New Accounts affect on Score.....

[Anonymous]

I was always under the impression that new accounts would cause your scores to dip slightly as the new account age.  But as two new accounts have been reports to the CRAs my score went up as a result.  Is this typical?  Or is it due to the affect on Utilization is greater than the affect of new accounts?

Prior to these posting, my UT was 23%,  now it has dropped to below 20 13%.   Once all of my new accounts post, my percentage should drop to around 10% ish.

Is this how it normally works? 

Thanks in advance for your thoughts.

[RonM21]

It can depend on the size of your file, as well as everything in it. The util is a key factor and depending on the new limit vs how much the utilization drops, that can offset the score drop, or even make it rise. Again, depending on your overall report.

[disdreamin]

My overall util was basically unchanged when I opened my new accounts last year (under 10% of total CLs) and I definitely saw a hit to my score from having the new accounts. The pulls also hurt, but the new accounts did affect my score for certain, as one of the bureau's wasn't pulled in my app spree. That one still dipped but is finally back to where it was.

[joltdude]

Right now im having a bit of the Thin File New Account hit.... and it just keeps dropping..... Starting to worry a bit.... My utilization has actually improved... but my current score is still dropping... The Fico started around 749-751 depending on where you looked ...and is now tanked to 692 (EQ) now all the new accounts are reporting..... The panic is setting in......

Still wondering how long I have to wait for it to start to rebound....  Fakos and actual Ficos just keep falling.... EEEEK....

-J

[Thomas_Thumb]

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@joltdude wrote:

Right now im having a bit of the Thin File New Account hit.... and it just keeps dropping..... Starting to worry a bit.... My utilization has actually improved... but my current score is still dropping... The Fico started around 749-751 depending on where you looked ...and is now tanked to 692 (EQ) now all the new accounts are reporting..... The panic is setting in......

Still wondering how long I have to wait for it to start to rebound....  Fakos and actual Ficos just keep falling.... EEEEK....

-J

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Looks like you had just crossed the 2 year boundry for AAoA in early March before acquiring your new CCs.

Passing a 2 year AAoA threshold is meaningful for scoring. Now you are back to under 1 year. Unfortunately the drop in AAoA, added inquiries and new accounts reporting are all hurting your score. The inquiries are going to influence score for 12 months and it will be 15 months before your AAoA is back to 2 years. Not sure how much of your total drop relates to those 2 factors.

Regardless, your score is also being negatively impacted by a new accounts reporting penalty. That should be temporary, perhaps lasting 60 to 90 days. Once things settle down allow a balance to report on only 1 of 3 cards to maximize score. Your scores may bounce back to the 720s with 1 card reporting.

Once accounts age up, you will be better off than before the "spree". 

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@Anonymous wrote:

I was always under the impression that new accounts would cause your scores to dip slightly as the new account age.  But as two new accounts have been reports to the CRAs my score went up as a result.  Is this typical?  Or is it due to the affect on Utilization is greater than the affect of new accounts?

Prior to these posting, my UT was 23%,  now it has dropped to below 20 13%.   Once all of my new accounts post, my percentage should drop to around 10% ish.

Is this how it normally works? 

Thanks in advance for your thoughts.

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Impact of new accounts depends on how thick and aged your file was before/after adding the CCs. If your AAoA is sufficiently high and you have enough existing cards to mute the influence of 2 new cards, then no real harm. Also, if you already have quite a few inquiries, then adding a couple more might not make a difference.

Sure, the benefit of the added CLs could help drive down utilization and that can positively affect score (dropping from 23% to 13% utilization is significant). If you reduced the # or % of cards reporting a balance that could be helping your score as well.

[Anonymous]

A bit off topic here, but does anyone know under FICO 08 scoring what the AAoA "buckets" are?  I've heard that 2 years and 5 years may be the points that new buckets begin, but I don't know how many years each bucket spans. 

[Thomas_Thumb]

The way I see it is the benefit of increasing AAoA starts to show at 2 years and likely provides some additional benefiit with every integer increase up to 8 years. After 8 years I believe there are no further points to be gained. Further increasing AAoA primarily adds value as a buffer for keeping AAoA high if some new accounts are added.

Testing AAoA is kind of a one shot opportunity so data is limited. I suspect the benefit of increasing AAoA has diminishing returns for each year after the 2 year mark 2 => 3, 3 => 4, 4 => 5 and so on. Not sure that there is much good data available that really isolates this factor other than the 2 year mark and to a limited extent the 3 year mark. Beyond that, there is some data from posters supporting an 8 year AAoA plateau. Additionally, although not Fico, Experian Plus uses 7 years 8 months as a milestone for AAoA.

[Anonymous]

Interesting info.  I wasn't aware that 8 years could potentially be the cap for AAoA in terms of benefits to ones score.

