Opening too many accounts? Bad idea?

[Grafton88]

Don't Dispair.  Scores can be very volatile.  Let's look at what happened.

You have a thin file with some baddies.

You have many new inquires.

Your Average Age of Accounts most likely went way down.

Instead of focusing about your score look at your Credit Factors in your report.  Look at how those changed.  How would a neutral observer, looking at your report, feel about these changes?  Are you a better credit risk or worse?

Getting these new cards will be helpful in the long run.  You just have to accept that your score will be hurt in the short run.  Knowing what happens can lessen the hurt.  Sometimes the scoring doesn't seem to make sense.  We have seen people lose a lot of point by paying off their mortgages.  Some people have seen point losses after PIF all their credit cards.

Setup a plan and closely monitor it.  Each time your score changes look at the Credit Factors to try to understand why.  Read other posts where people talk about their score rising or falling.  It is like a game.  The better you understand the rules the better your chances are at getting a winning score.

Best of luck.

[NYCGIRL718]

Thanks much. Have been doing a lot of reading to make sense of the score change and what I have read has been helpful.

[Anonymous]

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@NYCGIRL718 wrote:
Thanks much. Have been doing a lot of reading to make sense of the score change and what I have read has been helpful.

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Don't  get lost in the old thread dungeon.....

[NYCGIRL718]

😁 I was reading all night and morning. It was pretty disheartening to see that drop. I felt like I worked hard for nothing.

I have 1 account with lates but outside of that 1 credit card and student loans which were current/no lates. That 1 credit card is only a few months old. Based on what I read adding a new account the the above described situation would have the negative impact it did. But at least I know it's temporary. Just how temporary is the sad part lol

Now I'll just lay by my phone and wait for the other accounts to hit. At least the hits are coming one by one. I can brace myself for them

[StartingOver10]

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@NYCGIRL718 wrote:
😁 I was reading all night and morning. It was pretty disheartening to see that drop. I felt like I worked hard for nothing.

I have 1 account with lates but outside of that 1 credit card and student loans which were current/no lates. That 1 credit card is only a few months old. Based on what I read adding a new account the the above described situation would have the negative impact it did. But at least I know it's temporary. Just how temporary is the sad part lol

Now I'll just lay by my phone and wait for the other accounts to hit. At least the hits are coming one by one. I can brace myself for them

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What service did you use to check the score drop? If it was Credit Karma, new accounts really hurt - and remember CK scores are Vantage scores and not FICO scores. 

[NYCGIRL718]

I have myfico 3b so it alerts me to any changes.

[takeshi74]

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@NYCGIRL718 wrote:
My score has significantly improved. I originally only had a $300 cap one card . So after seeing my score increases I applied for a few cards within the last 30 days. In total I applied and was approved for 4 cards: Discover, Amex, Capone and just today a visa with my credit union. I should have done my research prior but in doing so today I came across some articles on the internet that too many new approvals is a flag. And that my credit scores will take a significant hit.

Has anyone else experienced this? How many points loss if so?

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We can't tell you that.  One always has to find the balance with opening new accounts versus what one's credit profile can support.  If you only had a card with a $300 limit that would indicate that at the time that card was approved that the creditor had serious concerns with your credit profile -- hence the small limit.  Unless your profile drastically improved since then your credit profile would only support a small number of new accounts.  Even with significant improvement your credit profile may only support a small number of new accounts.  Without specifics it's difficult for us to say for certain.  At this point it's too late anyway and all you can do is monitor your scores and reports to see the impact.

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@NYCGIRL718 wrote:
I have myfico 3b so it alerts me to any changes.

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myFICO does not alert you to every change. myFICO is a trigger based service.  Certain activity triggers an update/alert but not all activity with a scoring impact is a trigger.

http://myfico.custhelp.com/app/answers/detail/a_id/463/~/understanding-what-triggers-fico%C2%AE-3-bu...

This means that a number of changes can lead to a scoring change indicated by myFICO and that the trigger may not be the only reason for the scoring change.

[NYCGIRL718]

Hmmmm.  Now I am a bit confused.  But i have pulled my equifax report and there is not much on there well anything other than the new account added.  I did however have an account removed during the the time the new account was added.  The old collection was deleted on the 5/4/16 and the new account with Discover hit 5/5/16 I believe.  It's however good to know that not all alerts are triggers.  i didnot know this before.  But as you mentioned I will continue to monitor.  I was using the stimulator to determine what I needed to improve my score and it supported a new credit card, in particular Equfax. 

Either way I am glad for the info I have been given from you guys/gals.  We live and learn. Thanks

[NYCGIRL718]

And yes there has been drastic improvement.  I worked very hard to get it.  in the past i have dished out hundreds of dollars and have gotten no where near what i have done myself.  i do have a question for you though.  When I got the alert through My fico, the alert showed a new Discover account, only reporting a balance but it did not indicate the credit limit.  But when i check Equifax directly, a credit limit is showing.  Can a card showing just a balance and no credit imit possibly cause such a negative trigger? Thanks again

[Thomas_Thumb]

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@NYCGIRL718 wrote:

And yes there has been drastic improvement.  I worked very hard to get it.  in the past i have dished out hundreds of dollars and have gotten no where near what i have done myself.  i do have a question for you though.  When I got the alert through My fico, the alert showed a new Discover account, only reporting a balance but it did not indicate the credit limit.  But when i check Equifax directly, a credit limit is showing.  Can a card showing just a balance and no credit imit possibly cause such a negative trigger? Thanks again

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The rather large score drop due your exceedingly thin file is typiocal and expected. My recollection is you went from a single card having a low limit to four cards. You may see some further negative score impact as the accounts report and become active. 

I think you may see some score rebound after this "spree" of new accounts reporting passes 90 days [a short term rebound is not universally accepted - please report back on what you experience]. Either way, the inquiries will impact your score for a year. Your score was also negatively impacted by the new cards reducing your average age of accounts (AAoA) to under 2 years. 

The good news is the cards provide a foundation to build a strong credit history over time. I think it was the right decision to get cards now rather than a few years down the road. The important thing moving forward is to manage spending and payments. I would suggest keeping reported balance on any card under 30% and reporting non zero balances on a maximum of 2 cards in a given month. No real need to report a balance on one card only while you are in credit building mode.

Down the road if/when you need to optimize score for an installment loan (car or mortgage) you will want to adjust payment strategy so only one card reports a balance and maintain aggregate utilization under 9%. That's really not critical at the moment. What is important is establishing stability and reliability:  An unblemished payment history, and increase in AAoA. Try to forego any additional new credit for at least a couple years.