@Focker69 wrote:
This is specifically what I was looking for. Just how the Mortgage versions of the score treats them. I'll go and post in the mortgage section. Are you certain that this is true?
Thank you all for the replies.
Are we certain what is true? That it is ridiculous to think one has to run up the balance on a fresh new credit card just to claim the credit limit for scoring purposes? Yes, that is a patently ridiculous idea. Whoever told it to you doesn't know what they are talking about. With half the banks out there, such an action is likely to get the card completely shut down.
You're getting good advice here. If you aren't certain who to believe, there are many articles written by the experts at Fair Issac, as another formal part of this MyFICO overall site, which go over the basics of how credit cards and FICO scoring works. Maybe best to begin with that to get a baseline of understanding.
@Anonymous wrote:
@FireMedic1 wrote:@SoonerSoldier33When you said: "FICO does have 2 aging metrics which affect scoring specifically for open installment accounts, but not revolving accounts." That really isnt the case.
Age: With FICO there is no such thing as Average Age of Open Revolving Accounts (AAoORA) and Age of Youngest Revolving Account (AoYRA). AAoA's is all accounts. AAoA's drops for any new accounts added to a report. AoYA is reset back to 0 months each time any/all new accounts are opened.
Util: Credit utilization rates are based solely on revolving credit. The rates do not include installment loans like mortgage or auto loans. Installment loans like mortgages and auto loans factor into a different util rate which is your debt-to-income ratio. The only things that aren't included in AAoA's is collections and PR's. Here are the acronyms used here: MyFICO Acronyms Back to topic.
AoYRA is the new account scorecard determiner for FICO8 models. AoYA will either place you in the new account/no new account scorecard for Mortgage scores, but for FICO8 it is AoYRA that will place you into the new account or no new account scorecard. SO not technically a scoring factor, but AoYRA can indirectly affect scores.
Installment loans also have their own separate utilization that is tracked, current balance compared to original balance. This is far different than debt-to-income ratio. Thanks for pointing that out. I meant to type "which is figured into your"DTI
As far as OP's original question, I feel that has been addressed quite well by the responses so far.
This will be my last responce. It is getting away from the OP. With FICO's language there seems to imply that a given model has an "either/or" classification where it categorizes every account as either "new" or "not new." FICO Scores look at how many new accounts you have by type of account yes. They also may look at how many of your accounts are new accounts. I understand what your saying. Your scorecard is reassigned when you hit one year with AoYA. AOYRA (for lack of a better acronym) 1 year is a breakpoint for FICO 8. Where it gets interesting is for some scorecards there may be smaller increments like the new file scorecards. You go from a new account scorecard to a no new account scorecard. If a person's AoYA (age of youngest account) is already less than 1 year old before lets say a 3 card app spree, you have already taken the AoYA penalty before therefore none of the 3 cards would triggered a penalty.
If your AoYA on the other hand was 1 year+, and you app again, that's when you take the penalty hit. You will recoup those points when your youngest account reaches the one year mark, presuming you don't app again until then. However you'll take some hits to your AAoA and inquiries on what your current profile looks like. Back to the Mortgage part. This is why we ask people looking for home loans not to app for a year before applying.
@Focker69 wrote:
This is really great information. Thank you all for the insights. Just one additional question, assuming someone goes from an aoya of 19 months and then resets to Zero due to a new account opening, can anyone estimate what the score impact would be to the Mortgage Fico?
I believe your mortgage scores will get hit, but I can't say by how much.
