WHY?????

[Anonymous]

I just wondering, why most of the people love SCT or SP when trying to apply for a new credit card? They worry more about the new inquiry on their credit reports. I thought "inquiry" only have a small effect on Fico scoring model. Should we care more about AAOA?  Basically, either with SP, SCT or HP,  when a new account reported will lower AAOA, therefore will ding our score "more". Am I correct here? Please, advice Thank you.

[Anonymous]

Youre actually spot on.

SCT is really really stupid to do in the long term.  All you end up with in the long run is 10-50k worth of store cards for mostly overpriced things through a bank that will almost never transition those cards to open loop Visa or Mastercards.

On top of that, Transunion separates Retail Cards and Bankcards into two different categories for calculating Utilization ratios (i figured this out about four months ago the hard way) so you could have 40k worth of retail cards doing absolutely nothing to "pad" that 250/300 secured card you keep carrying a balance on.  That is on top of the individual utilization penalty.

No more than one or two retail cards, ever, and only at places you actually will use them at.  This should be a hard and fast rule.  Amazon makes sense, its a 5 percent off card for Amazon.  Target makes sense for the same reason.  Walmart is borderline as some general purpose cashback cards can beat it. 

But again, only good if you USE those stores.  SCT cards are from mostly mid to "highish" end outlet stores catering to people that want premium kitchen or living room sets for premium prices.  There is no way an 8000 CL Overstock card is more attractive than a 1000 limit Amazon card for that reason alone.  At least with the amazon you pay 5 percent less on the retail price.  With overstock youre normally paying 10-20 percent more from just their markup.

The three to five point loss from the hard inquiry on a good solid card wayyyyyy overshadows the 10-20 point age of account hit for thin profiles, nonwithstanding everything I just said.

On top of that, most people using SCT have really bad credit already.  Comenity is notorious for giving out 5k store card limits to subprime borrowers.  What will happen?  That borrower is going to charge up a fortune, get stuck in the 25 percent interest trap, and end up worse off than before.

Whats even worse, is that when you get to a certain point where you have cards with 6000+ limits and realize that store has a visa version, and you try to obtain that visa version, or for that matter ANY comenity Visa/Mastercard after you have open SCT accounts, comenity has a proven track record of closing every single account you have with them without any warning.

All of my comenity cards are perma sockdrawered and unused, and have been for quite some time now.  I dont care if comenity closes them.  They only exist now because they are positive tradelines and I have a very very thin AAoA already.

Do not SCT.  Take it from me.

[HeavenOhio]

Account age stats are definitely more important than an inquiry. Inquiries become unscorable after a year, and after two years, they're gone entirely. AAOA (average age of accounts) and AOYA (age of youngest account) are going to be affected over the long haul.

However, inquiries aren't entirely irrelevant. While lenders are likely to be more concerned about new accounts, they also may be concerned about recent inquiries to a somewhat lesser extent.

[Anonymous]

From what I’ve seen people don’t like HPs on their report. People have been denied for cards due to the amount of inquires they have. SP using the SCT for a store they already shop at is perfect.

Also just to reply to what game said above.... retail cards are perfect for someone rebuilding... just gotta watch out for that interest — never leave a balance on store cards ever! That $25 item is now $32 just because you didn’t PIF

[Anonymous]

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@Anonymouswrote:
From what I’ve seen people don’t like HPs on their report. People have been denied for cards due to the amount of inquires they have. SP using the SCT for a store they already shop at is perfect.

Also just to reply to what game said above.... retail cards are perfect for someone rebuilding... just gotta watch out for that interest — never leave a balance on store cards ever! That $25 item is now $32 just because you didn’t PIF

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Retail cards in moderation (ie: 2 or less) can be good for rebuilding.  SCT abusing can and will yield 4-6 or more useless cards that drag down AAoA for years to come, making it much much harder to get approved for better cards until they have aged a lot.  Recent inquiries can be a factor in denials, but so can recent accounts, new accounts, number of recent accounts, average age of accounts, total number of accounts, and so on.  Ive even seen "too few credit cards" because some lenders consider retail cards to not even be credit cards but rather charge accounts.

[Anonymous]

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@Anonymouswrote:
From what I’ve seen people don’t like HPs on their report. People have been denied for cards due to the amount of inquires they have. SP using the SCT for a store they already shop at is perfect.

Also just to reply to what game said above.... retail cards are perfect for someone rebuilding... just gotta watch out for that interest — never leave a balance on store cards ever! That $25 item is now $32 just because you didn’t PIF

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Yessss, I know but the score will get ding anyway when new account reported to CRA. Even tho it was approved by SP or via SCT. Also, Most lenders still can see there is "new account opened" recently even without HP inquiry show up that most people worried about

Plus if we talk more about famous Chase rules 5/24, No matter if you only have 2-3 HP inquiries on your CR but you open 8-10 new accounts via SP or SCT, Chase or most Lenders will be able to see it and still denied your application based new account opened regardless you only have 2-3 HP on your credit report.

[Anonymous]

Yeah you guys are both correct. Just wanted to point out that store cards (just a few) can be a good thing if your starting out rebuilding.

Also another reason is may be that their credit isn’t good enough for a normal card. But since Comenity and Sync give out credit like candy they might be approved for a store card. So applying via SCT you know your almost guaranteed to be approved for that store card. But even if you are denied it’s just a SP so no hard no foul vs applying for a non retail card which will result in a HP and denial.

I guess it’s a trade off. Yes you lower your AAoA but in return you do get a new SL of credit without a HP on your report. Then again a store card at a store you rarely shop at which sells stuff at a markup isn’t really the best idea lol

[outofcredit]

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@Anonymouswrote:

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@Anonymouswrote:
From what I’ve seen people don’t like HPs on their report. People have been denied for cards due to the amount of inquires they have. SP using the SCT for a store they already shop at is perfect.

Also just to reply to what game said above.... retail cards are perfect for someone rebuilding... just gotta watch out for that interest — never leave a balance on store cards ever! That $25 item is now $32 just because you didn’t PIF

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Retail cards in moderation (ie: 2 or less) can be good for rebuilding.  SCT abusing can and will yield 4-6 or more useless cards that drag down AAoA for years to come, making it much much harder to get approved for better cards until they have aged a lot.  Recent inquiries can be a factor in denials, but so can recent accounts, new accounts, number of recent accounts, average age of accounts, total number of accounts, and so on.  Ive even seen "too few credit cards" because some lenders consider retail cards to not even be credit cards but rather charge accounts.

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^^^This.  All my store cards, whether Comenity or Synchrony issued are coded as charge accounts rather than credit cards on all my credit bureau reports. Due to that coding I treat them like a charge card and PIF each month, never carrying a balance. I assume they are coded differently for a reason.

[Gregory1776]

What’s SCT? ☹️

[Anonymous]

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@Gregory1776wrote:

What’s SCT? ☹️

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SCT = Shopping Cart Trick, when the window pop-up when you shopping online on a certain website and saying "pre-approved"