or problems (trying to repair from a disaster that happened a few years back in order to hopefully buy a house in about a year).

I currrently have 3 credit cards (one I have had since 2011, one since 2015 - it has one time late in 2015, and the last one I just got a month ago). I also have a Self-Lender installment loan - it is 1 month old also. As far as credit accounts, that's all I have that are active, and most of the closed accounts have problems (either derogatory or a late fee). Would it do me more good to add the additional account (in this case, I was thinking to use Fingerhut since I have already been approved for it but have never actually used it - always thought too expensive...I won't get the additional inquery since it's already on there). The reason I changed my mind on possibly using Fingerhut is because I found one thing that's not quite as overpriced, and I can get $25 off, which will go towards their insane shipping cost. Anyway, it's the FreshStart option...so, it appears that it would be considered as an installment loan.

In MyFico, it says my Length of Credit History is "Very Good", but in other calculation platforms, it gives the age a D rating, saying the average is only 3 years, 1 month.

Thanks much in advance for the advice. I appreciate it.

Hi and welcome to MyFICO

Some things to start doing:

Put your payments on autopay so you don't miss any more payments. This is diastrous to your scores. And mortgage lenders don't want to see any derogatories or new accounts in the previous 12 months before applying for a mortgage.
Since you have 3 CCs, you already have the right amount for scoring purposes. IMHO, please don't apply for anything else.
Start either a campaign of goodwill letters or find a way to cleanup the derogtories on your CRs.
There is no reason to use your Fingerhut card. It can remain a $0 balance because you have other balances on other cards and the installment loan.

GL2U

Re: Adding Additional Account vs Average Age

Anonymous — Thu, 16 May 2019 18:15:54 GMT

Thanks! And appreciate the info.

I am paying on the card immediately after making purchases! At this time, I am using credit cards only as a tool to repair my credit.
Thank you. I won't, then.
Yea, that's the main problem I am going to have, I feel like.
Thanks again!

Re: Adding Additional Account vs Average Age

Anonymous — Thu, 16 May 2019 18:22:41 GMT

That's what I was thinking about the AAoA.

I think it best to cut off here then and skip the Fingerhut going by the other feedback and your comment that you don't believe it to be needed, just to be safe....since I am not sure exactly when I will need to start the whole process.

Yes, the degrogs is what I really need to help with.

I do have the cc debit paid off and closed accounts with balances. I will follow your advice about the $15. Thank you.

Re: Adding Additional Account vs Average Age

Anonymous — Fri, 17 May 2019 05:24:00 GMT

Just FYI your biggest score boost from your SElf Lender will be when its below 8.9% so you will want that during your app for your mortgage.

Re: Adding Additional Account vs Average Age

Anonymous — Fri, 17 May 2019 05:26:09 GMT

I discovered that too late. Sadly, it will be after the loan ends.

Re: Adding Additional Account vs Average Age

Anonymous — Fri, 17 May 2019 12:33:40 GMT

@Anonymous wrote:
I have the problem of average age not being old enough with some of the bureaus, but I also have the problem of needing more accounts paid without any late fees or problems (trying to repair from a disaster that happened a few years back in order to hopefully buy a house in about a year).

Where are you getting the idea that you need more clean accounts? This sounds like something you may be seeing from front-end fluff software from a CMS like Credit Karma. These things can be extremely misleading. For example, CK suggests that "percentage" of on-time payments matters when it doesnt. It even color codes it all pretty to suggest that 99% of on-time payments is just as good as 100%. Any negative information is going to harm a profile and scores. FICO scoring does not consider percentage of on-time payments. It considers the presence (or lack of) negative items and goes from there. If you have negative items present, adding several more or many more clean accounts with a ton of on-time payments isn't going to dilute your negative items or make them "count" less. The only 2 ways to escape the negative wrath of negative items is to get them removed or wait for the to age and eventually fall off of your CR.

Re: Adding Additional Account vs Average Age

Anonymous — Fri, 17 May 2019 19:40:24 GMT

Thank you very much. I indeed thought exactly what you said...that having more clean credit lines made the late payments present less damaging. It's mainly because of how the credit reports show the number of clean accounts with nothing bad against them, and like you said, all the sites that get a commission on the cards and try to make you think more is better at any cost. I thought that since I had few accounts, where half of them have a late payment, was a big problem for me...and having a couple more with 100% clean record would be positive. Your reply is very helpful to me. Thanks again.

