Author Topic: Credit score won't recover from travel hacking  (Read 3104 times)

Mrbeardedbigbucks

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Credit score won't recover from travel hacking
« on: October 12, 2017, 05:38:31 AM »
Back in May when Chase was offering 60k sign up bonus on their Southwest branded credit cards, I applied for the Plus and Premier cards and received both. Over a 3 month period we were able to make the minimum spend requirement and netted 126k points (120k bonus + 6k spending) and qualified for the Southwest companion pass. The companion pass is good through the rest of 2017 and all of 2018. So far we've used it once and we still have 115k points left. Two roundtrip tickets from Manchester, NH to Charleston, SC only used up 11k points. That companion pass and points are extremely valuable.

I'm enjoying the free airline tickets but not enjoying my credit score. I've read in multiple places (from the various bloggers who are skilled at travel hacking) that your credit score typically recovers in a few months. My average credit score prior to applying for the cards was 815 but after I applied for the cards it dropped to 795. It has stayed at 795. It hasn't recovered one point since May. I haven't applied for or closed any other cards since then. Both cards gave me a 30k credit limit each and I pay my cards in full every month. I also confirmed there was only 1 hard pull of my credit report since I applied for the cards almost back to back (within days).

Has anyone else experienced this? Why hasn't my credit score recovered like the travel hacking gurus said it would
?
I'd like to play the travel hacking game a little more but I don't want to see a 10-20 point hit to my score every time I apply for a card. I don't plan on applying for any loans anytime soon but you never know what's around the corner. I'd like to keep my score in the 800 range. 

martyconlonontherun

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Re: Credit score won't recover from travel hacking
« Reply #1 on: October 12, 2017, 06:14:00 AM »
Why do you care if your score is 795 or 815. Mine dropped from 815 down to 760 when applying for the SWs cards, consolidating student loans, and then applying for a mortgage. We still qualified for the best loan from the bank. (Maybe I'm a noob but it was the lowest stated rate and they told me my score hit the highest threshold and having a better score wouldn't have made a difference).


Also, it will go back up. Mine is back to 790 at 6 months. I'm sure you will be back at 800 within 4 months. My biggest ding according to Discover is too many inquiries and average length of credit history. The inquiries will start fading away after 12 months. The length of credit will to.

It could also be a timing thing, if you had 6k on credit when they ran it, it may lowered your score because your loans/credit limit ratio was lower? No idea, just throwing out alternatives.

Finally, churning is for people who don't care about their score since it is unlikely the churning will lower there credit enough to ding them on loans when you get below 740 (or they don't need loans). If it's a pride thing, then avoid churning in the future. I think SWs deal is worth it to do it twice (once for me, once for the wife)

It's kind of a paradox where your credit score is extremely important to people who don't know it, but not important at all that people who do. If you are the type of person who knows how to look at your credit score, you are probably smart enough financially to play loans on time, not take unnecessary credit, etc). At that point you look at it and say why do I even care (besides checking for identity fraud).

It's kind of like investing, it's such a mystery and spend all this time learning about strategies and you realize all you do is mainly invest in index funds. You almost feel dumb spending so much time caring when the answer is simple.

slappy

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Re: Credit score won't recover from travel hacking
« Reply #2 on: October 12, 2017, 06:25:12 AM »
795 is still an amazing score. I wouldn't worry about it.

NeonPegasus

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Re: Credit score won't recover from travel hacking
« Reply #3 on: October 12, 2017, 06:31:16 AM »
Mine took a hit as well and it was worse than what you suffered. It has been recovering slowly but it was definitely worth it for getting the companion pass and all of the free flights that we have enjoyed in the past year.


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SHARP_00

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Re: Credit score won't recover from travel hacking
« Reply #4 on: October 12, 2017, 07:47:20 AM »
So you probably got a small hit from the hard pulls themselves, which roll off in 12-24 months depending on the score algorithm. You also would take a hit to average age of accounts with two brand new accounts. Depending on how many and how old your other accounts are, this could be bigger or almost nothing. Either way, it won't change in 3 months.

