Is it bad to:

[Anonymous]

I just paid off an auto loan and then I just opened a new credit card since it has 0% APR and better rewards. The last time I've opened a credit account was a year ago for my motorcycle loan. Since I just opened a new credit card last week, will this be bad since I opened a bike loan a year ago? I paid off my car, so shouldn't it kinda even out?

[cobaltnv]

Opening a new cc with always lower your AAoA (which is a bad thing). However, a new card will also lower your %utilization (a good thing). As you are young my guess is that your average age of accounts is still quite low. THerefore a new account will not have much effect on that. You will get a ding for "searching for new credit" which will last one year. At your age I would not worry about it too much. In a couple of years you will have some nicely aged accounts and scores to make us all jealous.

If I may ask what other credit cards do you have? Are any carrying a balance? 

[Anonymous]

Target Visa Credit Card - Limit of $5,500 - Balance of $0

Discover Credit Card - Limit of $2,000 - Balance of $0

Dell Credit Card - Limit of $2,000 - Balance of $0

HSBC Motorcycle Credit Card- Limit of $14,000 - Balance of $9,000

I just paid off my 2005 Toyota Corolla 2 weeks ago.

I have a total credit card limit of  $23,500 and using $9,000. So 38% Utilization.

My motorcycle is on the HSBC credit card 5.99%. I am paying it off in $600/month and will be paid off April 2010.

Message Edited by Young-Kid on 02-13-2009 08:40 AM

[Anonymous]

What is AAoA?

[cobaltnv]

AAoA is average age of accounts. Your motorcycle will not "replace" your car loan since it is revolving credit (on a CC0 and not a true installment loan (like a car or student loan). Your scores will suffer a bit because utilization on installment loans is not that important, but it is very important on revolving debt like credit cards. You will likely see a big jump in credit score when your % utilization gets below 9% or so. 

If you have not already I would read the thread on "credit scoring 101" and "common abbreviations" both of which are at the top of the main page under commonly requested threads.

CHeers