My AAoA is about 7.7 years, and I was considering opening up 3 new accounts which would bring my 7 year AAoA to 6.  If I only open 2 accounts it would still fall into the 7 integer.  With diminishing returns as you said, I don't imagine I'd lose much falling from 7 to 6 (and it would only be for a few months then back to 7).  If it was going to have a greater impact, I probably would open just 2, wait a few months and open the 3rd.

[Revelate]

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@Anonymous wrote:

Interesting info.  I wasn't aware that 8 years could potentially be the cap for AAoA in terms of benefits to ones score.

My AAoA is about 7.7 years, and I was considering opening up 3 new accounts which would bring my 7 year AAoA to 6.  If I only open 2 accounts it would still fall into the 7 integer.  With diminishing returns as you said, I don't imagine I'd lose much falling from 7 to 6 (and it would only be for a few months then back to 7).  If it was going to have a greater impact, I probably would open just 2, wait a few months and open the 3rd.

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That's really the way to test it, cross a boundary with a fixed file... i.e. leave the same balance on one card for the two months  or similarly depending whether FICO rounds up or rounds down the month calculation; we're absolutely confident it truncates the year, but I'm not sure if 35.96 months for example counts as 36 or 35 months and whether that then counts as 3 years or 2.  Then if you're sprightly and interested put your app spree right after that which is how I isolated there is indeed a change going from 1 to 2 years (or the reverse 2->1) and that on my file it was worth 4 points (/yawn); the more useful data on that was to suggest there isn't a new tradeline penalty unless you cross an AAOA threshold which TT mentioned up above.

I went through my own AAOA calculation and while every service suggests 3 years, it's really at the aforementioned 35.96 and so I may not have crossed 2->3 years... I know there was no change last month, but maybe I get a boost on the first of next month.  Just wish I didn't have an inquiry that would be counted on 6/3 coming out of it's grace period but no help for that at this point as far as data analytics goes... just figured I missed the shot and in theory I can just pull on 6/2 and see if there's a difference on either EQ FICO 8 or FICO 04 which should be good enough as far as that goes since I will have recent data points for both and will be no balance changes between now and then.

Unlike TT I don't think there's an increase on every integer necessarily: there isn't on every year on oldest account age as I just went over 8 years on that (opened 5/2008) and nothing doing at least.  I think it may be binned much like inquiries are, and I've always pontificated that because of diminishing returns anything over 4-5 years was pretty much gravy but I think TT and others data suggests you need 8 years AAOA to get to 850 and I suspect that's reasonable so presumably 5 years isn't the "perfect" file spot but it's probably the majority of the points. 

[surferchris]

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@Revelate wrote:

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@Anonymous wrote:

Interesting info.  I wasn't aware that 8 years could potentially be the cap for AAoA in terms of benefits to ones score.

My AAoA is about 7.7 years, and I was considering opening up 3 new accounts which would bring my 7 year AAoA to 6.  If I only open 2 accounts it would still fall into the 7 integer.  With diminishing returns as you said, I don't imagine I'd lose much falling from 7 to 6 (and it would only be for a few months then back to 7).  If it was going to have a greater impact, I probably would open just 2, wait a few months and open the 3rd.

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That's really the way to test it, cross a boundary with a fixed file... i.e. leave the same balance on one card for the two months  or similarly depending whether FICO rounds up or rounds down the month calculation; we're absolutely confident it truncates the year, but I'm not sure if 35.96 months for example counts as 36 or 35 months and whether that then counts as 3 years or 2.  Then if you're sprightly and interested put your app spree right after that which is how I isolated there is indeed a change going from 1 to 2 years (or the reverse 2->1) and that on my file it was worth 4 points (/yawn); the more useful data on that was to suggest there isn't a new tradeline penalty unless you cross an AAOA threshold which TT mentioned up above.

I went through my own AAOA calculation and while every service suggests 3 years, it's really at the aforementioned 35.96 and so I may not have crossed 2->3 years... I know there was no change last month, but maybe I get a boost on the first of next month.  Just wish I didn't have an inquiry that would be counted on 6/3 coming out of it's grace period but no help for that at this point as far as data analytics goes... just figured I missed the shot and in theory I can just pull on 6/2 and see if there's a difference on either EQ FICO 8 or FICO 04 which should be good enough as far as that goes since I will have recent data points for both and will be no balance changes between now and then.

Unlike TT I don't think there's an increase on every integer necessarily: there isn't on every year on oldest account age as I just went over 8 years on that (opened 5/2008) and nothing doing at least.  I think it may be binned much like inquiries are, and I've always pontificated that because of diminishing returns anything over 4-5 years was pretty much gravy but I think TT and others data suggests you need 8 years AAOA to get to 850 and I suspect that's reasonable so presumably 5 years isn't the "perfect" file spot but it's probably the majority of the points. 

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Great information, thanks.