Charge cards

[Eighthundredbound]

I added an Amex charge card to my mix of credit cards. There was no inquirie for the application - soft pull only - so I know I won't suffer a 5-10 point drop from but does having added this charge card cause a drop? In other words, does a charge card affect my credit score? I  a 6 year old settled charge off and all of my other cards are in good standing with a 4% CU. My report is otherwise clean.

[Anonymous]

When I added an Amex Gold charge card earlier this year, I took a couple point new account ding. Barely noticed after a few months. 

[Eighthundredbound]

thx

[RadioRob]

The effect is depends on your profile. You're going to decrease your average age of accounts and you age of youngest account. 

Regardless though the impact is generally short lived. You'll see recovery at 3/6 month marks. How you treat the card matters more ultimately. Keep a low utilization and always pay on time and you'll come out ahead. 

Congrats on the new card. 

[Anonymous]

@Eighthundredbound Yes it definitely affects average age of accounts. We actually have not had a test to see whether it resets the youngest revolver segmentation factor. So it would be great to know if you had any revolvers under 12 months of age when you applied for this and if there is a score change. (@Anonymous , it would be great to know if you had a revolver under 12 months of age when you got yours as well.)

Chargecards will not save you from the all zero penalty because it’s not revolving activity, but it is counted in the number of accounts with a balance scoring metric. Not counted in utilization except EX2. The high balance is considered the credit limit for percentage purposes there.

[Anonymous]

I had two new revolvers (each about 2-3 months old) at the time I got the Amex. 

[Anonymous]

Darn I need to get somebody who has not opened up a Revolver in 12 months that opens up a charge card.

[K-in-Boston]

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@Anonymous wrote:
Darn I need to get somebody who has not opened up a Revolver in 12 months that opens up a charge card.

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On myFICO?  Good luck with that!  

The handling of Amex charge cards and other NPSL cards (like the original Visa Signature cards that reported no limit) was always a pain with the old scoring models.  If you charged $5000 every single month, you would always be at 100% utilization if you had never had a higher balance reported.  They can still wreak havoc on DTI calculations.  When I got my first mortgage years back, I was carrying about $50k in Pay Over Time balances (ouch I know, but 15.24% there was better than 25% elsewhere) and the entire $50k ($600k/year) was calculated into my monthly minimum payment obligations.