"Too many new accounts" and time

[KJinNC]

I have gone from zero accounts of any kind on TU and EX to six accounts of my own, plus one AU account.

They aren't all showing up yet, but they will be soon.

Those seven accounts will also all be on EQ, but there, I already had four accounts showing up (three are old positive closed accounts that are showing as active for some reason, one is a paid $92 charge-off from 2016). So on Equifax, I will go from four accounts to 11 accounts.

This all happened in a two-month time period.

The Chase credit monitoring service shows "reasons", like, the reasons you'd get for a denial for a credit card or other loan, and my "denials" so far have been either too few accounts/too little account history, or too many recent credit inquiries. I am starting to see "too many new accounts" show up as a reason.

My question is:

Does opening a bunch of accounts at the same time only hurt temporarily while they are all new, or in 1-2 years, will I still lose points for having opened all of these accounts at the same time?

Thanks!

[calyx]

---

@KJinNC wrote:

I have gone from zero accounts of any kind on TU and EX to six accounts of my own, plus one AU account.

They aren't all showing up yet, but they will be soon.

Those seven accounts will also all be on EQ, but there, I already had four accounts showing up (three are old positive closed accounts that are showing as active for some reason, one is a paid $92 charge-off from 2016). So on Equifax, I will go from four accounts to 11 accounts.

This all happened in a two-month time period.

The Chase credit monitoring service shows "reasons", like, the reasons you'd get for a denial for a credit card or other loan, and my "denials" so far have been either too few accounts/too little account history, or too many recent credit inquiries. I am starting to see "too many new accounts" show up as a reason.

My question is:

Does opening a bunch of accounts at the same time only hurt temporarily while they are all new, or in 1-2 years, will I still lose points for having opened all of these accounts at the same time?

Thanks!

---

Only while they're new.  As they age, that reason code will eventually drop away.

And from a mathematical standpoint, in a few years (or whenever), they're going to make a fantastic buffer in your AAoA when you open a new account (I opened 4 accounts in four months for that reason).

[SouthJamaica]

---

@KJinNC wrote:

I have gone from zero accounts of any kind on TU and EX to six accounts of my own, plus one AU account.

They aren't all showing up yet, but they will be soon.

Those seven accounts will also all be on EQ, but there, I already had four accounts showing up (three are old positive closed accounts that are showing as active for some reason, one is a paid $92 charge-off from 2016). So on Equifax, I will go from four accounts to 11 accounts.

This all happened in a two-month time period.

The Chase credit monitoring service shows "reasons", like, the reasons you'd get for a denial for a credit card or other loan, and my "denials" so far have been either too few accounts/too little account history, or too many recent credit inquiries. I am starting to see "too many new accounts" show up as a reason.

My question is:

Does opening a bunch of accounts at the same time only hurt temporarily while they are all new, or in 1-2 years, will I still lose points for having opened all of these accounts at the same time?

Thanks!

---

The damage to your score is temporary.

But sometimes a flurry like that can give rise to adverse action by a lender.

[KJinNC]

Do you mean an adverse reaction even after the score recovers? For example, in six or 12 months, would the flurry itself (as opposed to the associated average age or age of oldest) be a reason for a denial?

I understand why scoring would drop, because from a mathematical standpoint, it would be really hard to distinguish a spike in hard pulls and new accounts associated with what I am doing (credit-building) from what they probably worry about (trying to stay afloat, or opening new accounts because you are about to declare bankruptcy so you plan to use them and then add those to the bankruptcy). I am just wondering if that concern completely falls out of the formula after enough time has passed to demonstrate that you are making payments on time and didn't declare bankruptcy; or, if some echo of it lingers for a long time, like "we were worried about this guy last year, seems ok, but you still might want to look closer."

Thanks!

[calyx]

---

@KJinNC wrote:

Do you mean an adverse reaction even after the score recovers? For example, in six or 12 months, would the flurry itself (as opposed to the associated average age or age of oldest) be a reason for a denial?

