Existing AMEX customer applying for AMEX Gold before mortgage?

[integral0]

Hi all,

I've already read a few threads here and pretty sure I know the answer; would like to hear suggestions anyway -

Will be looking to apply for mortgage within the next year or so (at any point from now until next summer) - current scores across all three major credit bureaus are 750s. Currently an AMEX customer with BCP and Bonvoy (not Brilliant - migrated from old SPG Pref). Looking to apply for an AMEX Gold which fits my current needs more than the other two cards I have. Am I correct in assuming that my credit score will take a hit due to the following:

1. AMEX doing a hard pull

2. Will the avg age of accounts will be lowered even though both my accounts with AMEX is 10 years old? Does opening a new credit card with an existing bank count as a new account?

Right now I'm charging small amount to my Bonvoy card just to keep in active, it's my highest limit card and I don't want AMEX to lower the limit. The BCP I actively use, but am looking to switch to reward points rather than cash back. With housing market and prices the way they are right now, chances of applying for mortgage are low - but not zero. Any thoughts or insights appreciated!

edit: to add, I have a clean profile - have not applied for any new cards or opened new accounts in the past 18 months.

[FinStar]

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@integral0 wrote:

Hi all,

I've already read a few threads here and pretty sure I know the answer; would like to hear suggestions anyway -

Will be looking to apply for mortgage within the next year or so (at any point from now until next summer) - current scores across all three major credit bureaus are 750s. Currently an AMEX customer with BCP and Bonvoy (not Brilliant - migrated from old SPG Pref). Looking to apply for an AMEX Gold which fits my current needs more than the other two cards I have. Am I correct in assuming that my credit score will take a hit due to the following:

1. AMEX doing a hard pull  -- It's possible that in your particular situation (i.e. established AmEx cardmember) you may not incur a HP.  Always expect one (just in case), but in all likelyhood a SP.

2. Will the avg age of accounts will be lowered even though both my accounts with AMEX is 10 years old? Does opening a new credit card with an existing bank count as a new account? -- Yes, this will impact your AAoA (and potentially your scores) because this will be considered a new account.  AmEx no longer backdates on credit reports (not since early part of 2015).  Typically, it can take a couple months for AmEx new accounts to display on CRs, though.

Right now I'm charging small amount to my Bonvoy card just to keep in active, it's my highest limit card and I don't want AMEX to lower the limit. The BCP I actively use, but am looking to switch to reward points rather than cash back. With housing market and prices the way they are right now, chances of applying for mortgage are low - but not zero. Any thoughs or insights appreciated!

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[Remedios]

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@integral0 wrote:

Hi all,

I've already read a few threads here and pretty sure I know the answer; would like to hear suggestions anyway -

Will be looking to apply for mortgage within the next year or so (at any point from now until next summer) - current scores across all three major credit bureaus are 750s. Currently an AMEX customer with BCP and Bonvoy (not Brilliant - migrated from old SPG Pref). Looking to apply for an AMEX Gold which fits my current needs more than the other two cards I have. Am I correct in assuming that my credit score will take a hit due to the following:

1. AMEX doing a hard pull

2. Will the avg age of accounts will be lowered even though both my accounts with AMEX is 10 years old? Does opening a new credit card with an existing bank count as a new account?

Right now I'm charging small amount to my Bonvoy card just to keep in active, it's my highest limit card and I don't want AMEX to lower the limit. The BCP I actively use, but am looking to switch to reward points rather than cash back. With housing market and prices the way they are right now, chances of applying for mortgage are low - but not zero. Any thoughs or insights appreciated!

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Of course it's a new account, you just don't happen to be a new customer. 

Classic scores aren't used for mortgage lending, 2, 4 and 5 are.

You will take a big scoring hit on those scores, and older scoring models consider account new for 18 months. 

If 750 is your middle mortgage score, new account could drop it enough to change interest on mortgage.

You'd be exchanging sub on Gold for thousands in interest if you do decide to start mortgage process. 

You will need to decide what's your priority and go from there. 

[GrandBay]

my opinion is that folks tend to overstate the negative impact of opening a new credit line. your mortgage company will not deny you a loan over a single new line. whats most important is reducing you utilization and cleaning up any negatives. 

1. most mortgage lenders tend to use Fico2, 4 or 5. concentrate on those scores and not your Fico8

2. check the AMX pre qual page to see if the card populates. AMX tends to SP for folks with existing relationships but not always.

[Slabenstein]

Applying for a new Amex charge card could have the following negative effects on your mortgage scores:

1) If you have a clean profile and if you have not opened a new account in the last 18 months, you would see score loss from switching to a new accounts card when the charge card reports.

2) Your AAoA would be lowered.  Account age metrics look at the number of months each individual tradeline has been open, not your amount of time as a customer of a bank or lender.  How much scoring impact the decrease in AAoA would have would depend on the rest of your profile.

3) You may take an HP to EX.  With Amex, new cards are often SP for existing cardholders, but not always.

I, personally, would hold off on any card apps if you have plans to app for a mortgage in the next year or so, since dropping a rate teir is probably going to cost you a lot more than you could get from any SUB or new rewards structure.

