New Accounts Score Plummets...

[Foodie2018]

Hello Guys,

I need a pick me up, fresh off an app spree in April and May, opening up  5 new accounts was exciting.  Now of course, my scores has taken a hit. TU dropped 44pts, EX, 18pts, EQ 20pts.

Each new account is starting to report to the CRA's  and only 3 are reporting ( TJ Maxx, Old Navy, Discover It). My two AMEX haven't yet. Once they do, I'm gonna be DOOMED!

I've read on here that this common..prior to my spree, my file was very thin aside from my student loans and two subprime cards that I opened in Nov 2016. So, I'm gardening until May 2019 which is when I want to look for a mortgage.

What is my recovery time?

How does one cope with aftermath of app sprees?

This is torture!

[Anonymous]

People often ask about "recovery time" -- but that can be misleading, since your score would have tended to go up anyway, even if you had never gone on the spree, due to your profile aging, derogs aging, derogs falling off, etc.

The spree itself harmed your Age of Youngest Account and the number of inquries -- and that damage can be completely erased by staying in the garden for a full year.

It also damaged your Average Age of Accounts (reducing it sharply) and there is no way to erase that, though every month you spend will add a month to your AAoA which will be good.

A better way of thinking may be to look at what you have now and also think about future needs.  You have seven cards now, which is far more than anyone needs to have a perfect 850 score.  Indeed, you can have a perfect score with three cards.  So you should strongly consider staying in the garden for a very long time.  If you never got another card in your entire life you'd be fine from a credit scoring perspective, so you should certainly consider the possibility of staying in the garden until your scores are near 800.

The two credit needs that you might have at some point is a house and/or a car.  If I were you I would stop applying for credit cards for a very long time until you have these two things (assuming you think you might want them) and all three scores are in the upper 700s.

I'd also look carefully at your reports to figure out why your scores are so low.  The fact that your scores were hovering at 600 or just below in Feb of this year suggests some serious derogs that you have not mentioned.  Either that or perhaps cards that are completely maxxed out.  Fixing both of these should be part of your plan over the next few years.

I'd also look take a look at the intense emotions you are experiencing associated with obtaining cards and then post-app withdrawl.  The huge elation and then torture is common but is also a lot like the binging experiences that addicts have.  See if you can move into a more cool detatched "Mr. Spock" way of looking at credit and financial decisions -- the intense emotions are risky and often lead to bad decisions.

Best wishes...

[Foodie2018]

Thank you for your insightful feedback.

I'm satisfied with my choice of CCs, and yes I agree I should garden until my next credit venture which indeed is a mortgage. Next Spring will be when I plan to start looking. I hope to have my scores up by then.

I AM DONE with applying for any new credit.

I do have 3 90 day lates from some student loans accounts, I have written GW letters to have them removed ( no luck) and I also have one paid charge off. No collections. Aside from that, most of my credit is fairly new.

[Anonymous]

I suggest that you spend the next few months in the rebuilding forum strategizing on ways to get the lates removed.  One round of GW letters is only the first step.  You should look at something called the Goodwill Saturation Technique.

Are you keeping your CC utilization very low?

[Gmood1]

Relax, your scores will be back on track in six months. The affects aren't permanent by any means.

I've hammered my AAoA for several years. Scores still have continued to rise. Albeit a little slower if I hadn't beat them up. lol

You'll be in good shape by the time you're ready for the mortgage, minus the baddies if still reporting.

[DollyLama]

Just a tip, Spring 2019 is when you will be looking. Spend the money here Dec or Jan at latest and obtain your 3 Mortgage Scores, which can differ highly against FICO 8, depends on each independent file. Lenders will pull a tri-merge of the 3 and use the "middle score", tossing out the highest and lowest. If you have a joint applicant, they will use the LOWER of the two middle scores. 

This will give you an idea if there is anything else needed to be addressed before obtaining a pre-approval, and save, save for the closing fees, loan origination fee, appraisal and any down payment. 

[Foodie2018]

Well the student loans are through Nelnet...they have a reputation for being strict about not removing lates. But I can certainly keep trying!

My util is currently 3%, I PIF every month because I'm obsessive about keeping my balances low.

[Foodie2018]

That's what I hope! I'm alot smarter about credit now than I was previously, so I'm totally prepared to hunker down and garden my little cc patch for 12 months.

I can't wait to post my 700 club again : )

[Foodie2018]

Thank you for that tid bit of information! I will definitely get all 3 mortgage scores ahead of time.

[Anonymous]

One thing I would be careful to avoid is any CLI requests that might result in a hard inquiry.  CLI requests that result in a soft inquiry only won't hurt your score, but the bigger limits won't help your score either.