I understand why scoring would drop, because from a mathematical standpoint, it would be really hard to distinguish a spike in hard pulls and new accounts associated with what I am doing (credit-building) from what they probably worry about (trying to stay afloat, or opening new accounts because you are about to declare bankruptcy so you plan to use them and then add those to the bankruptcy). I am just wondering if that concern completely falls out of the formula after enough time has passed to demonstrate that you are making payments on time and didn't declare bankruptcy; or, if some echo of it lingers for a long time, like "we were worried about this guy last year, seems ok, but you still might want to look closer."

Thanks!

---

AAs usually happen immediately after the flurry or up to a few months.   There are some lenders who are known for getting spooked by a number of new accounts.    I know it's silly, but I track my softpulls to keep myself entertained while I'm gardening, and I see some new lenders that don't like credit seeking behavior (coughChasecough) pulling my report every 2 weeks like clockwork for a bit (they've stopped now).
It's not the math that bothers them, just (as you note) the increased credit risk to them.

It's doubtful that after a year you'd get AA, unless you did something else to cause them to think twice about their risk (another flurry of apps, maxing out cards, changing patterns in use, etc.)

[Queen_Etherea]

How long does it usually take for the reason code of "Too many recent accounts" to go away? 6 months? 1 year? Assuming you don't open any more new accounts.

[Anonymous]

It's generally believed that all scoring models (including the many made by FICO, Vantage 3.0, Vantage 4.0, the models used by the insurance industry, etc.) have some kind of internal metric where they categorize an account as either New or not-New.  The insurance industry models draw the line at 24 months.  FICO models probably use 12 months.

When all accounts are over 12 months old, that helps you out a lot.  That's equivalent to saying 0% of your accounts are new.  This scoring factor is often called AoYA or Age of Youngest Account.  A lot of people conjecture that clean profiles get help at a couple breakpoints before 12 months (e.g. AoYA > 3 or AoYA > 6).

But it's also likely that FICO also looks at ratios: e.g. something like (Number of New Accounts) / (Number of Open Accounts).  BTW, that's exactly the ratio that the LexisNexis insurance model uses.  If a FICO model uses something like that you'd get some bonus points just for having most of your accounts as not-New, even if you had 1-2 new accounts.  To take myself as an example, only 14% of my accounts are New (using that ratio) even though I have two cards I opened very recently.  That's because I have many  open accounts.

Bottom line is that if you stop opening accounts you will start getting help, but especially if you can get most (ideally all) of your accounts over 1 year old.

[SouthJamaica]

---

@KJinNC wrote:

Do you mean an adverse reaction even after the score recovers? For example, in six or 12 months, would the flurry itself (as opposed to the associated average age or age of oldest) be a reason for a denial?

I understand why scoring would drop, because from a mathematical standpoint, it would be really hard to distinguish a spike in hard pulls and new accounts associated with what I am doing (credit-building) from what they probably worry about (trying to stay afloat, or opening new accounts because you are about to declare bankruptcy so you plan to use them and then add those to the bankruptcy). I am just wondering if that concern completely falls out of the formula after enough time has passed to demonstrate that you are making payments on time and didn't declare bankruptcy; or, if some echo of it lingers for a long time, like "we were worried about this guy last year, seems ok, but you still might want to look closer."

Thanks!

---

By "adverse action" I mean account closure or credit limit reduction by a lender. Some lenders who see a flurry of new account activity after having extended credit will take "adverse action" of that nature.  Most recently there have been some posts about Chase doing that.

[KJinNC]

Thanks - good info on adverse actions for many situations - in my situation, my new accounts are all secured cards and other credit-builder type stuff, so I doubt that would happen.

I am the personality type that would rather frontload all the pain rather than spread it out, so I figured I'd get most of the pain of new accounts done to kick off the process. Just making sure there's not a part of the algorithm that negatively scores "number of accounts opened within 90 days of each other" (which would be true for years to come) as opposed to "number of accounts opened in past X number of days or months".

[Revelate]

Near as I can tell FICO 04 just looks at youngest (assuming top 8 scorecards) and that's it.

Something more sophisticated appears to be going on for FICO 8 as CGID alludes to, I took a non-trivial drop on EX FICO 8 still waiting to see if it is a pattern or just last one in the boat like the FICO 04 models.  I suspect EX FICO 2 looks at straight AOYA too.

Will state the Chase monitoring is Vantage Score before anyone begins worrying about that.