Bicycle_B

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Re: Credit score won't recover from travel hacking
« Reply #5 on: October 12, 2017, 08:45:59 PM »
I have 770 at one credit agency and 810 at another.  I don't care because they produce the same results.  My ratings are higher now than when I travel hacked last fall.  Planning to get another card or two soon.

EarthSurfer

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Re: Credit score won't recover from travel hacking
« Reply #6 on: October 13, 2017, 06:38:03 AM »

My average credit score prior to applying for the cards was 815 but after I applied for the cards it dropped to 795. It has stayed at 795. It hasn't recovered one point since May.
...

Has anyone else experienced this? Why hasn't my credit score recovered like the travel hacking gurus said it would
?
I'd like to play the travel hacking game a little more but I don't want to see a 10-20 point hit to my score every time I apply for a card. I don't plan on applying for any loans anytime soon but you never know what's around the corner. I'd like to keep my score in the 800 range.

Quit being such an overachiever in areas that don't matter!!!

You have a AAA credit credit score (over 720), and there is NO difference between 795 and 815 in the real world.

Travel hacking "spends" a few points of credit score for travel points. That's part of the game.

By design, credit scores drop quickly when there is new account activity, and the score will recover over a year. Multiple credit cards opened for less than a year will affect your average account age, but this has a minimal long term effect. (I would estimate about 10 points in my case.)
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Mr. Green

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Re: Credit score won't recover from travel hacking
« Reply #7 on: October 13, 2017, 07:01:05 AM »
To my knowledge there is no scenario where a 795 puts you in a worse position than an 815. No bank is going to charge you a higher interest rate for that. If you really want to see what's up you can get a free credit report (minus the score) from annualcreditreport.com. If there is something affecting your score negatively, it will tell you, like "Too many requests" or "credit history not long enough."
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kendallf

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Re: Credit score won't recover from travel hacking
« Reply #8 on: October 13, 2017, 07:16:55 AM »
I went through about a two year period where I opened 20+ cards, and my score bounced around probably 40 points from high to low during that period.  The more accounts I got, the less any one account activation affected it (though the multiple pulls is a drag on the score for a good while).  The more accounts you have, the more difficult it is to "move the needle" for average age of accounts and percent credit utilization.  The first gets slightly worse and the second gets slightly better..

My score is currently around 760-795, depending on which FICO score they're quoting and which credit reporting agency the data is pulled from.  None of that seems to matter in real life.  If I needed a mortgage I'd probably stop for a year, but I don't.
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boarder42

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Re: Credit score won't recover from travel hacking
« Reply #9 on: October 13, 2017, 07:38:37 AM »
haha is this a joke.  795 vs 815 seriously dude? 

and more importantly why do you care.
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Dicey

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Re: Credit score won't recover from travel hacking
« Reply #10 on: October 13, 2017, 07:59:07 AM »
Alll that travel benefit only "cost" you twenty points, and even that is temporary.  The only reason it should bother anyone is if they feel superior to others because their score is over 800. You're not one of those people, are you? There are a lot more valuable metrics by which to measure a life.
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Mrbeardedbigbucks

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Re: Credit score won't recover from travel hacking
« Reply #11 on: October 13, 2017, 09:27:30 AM »
haha is this a joke.  795 vs 815 seriously dude? 

and more importantly why do you care.

The only reason it should bother anyone is if they feel superior to others because their score is over 800. You're not one of those people, are you? There are a lot more valuable metrics by which to measure a life.


Quit being such an overachiever in areas that don't matter!!.

This is why I have a love hate relationship with forums like this. You can get a lot of good information but unfortunately you have to deal with comments like this from time to time.

