FICO dropped 44 points after applying for 3 credit cards

[Anonymous]

I will do lot of international traveling starting next month, so I had planned to acquire an airline rewards card, a hotel rewards card, and a Chase Sapphire Reserve card. I currently have two other Visa cards with zero balances.

My Experian (828) and TransUnion (825) scores dropped 3 points after I applied for the airline and hotel cards last week, but then my score plunged 44 points after I applied for the Chase card this afternoon. I'm a little surprised as I spent weeks reviewing the benefits of the cards I had targeted for my extended travel plans this year and next, and I calculated that my scores might drop 10 points because I knew applying for the 3rd card would push the needle to the left, but 44 was definitely a surprise. 

I was approved for the hotel AMEX card immediately. The airline Visa and Chase cards are under review. The 44 point drop was surprising, and I reason that applying for three cards in a span of a few days had much to do with that. But even had I known my scores would drop that far, I still would have applied because the rewards still balance out the hit I took on my scores. I'm remain in good shape at just north of 780 and I don't plan to go house shopping or take out any major loans for the next few years, so my question is, on average, how long will it take to recover that lost differential? I will keep all of my cards paid off before every billing cycle.

Thanks!

[simplynoir]

Where are you getting your scores from just to be sure?

I do think that your scores dropped that much in small part because of the HPs but a big one because you have no reporting balances on your credit reports if the information about your other two cards is accurate.

[Anonymous]

OP, your FICO scores wouldn't drop 44 points from applying for 3 cards.  Applying for cards involves taking on HPs.  3 HPs even if they're all on the same bureau (which is unlikely) would not result in a 44 point drop.  Now, if you're talking about the new accounts reporting as well, it could be possible with the AoYA reset to 0 months and the AAoA drop combined with the inquiries.  It sounds to me though like you're speaking about just the inquiries here and that the new accounts have not yet showed up on your CR.

The good news regardless is that a 820-830 score is no better than a 780-790 score in terms of the ability to score a mortgage at the best rate or any other credit products for that matter, so you're still in a fine place.

[Anonymous]

Thanks for your response. Exp and TU scores come from Creditkarma. My Wells Fargo FICO had me at 847. 

My existing credit cards have no balance. The smaller limit card was paid off years ago, and the larger limit bank card was paid off in December and hasn't been used since. Maybe I need to start carrying a balance. 

[simplynoir]

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@Anonymous wrote:

Thanks for your response. Exp and TU scores come from Creditkarma. My Wells Fargo FICO had me at 847. 

My existing credit cards have no balance. The smaller limit card was paid off years ago, and the larger limit bank card was paid off in December and hasn't been used since. Maybe I need to start carrying a balance. 

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No, don't use Credit Karma for scoring purposes. They use Vantage score models which I don't think anyone uses. Your TU score from WF is accurate because they use FICO scores. You can grab a free EX credit report from Discover website or creditscore.com (this is what I use) and see what it is atm. Use Credit Karma only as a monitoring tool for your TU/EQ reports such as balances and HPs but not scores.

[Anonymous]

Hey BBS, thanks for your input. I agree with you. After all of the studying I did on several credit card sites and reading dozens of articles here, nerdwallet, creditkarma, pointsguy, creditcards.com, investopedia, etc I felt pretty confident that I could apply for three high return rewards cards and suffer only a marginal hit on my scores. I'll check on my scores again later this week to see if there is a correction. The 44 point drop lowered me from an excellent CR to very good, but (as you mentioned) anything above 760 is pretty much window dressing for most creditors. In a year's time I expect I can raise my score above the 800 mark again, but I'm not sweating it. I hope I get approved for the 2 cards under review because I'm pumping the brakes on applying for any others for the time being.

[Anonymous]

And as mentioned above, paying every account to zero by due date is hurting you. Let one card report a small $5-10 balance, and once the statement cuts, pay it off. Use your cards as you see fit through the month, but pay off all by the due date except for one, so that a small balance reports and FICO does not ding you for the “no credit in use” penalty. That will net you some points as well.

[Anonymous]

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@Anonymous wrote:

The 44 point drop lowered me from an excellent CR to very good...

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Two things.  One, I'm not sure which of your credit scores dropped 44 points.  You've referenced both VS 3.0 and FICO scores in this thread, but I don't see exactly which one dropped 44 points?  Second, there's no such thing as being lowered from "excellent" to "very good" or any other rating, as those are just words provided by front-end fluff software (probably CK?) that has no bearing on anything.  The only way you dropped from "excellent" to "very good" would be if the lender with which you are dealing with had the same exact range and was using the same exact score, two things that are highly unlikely.  Aside from your credit reports, everything else from CK such as scores, ratings, charts/graphs, recommendations, etc. should all be completely ignored, as they're very misleading and in many cases simply inaccurate.

[Anonymous]

The lowered rating from "exceptional" (not excellent, as I erroneously wrote in my previous post) to "very good" came from Experian. Experian rates exceptional from 800+, and very good from 744-799. My Wells Fargo FICO won't update until the first week in May. Thank you for your advice on CK. 

[Anonymous]

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@Anonymous wrote:

The lowered rating from "exceptional" (not excellent, as I erroneously wrote in my previous post) to "very good" came from Experian. Experian rates exceptional from 800+, and very good from 744-799.

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Exceptional/Excellent, it's all the same, just fluff words/ranges to try and simplify things for users.  Dropping from (say) 810 to 790 doesn't mean a thing regardless of a new "rating" tier, because both scores would be able to obtain the same products at the same (most favorable) rates.