New credit determines 10% of a FICO Score
People tend to have more credit today and shop for new credit more frequently than ever. FICO® Scores reflect this reality. However, research shows that opening several new credit accounts in a short period of time represents greater risk - especially for people who don't have a long credit history.
Your FICO Scores take into account several factors, including how you shop for credit.
Its OK to request and check your own credit report
Checking your credit report won’t affect your FICO Scores, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers, such as myFICO.
How many new accounts you have
Your FICO® Scores look at how many new accounts you have by type of account. They also may look at how many of your accounts are new accounts.
Don't open new accounts too rapidly
If you have been managing credit for a short time, don’t open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your FICO® Scores if you don’t have a lot of other credit information. Even if you have used credit for a long time, opening a new account can still lower your FICO Scores.
How many recent inquiries you have
An inquiry is when a lender makes a request for your credit report or score. Inquiries remain on your credit report for two years, although FICO® Scores only consider inquiries from the last 12 months. FICO Scores have been carefully designed to count only those inquiries that truly impact credit risk, as not all inquiries are related to credit risk.
There are 3 important facts about inquiries to note:
- Inquiries usually have a small impact
- Many types of inquiries are ignored completely
- The score allows for "rate shopping"
MYTH: My FICO Scores will drop if I apply for new credit
TRUTH: If they do, they probably won't drop much. If you apply for several new credit cards within a short period of time, multiple requests for your credit report information (inquiries) will appear on your report. Shopping for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.
Learn more about credit inquiries
Length of time since credit report inquiries were made
When you shop for credit, inquiries remain on your credit report for two years, although FICO® Scores only consider inquiries from the last 12 months.
How long it's been since you opened a new account
Your FICO® Scores may consider the time that has passed since you opened a new credit account, for specific types of accounts.
Whether you have a recent good credit history, having bounced back from past payment problems
Late payment behavior in the past can be overcome; re-establishing credit and making payments on time will raise a FICO® Score over time.
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