I'm less concerned about my actual score for right now but more concerned about how quickly it dropped and how slowly it takes to recover. If I apply for two to three more cards in the near future, I'm concerned my score could drop another 40-60 points. I have no plans on applying for any loans right now but things could change. My wife and I may consider buying a rental property in the future.  We would like the best financing possible if we do.  I know the answer is "well if you plan on buying a rental property then stop applying for credit cards" but that's precisely why I'm here asking the question. I'm trying to figure out how and why my score dropped so much and how long it takes to recover. If it keeps dropping 20 points at a time, then maybe I should pull back on the travel hacking in order to keep my score in good shape for the future. I'm trying to get a better sense of other seasoned travel hackers experiences with their credit scores. I want to find a balance between travel hacking and keeping options open for the future.

I'm not trying to over achieve and this is certainly not a measure of my life. It's possible I just don't have a full understanding of how credit scores work. It's a financial blind spot for me.  I've read a lot of information online about credit scores but I like to hear about real life examples.

For those who provided constructive feed back, it's much appreciated.

boarder42

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Re: Credit score won't recover from travel hacking
« Reply #12 on: October 13, 2017, 09:54:14 AM »
your score didnt drop alot you're being irrational about it.

but opening 2 new accounts pulls down the avg age of your credit history. 

but freaking out over 20 points is laughable.  if you're over 740 you'll get the prime rate there is not a linear relationship between opening accounts and 20 point drops.  every card you open doesnt cost you 20 points

also if you're just using credit karma to track this your actual score is likely much less than what they are showing you - i'm sure that doesnt make you feel better but anything outside of a hard pulled score or asking for them yourself from the bureau is an estimate and most of them are off on the high side.
« Last Edit: October 13, 2017, 09:58:23 AM by boarder42 »
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Mrbeardedbigbucks

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Re: Credit score won't recover from travel hacking
« Reply #13 on: October 13, 2017, 10:18:57 AM »
your score didnt drop alot you're being irrational about it.

but opening 2 new accounts pulls down the avg age of your credit history. 

but freaking out over 20 points is laughable.  if you're over 740 you'll get the prime rate there is not a linear relationship between opening accounts and 20 point drops.  every card you open doesnt cost you 20 points

also if you're just using credit karma to track this your actual score is likely much less than what they are showing you - i'm sure that doesnt make you feel better but anything outside of a hard pulled score or asking for them yourself from the bureau is an estimate and most of them are off on the high side.

God I hope you don't have children.

I think maybe your knowledge about credit scores is laughable. I refinanced my mortgage earlier this year. My mortgage company pulled my credit score from three bureaus and used the middle score. That middle score was only 4 points lower than kredit carma and exactly even with Capital One Creditwise. I don't care how big your 'stache' is, if you're gonna offer advice and comment, at least know what you're talking about and keep your judgments to yourself.

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« Last Edit: October 24, 2017, 07:22:01 PM by arebelspy »

Scortius

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Re: Credit score won't recover from travel hacking
« Reply #14 on: October 13, 2017, 10:27:13 AM »
your score didnt drop alot you're being irrational about it.

but opening 2 new accounts pulls down the avg age of your credit history. 

but freaking out over 20 points is laughable.  if you're over 740 you'll get the prime rate there is not a linear relationship between opening accounts and 20 point drops.  every card you open doesnt cost you 20 points

also if you're just using credit karma to track this your actual score is likely much less than what they are showing you - i'm sure that doesnt make you feel better but anything outside of a hard pulled score or asking for them yourself from the bureau is an estimate and most of them are off on the high side.

God I hope you don't have children.

I think maybe your knowledge about credit scores is laughable. I refinanced my mortgage earlier this year. My mortgage company pulled my credit score from three bureaus and used the middle score. That middle score was only 4 points lower than kredit carma and exactly even with Capital One Creditwise. I don't care how big your 'stache' is, if you're gonna offer advice and comment, at least know what you're talking about and keep your judgments to yourself.

