WILL MY FICO SCORE DROP IF I GET MY FIRST CREDIT CARD

[Anonymous]

Hello,

I have a 627 mid fico score.  I am aware that if I have a score of 620 or more that I will be able to get an FHA loan to buy a home.  I have a car loan and some other loans I paid off, so I definitely have a long credit history.  

When I put a new credit card request on the myFICO score simulator it said my score would go up from 10-30 points.  I am not so sure that this "simulator" is completely accurate even though they claim it is.  

I am worried that applying for my first credit card would actually lower my score to 619 right away which would screw me over big time.

However, if my score went up 20 points it could lower my potential interest rate.

Has anyone else EXPERIENCED the immediately affect of a first CREDIT CARD.  Is that immediate affect (when they already have established a previous credit history) positive like the simulator claims or could it possibly be wrong and it up lowering my score because of 

A) the credit inquiry (2-5 points) and

B) lowering the average length of time of my accounts. (perhaps lowering it a lot more than 2-5 points).

Thank you very much.

Sincerely,

Justin

[llecs]

I'm certain that you'd see a significant increase if you don't have any CCs reporting, good, bad, or otherwise, if you were to add a revolving CC. IMO, the 10-30 pt estimate is low. I bet you'd see closer to 25-35 once that CC reports. Moreover, when that reports, you'll see some small gains over the next 6 months as the newness of that CC wears off with a little more by the 12th month mark.

If I am wrong, oops. BTW, if you happen to post back after the CC reports, bump this thread an let us know. Thanks.

When I first started to rebuild, I started with 0 CCs and saw large gains when I added my first CC. The second not so much. The third a little more (was a store card), and 4th through 12th CC, all dropped 20 or so points.

[Anonymous]

That is great to hear.  I am also wondering then if that is the case if maybe I should get two starting credit cards instead of one.  That way, because inquiries within a what is it 14 day period only get counted as one inquiry I would save the points on my credit report from two inquiries (only showing up as one).

Also, have you heard of whether or not it is best to charge something immediately and then pay it off?  I have heard this can be a good strategy for getting something reported immediately.

Also, any idea when the credit card companies report to the bureas?  The reason I am wondering is because I am wondering if I pay my balance down every month if a 0 will show up, or the average monthly balance will show up.  In which case, is it better to have some balance showing up there?  And if so, how to make that possible even if you want to pay everything to 0 each month.  I shouldn't have to pay APR when I can just pay the **bleep** thing back every month to get a higher fico score.  Maybe, however, I would just need to pay at the appropriate date to ensure things get reported with a positive balance first before I pay it all off.

Thanks a lot,

Justin

[Anonymous]

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@Anonymous wrote:

That is great to hear.  I am also wondering then if that is the case if maybe I should get two starting credit cards instead of one.  That way, because inquiries within a what is it 14 day period only get counted as one inquiry I would save the points on my credit report from two inquiries (only showing up as one).

This is only true for Mortgages and Car Loans - i.e. Loans where you may be "shopping around for rates" That does not work for Credit Cards and if you apply for two you will get hit with two hard inquiries (that will not just be counted as one)

Also, have you heard of whether or not it is best to charge something immediately and then pay it off?  I have heard this can be a good strategy for getting something reported immediately.

If it's a credit card then buy a pack of gum... let it report, PIF.  If you get two credit cards then buy two packs of gum but make sure that one is paid in full before the reporting date so you only ever have a balance showing on one card each month and it is for only 1-2% of your total available credit (at the most 9%) MOST (now this isn't all cause some do vary) credit card companies will report around your statement date so try and pay off most of your charges before then and then mke sure you PIF by the due date to avoid paying interest.  Also if you get more that one card then take it in turns to use them every other month so that both stay active (you also get point for having recently used your credit)

Also, any idea when the credit card companies report to the bureas?  The reason I am wondering is because I am wondering if I pay my balance down every month if a 0 will show up, or the average monthly balance will show up.  In which case, is it better to have some balance showing up there?  And if so, how to make that possible even if you want to pay everything to 0 each month.  I shouldn't have to pay APR when I can just pay the **bleep** thing back every month to get a higher fico score.  Maybe, however, I would just need to pay at the appropriate date to ensure things get reported with a positive balance first before I pay it all off.

Thanks a lot,

Justin

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[RobertEG]

I personally would not app for any new credit when in the loan app process, paqrticularly if you now qualify.

Sure, adding a new CC now will help your credit mix, but it might not be that simple.  You will take a new inq. hit that will impact for a year.  It will lower your AAoA.  You will have a new account.  And having no current revolving credit now, it may cause your scoring algorithm to be re-bucketed into those with revolving credit history.

It is not black and white.

If you do get a new CC now, just make sure you keep your %util very low, or you will add the impact of high revolving %util.

[Anonymous]

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@RobertEG wrote:
Sure, adding a new CC now will help your credit mix, but it might not be that simple.  You will take a new inq. hit that will impact for a year.  It will lower your AAoA.  You will have a new account.  And having no current revolving credit now, it may cause your scoring algorithm to be re-bucketed into those with revolving credit history.

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This is kind of where I am.  I have one CC (4 yrs old), and 1 CC (1 month old).   I realize that every account I open will bring down my AAoA in the future.  However, if I can qualify, wouldn't it benefit me in the long run to STACK my account with another CC and term loan, so that I have several open tradelines near the begining of my credit history?  I'm interested in buying a house in 3-4 yrs, and I think my "thin-file" could count against me.