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Question: New cards and FICO

cam006
Contributor

Question: New cards and FICO

I recently went on an app spree right after we got our mortgage figuring if new cards are going to bring down my scores then I I'd rather minimize the overall damage and maximize the building process.  I pulled my scores a few days ago and I'm back down to the early 600's.  (hurting me bad) But I wanted those inquires to happen before the mortgage reported. 

 

Today, I get a SW alert that my score is up +17 because I have a new account.  The Hooters card has finally been reported.  What gives?  I don't think I've seen anyone's score increase due to a new account. 

7/11/08: EQ: 635, TU: 658, EX: 607
10/10: TU 634, EQ 626, Ex 626
9/14/2012: TU 622, EQ 660
10/16/2012: TU 731, EQ 706 - finally on my way!
Message 1 of 11
10 REPLIES 10
jmbfl
Valued Contributor

Re: Question: New cards and FICO

Yes it can most definitely happen. Depends on what your CBR looks like as a whole. You are going to have quite a few changes coming up though so hold on to your hat. I don't know what as reported yet, but in general the first new account may help your score, the second one may not hurt your score - after that it is all downhill. After an app-spree you gotta sit on your hands for six months and let things settle out. After that it will all be good. (Assuming no missteps!)
Message 2 of 11
llecs
Moderator Emeritus

Re: Question: New cards and FICO

Your score would go up if you were lacking a good mix of credit (at least 2 revolving and one store charge card) and if your utilization improved (I'd say at least by 40%) as a result of this new CC reporting.

 

If none above apply, then something else happened to your CR to cause a change like a baddie dropping off, accout improved, or a recent anniversary date.

Message 3 of 11
cam006
Contributor

Re: Question: New cards and FICO

Hmmm...could be.  Hooters is the last card I applied for and received.  So now I've got HSBC (Orchard) coming up on 2 years, First Premier - coming up on 1 1/2 years, Target (new) , Cap 1(new), Crown Jewelers (finally bought something.) and now Hooters (new).  When I pulled my reports last week, mostly everything was showing.  Hooters should have been the last.   Just curious. 

7/11/08: EQ: 635, TU: 658, EX: 607
10/10: TU 634, EQ 626, Ex 626
9/14/2012: TU 622, EQ 660
10/16/2012: TU 731, EQ 706 - finally on my way!
Message 4 of 11
llecs
Moderator Emeritus

Re: Question: New cards and FICO

That is likely it. The newness of one of your new accounts is wearing off.

 

On avg., I've taken a 20-25 point hit for new CCs, but notice increases over the next 2-6 months as the damage wears off.

Message 5 of 11
likewise
Frequent Contributor

Re: Question: New cards and FICO

So the damage is roughly 6 months at most? Aren't they considered new for a year as far as FICO is concerned?
Message 6 of 11
llecs
Moderator Emeritus

Re: Question: New cards and FICO


likewise wrote:
So the damage is roughly 6 months at most? Aren't they considered new for a year as far as FICO is concerned?

 

I've found that most, but not all, of the points return by the 6 mo mark. However, I also, and others, experienced gains at the 1 yr anniversary mark. And FICO will continue to ding you for the new credit. Hence the "Accounts opened in the past year" field.
Message 7 of 11
wcnghj
Regular Contributor

Re: Question: New cards and FICO

I got a ~30 point boost when I opened my BofA card. Brought my util from 98% to 46%.
04/2009
TU:745
EQ:764

10/2008
TU: 708
EQ: 708
EX:707
Message 8 of 11
cam006
Contributor

Re: Question: New cards and FICO

So what you're saying is that: you get dinged for the new accounts but the score may go up a few points at a time as the accounts age (I got the 6 month boost on the older accounts previously) but you still get dinged for new accounts under 1 year? 

 

No wonder it takes a computer to work out that convoluted system. 

 

In any event, i think you are all right.  The new accounts likely helped my util and mix but the "newness" of the accounts gave me the initial drop in score.

7/11/08: EQ: 635, TU: 658, EX: 607
10/10: TU 634, EQ 626, Ex 626
9/14/2012: TU 622, EQ 660
10/16/2012: TU 731, EQ 706 - finally on my way!
Message 9 of 11
RobertEG
Legendary Contributor

Re: Question: New cards and FICO

The affect of the inquiries made to get the new accounts clearly drops at one year, and if doing it for score building, would be the least of my concern. 

 

Disregarding the short term affects of inquiries, I see two major concerns in seeking new revolving accounts.  One is how much it will help you overall CL, and thus decrease your %util, and the other is the affect on your age of accounts.  Clearly, a new account will add to overall CL, but at what cost?

New accounts enter into your average length of credit history as having a zero age.  If your current AAoA is low, then the affect will be small, but if your current AAoA is high, it will hurt quite a bit.

It is a balancing act, and dependent upon your overall credit file.  No simple answer.

Message 10 of 11
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