[FinStar]

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@GrandBay wrote:

my opinion is that folks tend to overstate the negative impact of opening a new credit line. your mortgage company will not deny you a loan over a single new line. whats most important is reducing you utilization and cleaning up any negatives. 

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I believe @Remedios makes a fair point on FICO 2, 4 or 5 scores given the OP may be applying for a mortgage in the future, no?

[integral0]

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@Remedios wrote:

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@integral0 wrote:

Hi all,

I've already read a few threads here and pretty sure I know the answer; would like to hear suggestions anyway -

Will be looking to apply for mortgage within the next year or so (at any point from now until next summer) - current scores across all three major credit bureaus are 750s. Currently an AMEX customer with BCP and Bonvoy (not Brilliant - migrated from old SPG Pref). Looking to apply for an AMEX Gold which fits my current needs more than the other two cards I have. Am I correct in assuming that my credit score will take a hit due to the following:

1. AMEX doing a hard pull

2. Will the avg age of accounts will be lowered even though both my accounts with AMEX is 10 years old? Does opening a new credit card with an existing bank count as a new account?

Right now I'm charging small amount to my Bonvoy card just to keep in active, it's my highest limit card and I don't want AMEX to lower the limit. The BCP I actively use, but am looking to switch to reward points rather than cash back. With housing market and prices the way they are right now, chances of applying for mortgage are low - but not zero. Any thoughs or insights appreciated!

---

Of course it's a new account, you just don't happen to be a new customer. 

Classic scores aren't used for mortgage lending, 2, 4 and 5 are.

You will take a big scoring hit on those scores, and older scoring models consider account new for 18 months. 

If 750 is your middle mortgage score, new account could drop it enough to change interest on mortgage.

You'd be exchanging sub on Gold for thousands in interest if you do decide to start mortgage process. 

You will need to decide what's your priority and go from there. 

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Figured as much - will continue to garden and hold off until after mortgage. Appreciate the insight!

[GrandBay]

@Remedios made great points but I am not sure if @integral0 has applied for any other credit products in the past 12 months. If not, I am not sure if this application will singularly tank his scores. His AAoA will drop and that will have some impact but is he really looking at a 50 point drop or a signifacnt rise in APR? Folks tend to discuss mortgage rates on this forum but APR would be a better indicator of his true borrowing costs and I am not sold that a mortgage that may be entered into Summer 2022 will really be significantly more expensive because of an application in May 2021. I can be wrong and this message board is for sharing our ideas and insights and folks doing what works best for them. 

[Remedios]

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@GrandBay wrote:

my opinion is that folks tend to overstate the negative impact of opening a new credit line. your mortgage company will not deny you a loan over a single new line. whats most important is reducing you utilization and cleaning up any negatives. 

1. most mortgage lenders tend to use Fico2, 4 or 5. concentrate on those scores and not your Fico8

2. check the AMX pre qual page to see if the card populates. AMX tends to SP for folks with existing relationships but not always.

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Pretty sure you're mixing up your 8s and 9s with 2, 4, and 5. 

One cannot overstate scoring impact of new accounts and accounts with balances on older scoring models, hence the birth of AZEO. 

Utilization plays the role, but it's more pronounced on newer scoring models. 

Different decades, different data sets. 

It needs not be $10.00 on one card unless one has to squeeze every last point. Even with ultra low utilization, one may still stay in the same apr range as having card at 29%.

These questions are best addressed by loan officer when process starts. 

One can only control what they do before it starts. 

Would one get approved with a new account? Probably, just draw up something on a piece of paper explaining why apply for credit and pay more in interest. 

It seems like everyone forgot that in it's truest sense, application isn't about rewards, it's about the need for additional credit. 

In credit time, rewards started yesterday, and industry that hasn't budged on using different scoring models ain't gonna budge on "But it's X4 on groceries and plane ride!" 

I have no idea if OP has negatives, but if score they mentioned is Fico, it would have to be something like an older isolated late, since 750 with CO or CA is a very tall order. 

[Remedios]

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@GrandBay wrote:

@Remedios made great points but I am not sure if @integral0 has applied for any other credit products in the past 12 months. If not, I am not sure if this application will singularly tank his scores. His AAoA will drop and that will have some impact but is he really looking at a 50 point drop or a signifacnt rise in APR? Folks tend to discuss mortgage rates on this forum but APR would be a better indicator of his true borrowing costs and I am not sold that a mortgage that may be entered into Summer 2022 will really be significantly more expensive because of an application in May 2021. I can be wrong and this message board is for sharing our ideas and insights and folks doing what works best for them. 

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18 months and there is a "spree penalty" when there is more than one or two new accounts (fell free to look up negative reason codes per scoring model, per CRA). 

If new account penalty is already in place, there will be additional penalty.

If no new accounts in the 18 months, 25-30 at minimum. 

There is almost 60 points difference between my EX 2 and EX 8 and I haven't had new account reporting in 16 months.

There is a reason for that. 

Anyway, feel free to start a thread in UFS (or search for threads) dealing with this situation. It's common and evidence based, not some fairy tale created on CC forum to scare kids away from applications. 

Home is one of the biggest financial decisions one will make in their lifetime.

Card is 🥜 at best.