Re: Adding Additional Account vs Average Age

Anonymous — Fri, 17 May 2019 19:37:38 GMT

What about total amount of credit? I have read online that your score will increase if you have a larger amount of total credit available. I guess that's another reason someone might want an additional account (if true)...

Re: Adding Additional Account vs Average Age

Anonymous — Fri, 17 May 2019 19:47:13 GMT

@Anonymous wrote:
What about total amount of credit? I have read online that your score will increase if you have a larger amount of total credit available. I guess that's another reason someone might want an additional account (if true)...

100% false.

Two people with otherwise identical profiles could have exactly 3 credit cards. Cornelius has 3 cards all with $500 limits, where Rupert has 3 cards all with $30,000 limits. Total credit limits therefore are $1500 for Cornelius and $90,000 for Rupert. If all things were exactly the same with both of their profiles and they both reported a tiny (say $5-$20) balance on one of their 3 CCs with the other two reporting $0, their FICO scores would be identical. The additional credit limits possessed by Rupert would not yield him a single FICO point more than Cornelius with his 3 tiny limits cards.

Re: Adding Additional Account vs Average Age

Anonymous — Fri, 17 May 2019 19:50:20 GMT

@Anonymous wrote:
I thought that since I had few accounts, where half of them have a late payment, was a big problem for me...and having a couple more with 100% clean record would be positive.

Well, it can still be considered a big problem for you, as your dirty accounts land you no doubt in a dirty scorecard. Having a couple more clean accounts won't hurt, but more positive tradelines aren't going to remove you from the dirty scorecard that you're in and your scores will be equally adversely impacted by the negative items present on your CR whether or not you open any new (positive) accounts. Your best course of action would be spending some time in the rebuilding forum and looking for ways to get those negative items removed. Doing so has the potential of positively impacting your profile/scores and possibly in a big way.

Re: Adding Additional Account vs Average Age

Anonymous — Fri, 17 May 2019 21:29:24 GMT

Thanks again....and will do. I have been reading over in that forum. Will read more for the best course of action.

Re: Adding Additional Account vs Average Age

Anonymous — Wed, 22 May 2019 06:01:54 GMT

The only problem occurs when Cornelius needs to carry a balance and utilization penalizes him. Whereas Rupert can spend quite a bit without his scores being affected, If Cornelius reports just $135, he will be penalized due to his low limits.

So while if one does not use their cards, or can always have less than $100 report, then, yes, they can score optimally. But watch out if the guy with low limits reports a $500-$1000 purchase!

I think this is important since many people like to use their cards and not stick to AZEO.

Re: Adding Additional Account vs Average Age

Revelate — Wed, 22 May 2019 16:33:56 GMT

Right but assuming people are PIFing or otherwise paying back the large (with respect to credit limits) adroitly the odds of it’s mattering are low anyway.

I take your point in the extreme case: I can carry 10’s of thousands of revolving debt and not really be that penalized for it credit wise: actually a flat 100k would bring me about to 50% aggregate, probably less actually given how HELOC’s score and I could go get a much bigger HELOC now too if I really needed to push it, even a conservative appraisal and 80% LTV would increase the HELOC to over 150k from 27k.

That would put my revolving balance carrying to around 200k with a nominal penalty.

That’s pretty absurd when I start thinking about it.

Re: Adding Additional Account vs Average Age

Anonymous — Thu, 23 May 2019 00:23:56 GMT

@Anonymous wrote:
The only problem occurs when Cornelius needs to carry a balance and utilization penalizes him. Whereas Rupert can spend quite a bit without his scores being affected, If Cornelius reports just $135, he will be penalized due to his low limits.

So while if one does not use their cards, or can always have less than $100 report, then, yes, they can score optimally. But watch out if the guy with low limits reports a $500-$1000 purchase!

I think this is important since many people like to use their cards and not stick to AZEO.

Most of the time, though, it's a self-correcting system. If such a person did report $500-$1000 across their $1500 in total limits and then paid it off, sure they'd have a month of high utilization, but the chances of their creditor(s) giving them auto-CLIs would be pretty strong. The bumping up of those limits would then cut back the high utilization spike the next time.

Either way this is a completely different argument all together. The bottom line is that credit limits in and of themselves have no bearing on FICO scores, which is what the original question was.

Re: Adding Additional Account vs Average Age

Anonymous — Fri, 14 Jun 2019 22:25:19 GMT

There's also the "Few accounts paid as agreed" (not sure if that's the exact wording, but very similar). You even see that one on MyFico, I think.