FICO Scoring System 4 – Recent Credit

Sending the Wrong Message

As we have mentioned before, opening a new line of credit tells lenders you may be having financial hardships and need more credit to cover your bills. The FICO scoring model gives new credit a weight of 10% on your credit scores due to the relationship between newer credit and financial struggles.

Account Affect

Theoretically, opening a new account will reduce your credit scores. If you do not have much credit then the hit to your report will be more dramatic. Credit repair will help you manage your debts carefully and will in turn improve new account impact with time. If you have a long credit history and large credit limit, opening a new account will likely have little affect on your credit score.

Checking Credit

Anytime someone accesses your credit report it is called a credit inquiry. An inquiry will reduce your credit score dependent on the credit report’s content. With each inquiry your credit score will drop one to five points. An exception to this rule is for mortgage and auto loan inquiries. You are able to have as many of these inquiries as you want within a 45 day period, and your credit score will only be hit once. This allows you to shop around for the best mortgage and car interest rates.

Stick to Necessity

While repairing your credit, it may be necessary to open a new account. Limit your new account activity to what you need. This will enable you to regulate the negative affect a new account will have on your credit report.