Impact of New Accounts on My Credit Score?

[Anonymous]

Thanks everyone for all the information you provide.  I have a question regarding the impact new accounts will have on my credit score. I will try to provide enough information so that you can make your best guesstimates.

Here goes:

Current CR stats:

AAoA                     =9.5 years

Oldest account       = 26 years

Last late payment   =  2.3 years. Accounts Ever Late (6) .  All included in BK7 or Shortsale

Installment Accounts = 6 student loans from 1/12 to 9/13. Paid Down from $50K to $14K

Credit Cards   = Capital One $3000 CL (Newly Opened 9/2016) Just reported to CRA

                        = Discover It $5500 CL (Newly Opened 10/2016) Has not reported to CRA as of today. No other revolving lines. These are my first CC after BK7. 

                         Low utilization. Less than 4% on capital one reported for first month. PIF

Inquiries           = TU 2 (Cap 1 and NFCU membership), EQ 2 (Cap1 and Discover)  EX 1 (Cap 1)

Derogs                 = BK7 filed 4/2014 Discharged 10/2014

                               = Shortsale of home (primary and HELOC) 9/2013

No Accounts in Collections, No late accounts since BK7

Fico 8 Scores

9/2016 TU 643, EX 653, EQ 667

10/2016 TU 667, EX 690, EQ 703

1. When I opened the Cap 1 card. My scores rose across the board with great increases. What impact will my opening the Discover Card have on my scores? Will it also be an increase or will my scores take a big hit?
2. I have read on myFico about needing at least three credit cards for optimal Fico Scoring. I have just obtained membership to NFCU thanks to the info on this site. And I want to apply for one of their cards. Others have suggested I wait to obtain a CC from them since I just received two new cards in one month. I believe this to be a good idea. How long should I wait so that I will have the least ding to my score? Three months? Six months? 

[Anonymous]

The simplest answer is "wait and see."

The reason is this.  You are not asking what wiill happen IF you take action X -- and then based on what you hear from folks on the forum, you might decide to take action X or not.

Rather, you have already taken action X. (X being "adding a second credit card.")  So there's no point in trying to guess what will happen.  Just give it another month and find out.

Another reason not to worry or speculate about the proposed action is that adding the second card was the right thing to do.  Whether you take a short term hit for it or not, it was unquestionably the correct step for you to take. 

Adding a third card is in my view also the right thing to do, as long as you don't have an urgent need for credit coming up soon (e.g. a car loan or a mortgage).  You may feel better if you do this stuff incrementally (based on what you have said so far) so perhaps adding a third card is something to put off till after Thanksgiving or perhaps New Years, when you have a better idea what your scores are.

My advice would be to make an appt with an NCFU credit card specialist in November or December and tell them what your scores are.  Then ask them if they can give you some off-the-record advice about whether you'd be likely to get approved if you applied for the specific card you have in mind.  (But make sure they don't pull your score to answer that, which would generate a hard pull.)  They may tell you which bureau they do an inquiry with as well.

[SouthJamaica]

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@Anonymous wrote:

Thanks everyone for all the information you provide.  I have a question regarding the impact new accounts will have on my credit score. I will try to provide enough information so that you can make your best guesstimates.

Here goes:

Current CR stats:

AAoA                     =9.5 years

Oldest account       = 26 years

Last late payment   =  2.3 years. Accounts Ever Late (6) .  All included in BK7 or Shortsale

Installment Accounts = 6 student loans from 1/12 to 9/13. Paid Down from $50K to $14K

Credit Cards   = Capital One $3000 CL (Newly Opened 9/2016) Just reported to CRA

                        = Discover It $5500 CL (Newly Opened 10/2016) Has not reported to CRA as of today. No other revolving lines. These are my first CC after BK7. 

                         Low utilization. Less than 4% on capital one reported for first month. PIF

Inquiries           = TU 2 (Cap 1 and NFCU membership), EQ 2 (Cap1 and Discover)  EX 1 (Cap 1)

Derogs                 = BK7 filed 4/2014 Discharged 10/2014

                               = Shortsale of home (primary and HELOC) 9/2013

No Accounts in Collections, No late accounts since BK7

Fico 8 Scores

9/2016 TU 643, EX 653, EQ 667

10/2016 TU 667, EX 690, EQ 703

1. When I opened the Cap 1 card. My scores rose across the board with great increases. What impact will my opening the Discover Card have on my scores? Will it also be an increase or will my scores take a big hit?
2. I have read on myFico about needing at least three credit cards for optimal Fico Scoring. I have just obtained membership to NFCU thanks to the info on this site. And I want to apply for one of their cards. Others have suggested I wait to obtain a CC from them since I just received two new cards in one month. I believe this to be a good idea. How long should I wait so that I will have the least ding to my score? Three months? Six months? 

