new apps

ironchef · ‎05-21-2020

Quick question guys ,

If I just closed yesterday on my house and I wanted to app for a couple of tradelines would it be best now or after the mortgage hits the account ?/

Any feed back would be great

Anonymous · ‎05-21-2020

Although everyone's credit file is different, the most common effect often seen is that scores initially decrease when a new installment loan is reported. The types of debt we see on credit reports can be categorized as revolving (credit cards, retail store cards) and installment (loans, lines of credit)and as secured and unsecured (collateral and no collateral). How each are weighed and scored varies by the algorythms each CRA uses.

A mortgage is typically the largest installment loan "most" of us will have. So when it's new, not only is it a new account, there's no payment history and it's typically at 100% of the balance. Further, your DTI will naturally change, with more debt. All of those factors traditionally decrease scores. It is also widely reported and observed by many that the scores "rebound" rather quickly with 6-12 months of on-time mortgage payments. In fact, it is often observed and reported that scores will exceed previous "highs" provided no other information in your file has significantly changed. In effect, it appears as though the "ceiling" on your scores has been raised.

We also see that although mortgages are installment loans, they are looked at and treated differently. Where a lender has deemed you financially trustworthy enough to lend a large amount (albeit with collateral), other lenders see that favorably, and it appears as though the algorythms used by the CRAs do as well. The same seems to be true for auto loans but to a lesser degree.

Having recently purchased a home myself, I have planned for my scores to drop once the mortgage reports, so I applied for the cards I wanted just after I closed on my home. Barring unforseen circumstances I will garden for at least a year to allow inquires to stop counting toward my scores (although they will still be seen), for some of the "newness" to wear off of my mortgage and new tradelines, and to establish a history of full, on-time mortgage payments.

I hope I haven't insulted your intelligence by working through the observations, reasearch, and thought process I went through to determine my strategy. Of course many others will likely have experiences that differ, but the above seems to be the most widely reported. As always, YMMV.

Congratulations on your new home! Good luck with your applications, I hope you will share with us your experiences!

M_Smart007 · ‎05-21-2020

@ironchef wrote:
Quick question guys ,
If I just closed yesterday on my house and I wanted to app for a couple of tradelines would it be best now or after the mortgage hits the account ?/

Any feed back would be great

I would do it before the Mortgage Installment hits the account.. JMO

ironchef · ‎05-21-2020

Thank you for the time to be so informative and detail on your respone. I do appreciate it and yes it was clear and did help. With that I was aware of a good bit but since I am not one with many inq on file and space out my Intrest of tradelines I have not had the experience of issues. Thankfully! Now seeing the mortgage is going to impact as you said my DTI as well the payments not being repoted yet and needing to be atleast 6 mo i realize it will have some of an impact and then an Benefit to my score .

I do think that I will go after a few tradelines soon and go to garden for sometime. I just need to plan my strategy for which and what cards would benefit me and offer me the best !