Score drops 16 points

[Anonymous]

I pulled my Equifax score here on myfico two weeks ago and subsscribed to score watch, it was 761. I applied for a discover card, got approved and the score dropped one point to 760. A week later, I got an alert that the score has increased to 767.

I added my wife who is new to this country to two of my credit cards(Discover and Elan) as co-owner  this week(she was already authorized user, but they don't report her). I talked to the credit card CS rep on the phone, they told me they wouldn't be pulling my credit report again. Today, I got an alert that my score dropped to 751 due to a hard pull by US Bank Corp. I wonder what is going on as I have not applied for credit with US Bankcorp. Is US Bankcorp owns one of the Discover/Elan credit cards?

Maybe some of you who know how this credit score works can give me a hint?

TIA

[Anonymous]

Anyone has any insight as to why my credit score dropped 16 points?

[haulingthescoreup]

That's a big chunk of points, and frankly, I don't know why.

I don't imagine it's worth pulling your report again, but if you did, you could compare the negatives on the left on screen 2 from the first report with those on the second report, and see what changed (new order, new negative, etc.)

I can actually see why it might have dropped from your initial score. The one point was for the inq showing up. Then the bigger drop was from when the account itself showed up, putting you in the new credit score bucket (ding) and possibly lowering your AAoA --average age of accounts --enough to trigger another ding. Then since US Bank did a hard --that's the Elan inquiry --you would have had two inquiries, and that would cost you more than just one.

What I don't get is why it went up to 767. If the new CL on the Discover card did something miraculous with your revolving util, then OK, it might have been that, but that should have been cancelled out by the newness bit that I mentioned above.

[Anonymous]

The Elan credit card has only $2000 credit limit, Discover approved for $4,500, so I supposed the new discover card has tripled my credit line thus the initial increase?

The last time I pulled the report, there were two inquiries (one from Elan when I ask for increase of credit limit last Feb, one from stock broker when I apply for margin to trade options) I supposed with the new inquiries from Discover and Elan(when I added my wife), they are 4 inquiries now? So, the difference between 2 inquiries and 4 inquiries cost me 16 points?

I don't understand why Elan pulled my credit report again, I was told they wouldn't be doing that!!

We are planning to buy a house this year, so have been trying to keep the score high!

[haulingthescoreup]

Are these your only two open credit cards? (You mentioned tripling your total credit line.) If so, and you had no open CC's when you got the Discover, that would certainly explain the score jump.

Meanwhile, the score drop would result from not just the inquiries, but the appearance of the new card on your reports. Inquiries hit immediately, in real time. The actual new account that results from the inquiry takes time to appear. When it does, it affects your credit in several ways --if you allow balances to report, it can improve your revolving util by increasing your total credit, but it lowers your average age of accounts, and if it's your first new account within the last six months or so, you will be penalized for the presence of a new account.

So the score change wouldn't be just from the inqs; it would be from when the new card began to report, and there's almost always a delay in that. Some cards report nearly immediately, such as BofA, but others can take well over a month, such as American Express.

I'm still a bit unclear on the sequence of events, in terms of what appeared on your report when, and the associated scores, but I'm guessing that it's something like that.

Remember, an inquiry doesn't necessarily mean that there is a new account. Sometimes people get turned down, so there will be an inq and no account. Other times there will be an inquiry for such things as a cell phone or an apartment rental application, and there won't be a new credit account reporting as a result, just the inqs. The effects of new accounts hit in two waves, the initial impact (if any) of the inquiry, and then the impact of the account itself beginning to report, and that can definitely cost you points.

The good news is that most of the damage is gone within six months or so, as long as you don't keep opening more accounts. What is your timetable for a mortgage app?

[Anonymous]

Thanks for all the info.

I have only 2 credit cards and one store card(kohl's), Elan has $2000, Discover $4500 and Kohl's with $500 credit limit.

12/25/2010 check score 761

=>12/27/2010 apply for disscover card

12/28/2010 score watch alert 760 Discover Inquiry

01/13/2011 score watch alert 767 Kohl's report balance

=>01/15/2011 mail out forms to add my wife as joint owner for both Elan and Discover cards

01/20/2011 score watch alert 751 US Bankcorp inquiry

My credit report shows the longest history is 18-20 years old credit cards. Unfortunately I didn't keep my credit cards when I was oversea and made the mistake of canceling them. The Elan credit card is 2 years old, which I got from the local bank I am using. The Discover card is three weeks old. I had a student loan account, in good standing and fully paid. There were some negatives that were aged and dropped at the end of 2010, so they no longer appear on the credit report .

We are planning to buy a house in the summer or fall, so do have a little bit of time to work on the score.