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New accounts depress your FICO score in multiple way:

1. the inquiry

2. the new short period for most recent account

3. the lower average age of accounts

Plus lenders take it into account as a separate "red flag" apart from the scoring issue, and most will turn you down no matter how high your FICO scores are if the number of new accounts exceeds their underwriting standards.

In your case, IMHO, you should not rush to get a new card, but if you're going to do it, NFCU is the ideal place to do it.

[Anonymous]

@CreditGuyInDIxie  I do not have any plans to buy or finance a house or car for at least 3 ro 4 years, maybe even 5. And, thanks for the confirmation that the second card was the right thing to do. And I won't worry about the impact on my score. I will use my cards wisely and hopefully any negative impact on my score will rebound. Also, thanks for the advice about contacting NFCU.

As for the third card, thanks for the confirmation on that, as well. I have read on myFico many times that at least 3 cards are needed for optimal scoring. So, I will get a third card. It is just a matter of deciding when to app for it. Now? 3 months? 6 months?  I did like your suggestions on contacting the NFCU credit card department. Thank you. 

[Anonymous]

@South Jamaica. Thank you for your input. I really appreciate your taking the time to respond. I will try to be patient and wait and at least see what effect this second card has had on my score. 

[Anonymous]

OP, I think I'm pretty qualified to answer your original question here.  My profile is quite similar to yours.  I have single digit utilization, 1-2 inquiries per bureau (at the time of my "spree" a few months back), mostly good accounts but a couple with baddies 2-3 years old, my oldest account is 16 years and AAoA 7 years which is a little less than you but FICO scoring wise is pretty close.  I have 1 mortgage and 3 auto loans PIF on my reports and one current mortgage + one current auto loan both at about 70% utilization.  After my 3 new accounts reported following my mini spree, my scores dropped about 10 points.  I think the drop was mainly from the new accounts reporting (that's when I saw the drops really) not when the inquiries hit.  Also my AAoA didn't change [under FICO scoring it's rounded down to the nearest whole number which was still the same for me].  Within 3-4 months my scores were all 10-15 points higher than they were at the time I did my app spree.

[Anonymous]

Thank yoiu so much!! This helps tremendously, especially as your data points are similar in many ways to mine!!! This is definitely food for thought and making me rethink some things.  

[Anonymous]

I know thiis post is almost a month old. But, I wanted to come back and report the results. 

Thanks to BrutalBodyShots' data points and prompting from my best friend. I did indeed app for the NFCU CashRewards. I was approved with a $5K Limit and 9.9% APR. I waited a month to report because I wanted to see what effect this would have on my scores. 

As stated in original post- Opened Cap1 QS1 around Sept 1 or a few days earlier. Opened Discover Oct 1. Opened NFCU Cash Rewards around October 4. 

My scores are in my siggy. But, instead of going down, my scores actually increased a little (all three cards have reported to the credit agencies). So, I am glad I took the plunge. Now, I am in the garden for at least 6-12 months to nurture my cards and hopefully have all my scores increase above 700. 

[Anonymous]

Glad to see things worked out for you!

I've always been of the opinion that the end result (mid-long term) of a mini "spree" over opening accounts slowly is usually the same.  Major sprees are different, but for mini say 3-account sprees I don't really see the point in stressing over it either way.

Say someone wants to open 3 cards.  Whether they open them all on Jan 1st or they open one on Jan 1st, March 1st and May 1st ultimately won't matter.  Come the fall, regardless of which method they took their AAoA will be basically the same, the inquiries will have already lost their sting and their "new accounts" won't be dinging them any longer.  Assuming otherwise healthy credit behavior, either individual in this example would likely have scores equal to or greater than what they had when they added the new accounts within 6 months of adding them.  I think often we get too hung up on the short term when the bigger picture is often better considered.

[Anonymous]

Thats awesome.  I love it when a plan comes together.

Yep waiting six to12 months should get you readyfor primecasrds i would think