APPS & NEW ACCTS VS. BETTER UTILIZATION RATIO

[rom828]

Wondering if my new lines of credit reducing my utilization will help offset the inqs and new account minus points?

I have about $2500 overall cc debt, $1100 on an Orchard mc  w/$1390 CL and $1000 on Orchard visa with $1150 CL.  The rest is on two retail (catalogue) cards.  Prior to recent apping spree, I had total CLs of about $5500, so my myfico analysis has shown high utilization under "what's hurting your score".

Scores have improved enough that I felt comfortable apping (had no inqs in 2006 and only 2 in 2007..my mortgage and Old Navy).  Thought higher credit lines could improve utilization while I pay down those Orchard cards.  And now that I have some prime cards, I probably wont ever use them, but I'll keep them because one is 10 yrs old and the other 4  years.

I recently obtained:  

Amex Green,       Amex Blue $3100,      Amex Delta Skymiles $7500,

Discover More $2000,  Target  $300   Walmart  $400

I also applied for Citibank (in March and again in April when scores improved) but was declined due and old C/O.  I also have old PR, but it's on my DH's also and he got approved for Citi Platinum Select, so I think the C/O was the reason (decline letter said "delinquent acct paid or unpaid")

I plan to treat all of these as PIF cards (the Green of course is a PIF card anyway) since I have to focus on paying off the Orchard.  I may transfer the higher interest Orchard to one of the Amexes just to get the BT low interest)  and I also plan to put some of the Delta CL on the Blue Card, which Amex said I can do (Boy, their customer service is awesome!).  Still have to really learn about how all hte rewards work etc, but that's another thread!

My goal is to pay all the debt off, then use the cards with just enough utilization to get the most points. From what I've read, I need 1/2 at   0 and the other 1/2 with less that 9% reporting.  I have now with these 6 new cards a total of 13 accounts, including the 4 catalogue (Chadwicks, etc), Old Navy,  and the 2 Orchards.

Just got all these cards on the 15th and 16th.   Apped  all at once so inqs will all age together.  Walmart and Discover reported even before I got the cards this week.  From what I've read on this forum, Amex takes about 2 months or so to show up.

I know this is a lot of apping, especially since I had so few inqs before, so I'm curious as to what will happen to my scores.  What should I expect in terms of point loss?  how long before I'd regain points?  And will the improvement in utilization be enough to offset the minuses of all the apps and new accts?!

FICOS  TU 687   EQ 658  EX 692

Message Edited by rom828 on 04-26-2008 09:31 PM

Message Edited by rom828 on 04-26-2008 09:32 PM

Message Edited by rom828 on 04-26-2008 09:33 PM

[RobertEG]

You are over 70% on the first Orch, and over 80% util on the other.

So that is the major factor in your FICO score, not the affect of the new accounts.

Yes, inquiries that you incurred to obtain your recent credit will drop from your scoring after one year.  But they are minor when compared to your current high % util.  Getting new credit may boost your  CL, but does not necessarily improve your financial stability.

They add inquires, as you know, and also decrease your length of credit history.

The only aging benefit you will gain is when the inq's drop at 12 months. 

New accounts are not usually beneficial unless you need them from a financial, and not a FICO, perspective. 

Just my opinion.

[Anonymous]

---

RobertEG wrote:

...They add inquires, as you know, and also decrease your length of credit history.

The only aging benefit you will gain is when the inq's drop at 12 months. 

New accounts are not usually beneficial unless you need them from a financial, and not a FICO, perspective. 

Just my opinion.

---

Agree with Robert that % utilization is probably hurting you more than you think.  What I find interesting about this whole financing 'game' is you are considered a greater risk when applying for credit because then you are indicating you *need* credit (so it hurts your score) - BUT -- a lot of us have learned that you *should* apply for credit when do NOT need it - because they won't give you what you need, well... when you really need it!

I too recently went on an app spree (in March).  I'm not sure of the point loss as I also paid down balances, so my scores basically stayed the same or went Up.

Bottom line in your situation it sounds like having the extra cushion/flexibility that the new CC's give you, and the responsible way you're going to handle them (PIF) - unless you're about to also apply for a mortgage I think you did yourself a big favor. 

(Also just my semi-informed opinion of course) 

Sovi

[rom828]

I intend to really jump on these Orchard balances, and as mentioned, may BT one so I can get it paid off sooner at 0 or lower interest.  I know it's really hurting me to have this  high utilization, though even with just the Discover reporting utilization is down to 43%, so hopefully my plan will eventually pan out.

Should be below 20% when the Amexes report and next Orchard pyts report.

As a matter of fact, Sovi,  wanting to refi has been one of my main reasons I've been so focused on improving score.  I currently have FHA  (was Terrace--Wells Fargo bought it the first week after closing in Oct 07) at 6.75%.

My broker advised need to get to min 680 but 720 is really better and 760 is ideal to do the refi I want to do to get some equity out for repairs, renovation.

I realize also with these new accts they will need now to age about 6 mos or so (read diff time lines on this forum) before I'll be able to do the mortgage, but I figured getting them was a good way to boost the score, while at the same time giving me some prime cards AND a way to accumulate some reward points and not really change my spending.  Have used and plan to use Amex like I would my checking acct.  I actually even have subtracted Amex purchases from my check book register to earmark the money I'll need for monthly payment. 

