The Ding Thing

[Anonymous]

I have 2 new credit cards and a car loan all opened in July of 09. I know the inquiries fall off of scoring after a year. I thought I read somewhere that after 6 months of responsible use that the ding for the new CC accounts diminishes? Correct or just wishful thinking?

CB

[haulingthescoreup]

That's my impression: that the new account ding lasts for six months. (I've posted otherwise in the past, but I've seen too much new info, including on my own reports.) But I've been wrong so many times now that I've long since lost count...

If you pull your scores again in February (nod nod, wink wink!) let us know if you see any change! I wouldn't put a whole lot of faith in the first screen with the speedometer and "FICO score ingredients" over on the right, but check out screen 2, looking for changes in your negatives, plus an overall score change.

In a perfect world, your new accounts would all hit 7 months old on February 1, but it's possible that it might be on the actual anniversary that they opened, the 15th or 23rd or whatever. Just to save you some bucks, just in case.

[Anonymous]

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@haulingthescoreup wrote:
That's my impression: that the new account ding lasts for six months. (I've posted otherwise in the past, but I've seen too much new info, including on my own reports.) But I've been wrong so many times now that I've long since lost count...

If you pull your scores again in February (nod nod, wink wink!) let us know if you see any change! I wouldn't put a whole lot of faith in the first screen with the speedometer and "FICO score ingredients" over on the right, but check out screen 2, looking for changes in your negatives, plus an overall score change.

In a perfect world, your new accounts would all hit 7 months old on February 1, but it's possible that it might be on the actual anniversary that they opened, the 15th or 23rd or whatever. Just to save you some bucks, just in case.

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Going to wait until March to order new scores. One of the accounts is an Orchard Bank card and won't report the 7th payment until EOM. The other 2 are reporting the middle of this month so I'll keep an eye on my Score Watch for an increase.

[Anonymous]

Update,

Still no change. Orchard and Chase haven't updated since Jan so the magic 7th payment hasn't been reported yet. I have actually lost 4 points because I let my Kays card report a small balance (it was it's turn in the rotation) and because my Orchard card hasn't updated it's zero balance, I got dinged for 2 of 3 of my cards reporting a balance. Still under 10% though.

And so I wait . . .

CB

[Anonymous]

The seventh payments from Orchard finally posted and no bump. Still no 7th payment update from chase on my auto loan. I guess for me the 12 month rule is solid. Oh well, I guess I'll just keep on keepin' on.

The waiting is the hardest part - T Petty

CB

[RobertEG]

I think we are talking about apples and oranges.

Yes, credit inquiries remain in your CR for two years, and are only considered in the new credit inquiries segment of your scoring by FICO for one year.  But inquiries are unrelated to establsihment of new accounts.  A new inquiry is scored, even if grant of new credit is never granted based on that inquiry.

What you are talking about is improvement in length of credit history, which is an entirely different scoring category in FICO.  That  category is only 15% of total FICO scoring weight, and from all I have ever seen in postings by Fair Issac, takes years, not months, for any significant scoring impact.  An account with 6 months of age vs 7-12 months, or even 24 months of age, still scores in average age of accounts based on its age from opening date.  I have never seen any magic bump in score once an account eases over 6 months.  If others have seen it, I never have. 

[Anonymous]

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@RobertEG wrote:

I think we are talking about apples and oranges.

Yes, credit inquiries remain in your CR for two years, and are only considered in the new credit inquiries segment of your scoring by FICO for one year.  But inquiries are unrelated to establsihment of new accounts.  A new inquiry is scored, even if grant of new credit is never granted based on that inquiry.

What you are talking about is improvement in length of credit history, which is an entirely different scoring category in FICO.  That  category is only 15% of total FICO scoring weight, and from all I have ever seen in postings by Fair Issac, takes years, not months, for any significant scoring impact.  An account with 6 months of age vs 7-12 months, or even 24 months of age, still scores in average age of accounts based on its age from opening date.  I have never seen any magic bump in score once an account eases over 6 months.  If others have seen it, I never have. 

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Thanks RobertEG,

What I was pondering was the number of months before, for scoring purposes, a new account is no longer considered a new account. I understand completely about the ding for the inquiry and how AAoA works.

Maybe I'm confused about the ding when you open a new account. You get a ding for the inquiry and a ding for the new account, correct? Is the ding for the new account just the dilution of AAoA that the new account causes? 

Thanks for helping me understand this.

CB

[haulingthescoreup]

charliebrown, check out the FICO Scoring Reason Codes stickied at the top of this board.

Number 30 on all three reports is "Time since most recent account opening too short."

So you can get dinged three ways:

• new inq
• new account
• your AAoA dropped a year and into a new tier

You might not get dinged for a new inq, depending on how many you already had on that report. You might not get dinged for dropping your AAoA if it didn't drop a year, i.e., it went from 5y 10m to 5y 2m. But a new account is a new account.

And if you go hogwild, there's also reason code #9, "Too many accounts recently opened."

[Anonymous]

Thanks Hauling and Robert! I think I've got it now!

CB