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New
Credit
Are
you taking on more debt?
APPROXIMATELY 10% OF YOUR SCORE IS BASED ON THIS CATEGORY.
People
tend to have more credit today and to shop for credit —
via the Internet and other channels — more frequently than
ever. Fair, Isaac scores reflect this fact. However,
research shows that opening several credit accounts in a
short period of time does represent greater risk —
especially for people who do not have a long-established
credit history. This also extends to requests for credit, as
indicated by certain "inquiries" to the credit
reporting agencies, resulting from your requests for new
credit. An inquiry is a request by a lender to get a copy of
your credit report.
FICO®
scores do a good job of distinguishing between a search for
many new credit accounts and rate shopping, which is
generally not associated with higher risk.
Your score takes into
account:
- How
many new accounts you have. The score looks
at how many new accounts there are by type of account
(for example, how many newly opened credit cards you
have). It also may look at how many of your accounts are
new accounts.
- How
long it has been since you opened a new account.
Again, the score looks at this by type of account.
- How
many recent requests for credit you have made, as
indicated by inquiries to the credit reporting agencies.
Inquiries remain on your credit report for two years,
although FICO scores only consider inquiries from the
last 12 months. Note that if you order your credit
report from a credit reporting agency — such as to
check it for accuracy, which is a good idea — the
score does not count this, as it is not an indication
that you are seeking new credit. Also, the score does
not count requests a lender has made for your credit
report or score in order to make you a
"pre-approved" credit offer, or to review your
account with them, even though you may see these
inquiries on your credit report.
- Length
of time since credit report inquiries were made by
lenders.
- Whether
you have a good recent credit history, following past
payment problems. Re-establishing credit
and making payments on time after a period of late
payment behavior will help to raise a score over time.
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