Losing points

[Anonymous]

I spent many years rebuilding my credit. All the baddies are gone and my score (FICO 8) was in the mid to high 700's. I took out a mortgage and the first time it reports I lose 14 points. I apply for a credit card (Amex, $4,000 CL not on my CRA yet) and lose 20 more. Since I only got 3-4 points a month in re-build it would take me 4-7 months just to get back to where I started out.

Was I wrong to take on these two accounts? Am I missing something in the way FICO will look at these two new TLs?  The only other open credit I have is a $500 secured toy card. Everything else is all paid off.

[Anonymous]

Installment loans that are new ding you for sure until a certain point where they're paid down and aged. With real estate loans, it's probably at some point below 90% according to plenty of data points.  Other installment loans (auto, personal, etc) may be even lower than 90% before you win back those points.

Having new accounts on your credit report ding you for sure (in fact, FICO probably has a scorecard or "bucket" for profiles with new accounts).  There a debate if this newness ends at 6 months or 12 months or 24 months.  My opinion is 6 months, but that's based only on the not-reliable FICO simulator.  I do feel confident than the new account ding is only for 6 months if your credit profile is well aged and thick overall.

Keep in mind that FICO definitely likes you having 3 credit cards open and active.  So that will help majorly once they age a little bit more!

I don't have a mortgage, never have had one, and don't envision ever having one but I think if I needed one, I would probably get a mortgage that I could immediately prepay 11% of balance off quickly just to get below what appears to be the installment penalty for a new real estate loan.

[Anonymous]

I will be paying the mortgage down to 65% of original line at the 8 month point. My toy card (Crap1) has a $500 CL and a $0 balance. It resides in my sock drawer between my black socks and my tidy whities. Amex ($4K CL) resides with it except it sees daylight when I need a tank of gas (about once a  week). I have 2 paid satis mortgages and three paid satis car loans on my file. The rest is gone due to age.

[Anonymous]

I think in most cases the impact of apping (inquiries and new accounts) is overcome within 6 months and scores are right back to where they were prior to apping and many times even a little higher.