I was just curious if anyone had  experience with this kind of apping and how it affected scores in the short and long run.  Read some on the forum, but of course wanted someone to respond to my specific situation!

I hope, you're right, Sovi, that I did myself a favor, and I appreciate your "semi-informed" opinion!!  It sure seems from what I've learned on this forum  that  the time to get credit is surely when you don't need it...or in my case, when you can get it is the time to get it!!

I anguished over whether to app more or not after the Green Amex, and got varying forum opinions (wait six months, etc), but the advice I took was to go ahead and go for it cuz 'you dont know what the next 6 months could bring'!  And in my case, if I was gonna app, I wanted to get it all done and over with at one time so all the inqs and accts could age together, and the quicker the better so I can do the refi.

Even if score stays the same or thereabouts as I pay down the Orchards (goal is 6-9 months to have paid off), I hope I'll continue to see an increase as I become more adept at playing the utilization game!!

[Anonymous]

Rom,

Sounds like you're on the right track.  This isn't a true science for any of us, and each of our situations are different (but have such famililar rings!).  If you're not 'dying' for your refi right now, and it sounds like you're not, I still think you did yourself a favor (get it while you can, so you have it when you can't).  The one big caveat to that is always *if* you have the discipline to not use it (you hear that, oh loving hubby of mine?!)

Last year 680 was definately the magic number for a lot of things.  From everything I've read here and all over the place, it seems that 720 is the new 680, but who truly knows?  The hit from new accounts seems to vary, and be short-term.  

The extra 'safety cushion' for emergencies as far as I'm concerned far outweighs any temporary loss. Plus, yes - it would help overall utilization too.

Good luck Rom!

Sovi

[rom828]

Sovi,

Thanks so much for the advice and encouragement!

I'll try to remember and post back to advise how this whole "new acct" saga plays out!

Fortunately, we can wait on the refi for now, which gives us time to work on our scores.  DH's are a little higher than mine now, but he got 2 new cards also, so he'll probably take a little hit as well.

Our broker told us the same thing..and I've read it elsewhere....720 is the key...680 doesnt really cut it anymore.  So we'll be patient, be fiscally resposible, and let time do its magic!

And, boy, it does feel good to know those lines are there, just in case.  We were already thinking about that, that if push came to shove on a home repair (roof, ac), we could use the cards but know we'd pay them back out of the refi.  It's just nice to have that cushion that we didn't have before, so I'm trying not to really beat myself up about this app/new act thing, but was just looking for any insight as far as what we might expect.

From what you've said, even if we do take a hit, I wont feel that we made a mistake, and it's possible we won't be hit as badly as I may have thought.

We shall see!

Thanks again for chiming in!!!!

[Anonymous]

Anytime, Rom --  Like you've I've found lots of words of wisdom here and a place to go and air out questions (dumb and not) and share what little I've gathered myself.

I can tell you that from my app spree, my scores dropped for TU and EXP by 10 and 9 points, but went *up* for EQ. 

I'm having one of those 'a-ha' moments -- my TU and EXP reports also have a collection on them, but EQ Doesn't.  I wonder if that's why those two dropped, but EQ rose?!

Hmmmmmmmmmmmm. 

(See..what this board makes us think of?!)

Best of luck!

Sovi

[rom828]

Wanted to give an update on where my scores stand now.

I GOT MY FIRST 700!!!!!!!!!!!!!!!!!!!!

Woohoo! 

Today's FICOS:  TU  684    EQ  665    EX 709!!!!!!!!!

(I'd insert a big grin smiley face, but I don't know how!)

This is with Amex Delta Sky Miles  (7500CL)  reporting as a new accounts, no amounts due.

Since my last post here, I did go ahead and transfer the Orchard balances to the Amex Blue, and I moved around some CLs with Amex to do that.

I took all but $1000 from Skymiles and put 6500 to the Blue for a total of $9600.  Wanted to do that since I was doing the BT on that card.  Once I pay it down a bit, I'll probably do some more moving of the CL.

I have to say, Amex  has been very helpful ...their customer service is awesome!  I pray that this new relationship will prove to be mutually satisfying!!

So I dont know what will happen when the Orchards show up at 0,  and the Blue shows up with the 2400 BT, and Green reports.

Utilization is shown at 18%, tho reports have a little red flag by "new accounts".  Shows a total of 5, which includes my mortgage from 10-07, Old Navy from 12-07, and then Amex, Discover and Walmart on April 08.  Inqs for those of course varied by CRA.  From 06 til my mortgage, had '0' inqs.

But for the moment, I have to say, I'm not too upset with what's happened so far, since TU is the only one that dropped and then just by 3 points.

Side  note: I ran reports today because I got scorewatch alert advising score was up 1 point to 658.  It had dropped 7 points a few weeks back due to an inquiry being added that I hadnt done (some bank I never heard of!) , I disputed it and they removed it right away, but I never saw the points back. I went from 662 to 655, then got a couple of points back  when new Walmart card showed up. Decided to run full report and saw score at 665!  I was thrilled because this is my highest EQ in the last 3 years!

Just think it's interesting, though, that today's score alert showed by score at 658, but when I ran the report, my score is 665?!?!?!

Anyway, just wanted to share these glad tidings!  I know I could not have got to this point without the wisdom , help and encouragement of my fellow forum members!!!!!!!!!

Message Edited by rom828 on 05-09-2008 10:08 AM

Message Edited by rom828 on 05-09-2008 12:52 PM