No, you are missing the point.  Above a certain score around 720-760, there will be no difference in the financing options available to you. 795 vs 815 is meaningless and you are worrying about a non-issue.  People are laughing because you have excellent credit that many in the country could only dream of, and you are flipping out over a meaningless temporary dip in your score.

boarder42

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Re: Credit score won't recover from travel hacking
« Reply #15 on: October 13, 2017, 01:16:16 PM »
your score didnt drop alot you're being irrational about it.

but opening 2 new accounts pulls down the avg age of your credit history. 

but freaking out over 20 points is laughable.  if you're over 740 you'll get the prime rate there is not a linear relationship between opening accounts and 20 point drops.  every card you open doesnt cost you 20 points

also if you're just using credit karma to track this your actual score is likely much less than what they are showing you - i'm sure that doesnt make you feel better but anything outside of a hard pulled score or asking for them yourself from the bureau is an estimate and most of them are off on the high side.

God I hope you don't have children.

I think maybe your knowledge about credit scores is laughable. I refinanced my mortgage earlier this year. My mortgage company pulled my credit score from three bureaus and used the middle score. That middle score was only 4 points lower than kredit carma and exactly even with Capital One Creditwise. I don't care how big your 'stache' is, if you're gonna offer advice and comment, at least know what you're talking about and keep your judgments to yourself.

i have no idea what my case of whether to have children or not has to do with this at all. 

it is not my fault you cant accept the fact that you're being irrational.

but after this post i'd say the travel hacking game likely isnt for you.  You probably should quit so you can keep that score high.  the less people who play the longer the game will last for the rest of us. 

tldr; if you cant stomach your score going under 800 this isnt a game you should play
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Mrbeardedbigbucks

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Re: Credit score won't recover from travel hacking
« Reply #16 on: October 13, 2017, 02:08:58 PM »

No, you are missing the point.  Above a certain score around 720-760, there will be no difference in the financing options available to you. 795 vs 815 is meaningless and you are worrying about a non-issue.  People are laughing because you have excellent credit that many in the country could only dream of, and you are flipping out over a meaningless temporary dip in your score.

I don't think I'm flipping out about my credit score. I'm just trying to get information. And not everyone is laughing except you and that other dude but thanks for taking the time to reply.

Here's a recent article from what I believe to be a credible source:

http://www.nasdaq.com/article/how-credit-score-affects-your-mortgage-rate-cm857731

"The lending industry carves up the credit score scale into 20-point increments and adjusts the rates it offers borrowers each time a credit score moves up or down by about 20 points. For instance, if your score drops to 740 from 760, you're likely to see a small bump up in the rate you'll be offered. In the industry, this is called "loan-level pricing," and every time you go down a level, there's an increase in costs, Hoovler says.

"If you have a score of 760 or above, you're pretty much golden," he says. "From there down, every 20 points you'll start seeing small hits here and there."


Yes, right now I'm in that golden territory but my concern is seeing these 20 point drops every time I get a new card and my score takes a long time to recover.  I was under the impression that a hard pull on credit would only drop your score by 5-10 points and then your score rebounds after a few months. Perhaps this is specific to each persons credit history and details. I don't know. That's why i'm here, to find out what experiences other people have had with their scores.

We have no plans right now or in the near future but if we decide to buy a rental property at some point and our score is still low from all this credit card churning, it's possible we won't get the best rate available. The hit we take on the rate could potentially wash out the travel savings that we realized with credit card churning. I'm trying to figure out a way to get free travel and not shoot myself in the foot if we decide to invest in a two family home someday.

Catbert

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Re: Credit score won't recover from travel hacking
« Reply #17 on: October 13, 2017, 02:09:42 PM »
Op, to get back closer to your original issue.  I started travel hacking in Jan 2015.  Before I started Citi showed my FICO as 859 on a 900 point scale.  (yes, it's a real FICO, I think called FICO 9.)   After I got my first travel card*, it dropped to 830.  When it slowly drifted up for  couple of months.  Then I got another card after 4 months or so my FICO was 832. 

Over the last almost 3 years I gotten 9 cards and my FICO is 863 (higher than when I started).  When I get another card it takes a small dip but then drifts up again.


*Obviously this wasn't my first credit card ever, but it was probably the first I'd gotten new in this century.




Clean Shaven

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Re: Credit score won't recover from travel hacking
« Reply #18 on: October 13, 2017, 02:20:08 PM »

This is why I have a love hate relationship with forums like this. You can get a lot of good information but unfortunately you have to deal with comments like this from time to time.

