Can someone explain how new accounts are bad and good at the same time? I'm confused.

[Anonymous]

On the first page of Fico Summary it says Amount of New Credit = Not Good but on the next page, “Understanding your fico score” table it shows that a “new account” is hurting my score.

Let me understand this, my amount of new credit is not good, yet a new account is hurting my score? huh?

So does Fico want me to have new credit or not? I purchased a car with my husband (joint) and co-signed for a small line of credit at Sit n Sleep. Both last quarter of 2007. Is that helping and hurting at the same time?

[Anonymous]

Opening a new account at first might hurt your score a little, but it is necessary at times in order to build your score.

At first that new car loan probably dropped your score a bit because your average age of accounts dropped and you had an inquiry on your credit which also drops your score a little....But in time these accounts will help you at 6 months a little then after 1 year a lot.

So yes it hurt your score at first, but as it ages and your on time payments post it will build your score higher then it would have gone without the auto loan.  Now you have a good mix of credit which helps your score.

[Anonymous]

The only way to win is to get old accounts as new credit. (doesn't really exist with out AUs) lol. You are graded on what you have not what you resist from getting. If you don't have it they can't score you on it. However FICO doesn't like new open accounts since it can make someone look desperate or maybe getting in to something they can't handle. They like seeing accounts about 1-2 years old because it shows you can handle it. So if you just applied, they say bad until it ages. Then you get rewarded and then they say you don't have enough new accounts starting the cycle over again. It's really hard to set up your accounts to be a specific age when you need your score the highest. But you are doing the right thing.

[haulingthescoreup]

It's like lifting weights to build up muscle. Your muscle tissue actually breaks down when you're lifting, but then it rebuilds, and there's more of it. So after a certain period of time, you have more muscle.

Using this analogy for my recent app spree, I should look like Arnold Schwarzenegger in 10 more months.

[Anonymous]

Either Arnold like you say or your app spree was akin to drinking a few steriods shakes, mixing in a little human growth hormone!

[Anonymous]

I have created a guide on how new accounts affect your FICO score:

http://www.allaboutthebenjamins.org/creditcards/page1.html