How Long Does a New Credit Card Effect FICO Score?

[Anonymous]

About two years ago, my FICO score was 826. I applied for a hotel chain Visa affinity card thru Chase.  My FICO score dropped to 814 - 816, and it remains there.  I have never missed an on-time payment and pay in full each statement.  How long will my FICO score remain depressed because of my new credit line?  As I now have two Visa cards, if I cancel one of them will that help or hurt?

[Anonymous]

A new account dings FICO in 3 ways, typically:

1. New account penalty which has breakpoints of 0-3 months since your last new account, and 3-6 months.  After 6 months this penalty should go away.
2. AAoA decrease -- if your Average Age of Accounts falls to the next lower year (or worse), you'll get dinged here and that ding remains until your AAoA is back up above the breakpoint.
3. Inquiry -- An inquiry can count for anywhere from 0-6 FICO points typically and hurts for 6 months.  After 6 months it hurts less until a year is up when it doesn't hurt at all (but still shows up on your reports for a full 24 months).

One thing to note is if you have fewer than 3 credit cards reporting, the first 3 cards adding to your profile won't hurt as bad with these penalties as FICO gets a boost for your first 3 cards.  Cards after the first 3 all incorporate these penalties, but can also help your FICO score if it helps reduce overall utilization below a breakpoint.

[GFer]

If you only have two cc's, I wouldn't cancel one!

[Anonymous]

OP, are you saying that you applied (and received) this CC about 2 years ago?  If so, that account is having no adverse impact on your score at all currently for any of the factors related to adding a new account as ABCD listed above.

The extremely rare exception to this would be if you only had say 2 accounts on your credit report (total) and your AAoA was 7 years, for example.  Adding a 3rd account would then drop your AAoA to 4 years, so in 2 years time you'd be at 6 years AAoA (compared to 7 years AAoA before the new account).  It's possible that an AAoA difference between 6 years and 7 years could make up 5-9 points I suppose.  The chances of this scenario matching your profile though is extremely small, so more than likely your AAoA 2 years after opening an account would be greater than it was before opening that account.

It's perfectly possible that there are other factors that have changed over the course of the last 2 years that aren't allowing your score to reach the level they were before adding that CC you mentioned.  For example, 2 years ago you could have had AZEO in place, where now perhaps you don't.  2 years ago you could have had an open installment loan, possibly one mostly paid down and now perhaps you don't have an open one present on your credit report.  An aggregate utilization change, or even individual trade line utilization changes between then and now could be the difference.  There are many reasons why you may not be seeing the same score today that you were 2 years ago and the credit card you mentioned (outside of utilization on it) is not likely the cause of your concern.