God I hope you don't have children.

...if you're gonna offer advice and comment, at least know what you're talking about and keep your judgments to yourself.

Pot, meet kettle.

Mrbeardedbigbucks

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Re: Credit score won't recover from travel hacking
« Reply #19 on: October 13, 2017, 02:30:29 PM »
Op, to get back closer to your original issue.  I started travel hacking in Jan 2015.  Before I started Citi showed my FICO as 859 on a 900 point scale.  (yes, it's a real FICO, I think called FICO 9.)   After I got my first travel card*, it dropped to 830.  When it slowly drifted up for  couple of months.  Then I got another card after 4 months or so my FICO was 832. 

Over the last almost 3 years I gotten 9 cards and my FICO is 863 (higher than when I started).  When I get another card it takes a small dip but then drifts up again.


*Obviously this wasn't my first credit card ever, but it was probably the first I'd gotten new in this century.

So it looks like you got a fairly big drop in your score but it slowly started to creep back up. For what ever reason I'm not getting that recovery. My score really hasn't budged in three months and there's nothing strange looking on my credit report.  Perhaps the way scores are calculated have changed.

Mrbeardedbigbucks

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Re: Credit score won't recover from travel hacking
« Reply #20 on: October 13, 2017, 02:37:05 PM »

This is why I have a love hate relationship with forums like this. You can get a lot of good information but unfortunately you have to deal with comments like this from time to time.

God I hope you don't have children.

...if you're gonna offer advice and comment, at least know what you're talking about and keep your judgments to yourself.

Pot, meet kettle.


You're right, I apologize. Trolls can bring out the worst in a person. Someone warned me about him. I should have just kept my mouth shut.

bacchi

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Re: Credit score won't recover from travel hacking
« Reply #21 on: October 13, 2017, 03:05:53 PM »
Yeah, this is probably from your AAoA. Are you in your 20s? How long have you had credit? My score barely nudged when I started but I had an AAoA of 15 years (from several cards in freshman year that I kept).

bridget

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Re: Credit score won't recover from travel hacking
« Reply #22 on: October 13, 2017, 03:07:52 PM »
It sounds like your concern is that each card (or pair of cards) will have a similar, linear effect on your credit score. 

Some anecdata: Over the last 2 years, I have applied for 6 cards, approximately 4-6 months a part from one another.  With the first pair of cards, my score also slipped 15-20 points, like yours, and crossed the threshold.  The next card (a single one, not a pair like the first time) dropped it 5-10 points, and it crept up again.  For the last three cards, the change was more negligible (5 points, I think).  I started in the 810 range, and have never dropped below 785, even though I opened cards seriatim.  I stayed in the ideal zone the whole time.

Note, my average age of credit stays fairly high because my oldest card has been active since about 2006. 

The math on how credit scores work is a little opaque, but I think the answer is that you do not need to be concerned that your next card will make you drop to say, 770, and then next to 750 (out of the golden zone). 

tralfamadorian

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Re: Credit score won't recover from travel hacking
« Reply #23 on: October 13, 2017, 03:56:22 PM »
I'm less concerned about my actual score for right now but more concerned about how quickly it dropped and how slowly it takes to recover. If I apply for two to three more cards in the near future, I'm concerned my score could drop another 40-60 points. I have no plans on applying for any loans right now but things could change.

Wow, folks are being tough on the OP. 

OP, download the Credit Karma app and see what you numbers look like.  Chances are the change is due to decreased average account age and/or increased number of hard credit pulls.  You will be able to see right there how long it will take for the average credit age to increase up to the next bucket or for credit pulls to drop off.  There's also a credit simulator that will tell you how much a new card or two would change your score according to their estimates. 

boarder42

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Re: Credit score won't recover from travel hacking
« Reply #24 on: October 13, 2017, 08:46:53 PM »

This is why I have a love hate relationship with forums like this. You can get a lot of good information but unfortunately you have to deal with comments like this from time to time.

God I hope you don't have children.

...if you're gonna offer advice and comment, at least know what you're talking about and keep your judgments to yourself.

Pot, meet kettle.


You're right, I apologize. Trolls can bring out the worst in a person. Someone warned me about him. I should have just kept my mouth shut.

So first you insult me by saying I shouldn't have children. Then in your wise wisdom you follow that up by calling me a troll. I'm not a troll on these forums. You aren't listening to what anyone has said that isn't in line with a response you expected. 

If youre looking for a room full of yes men what would you like the answer to your question to be? 

Your response is similar to someone posting about buying an SUV and getting pissed when people laugh at it. 

You obviously need to spend some time learning and reading yourself from what you personally consider to be credible sources because you are looking for someone to say something to confirm a preconceived notion you had in mind. It not just 2 or 3 people here laughing at your concern. 

You can Google anything and get a result that meets your expectation. Why you would ask this question here and then be offended by people laughing at the premise is beyond me. 

The laughs are not personal attacks. It's because the question is as ridiculous as asking why wouldn't I eat McDonald's every day

But feel free to continue to personally attack me rather than read what I wrote.
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channtheman

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Re: Credit score won't recover from travel hacking
« Reply #25 on: October 14, 2017, 03:35:58 AM »
Are you being serious OP?  795 is a fantastic score and you know it.  Stop humblebragging.

Mrbeardedbigbucks

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Re: Credit score won't recover from travel hacking
« Reply #26 on: October 14, 2017, 04:35:47 AM »
It sounds like your concern is that each card (or pair of cards) will have a similar, linear effect on your credit score. 

Some anecdata: Over the last 2 years, I have applied for 6 cards, approximately 4-6 months a part from one another.  With the first pair of cards, my score also slipped 15-20 points, like yours, and crossed the threshold.  The next card (a single one, not a pair like the first time) dropped it 5-10 points, and it crept up again.  For the last three cards, the change was more negligible (5 points, I think).  I started in the 810 range, and have never dropped below 785, even though I opened cards seriatim.  I stayed in the ideal zone the whole time.

Note, my average age of credit stays fairly high because my oldest card has been active since about 2006. 

The math on how credit scores work is a little opaque, but I think the answer is that you do not need to be concerned that your next card will make you drop to say, 770, and then next to 750 (out of the golden zone). 

Yeah, this is probably from your AAoA. Are you in your 20s? How long have you had credit? My score barely nudged when I started but I had an AAoA of 15 years (from several cards in freshman year that I kept).


I looked into it a little further and my oldest credit line is 8 years but the two Southwest cards I opened are both at 4 months. This is pushing down my average significantly. I'm also wondering if it has to do with the fact that they changed the way credit scores are calculated. Someone sent me this link:

https://thepointsguy.com/2017/04/changes-credit-score-calculations/

And for all of those who have lots of cards open, your score could be hurt as well. VantageScore will punish those with exorbitantly high credit card limits because they have the ability to rack up high credit card debt quickly.

In the past it was recommended to keep all your credit card accounts open (if you could afford the annual fees), helping your average age of accounts score and keeping your credit utilization ratio lower. Now it may be worth considering closing some accounts that you may not use.


I'm not sure what is considered "exorbitantly high" but the two Southwest cards each had a 30k credit limit. Perhaps the combination of average age and the new credit score calculation is causing my score to be stagnant.


Wow, folks are being tough on the OP. 

OP, download the Credit Karma app and see what you numbers look like.  Chances are the change is due to decreased average account age and/or increased number of hard credit pulls.  You will be able to see right there how long it will take for the average credit age to increase up to the next bucket or for credit pulls to drop off.  There's also a credit simulator that will tell you how much a new card or two would change your score according to their estimates. 

Thank you for pointing out that credit simulator. I checked it out but I'm not certain if it's working. No matter what I enter, my credit score stays the same or maybe it is working and that would be good! I guess the only way I'll find out for sure is to apply for the Chase Sapphire and see what happens. If I get dinged another 20 points then maybe I just slow down on getting cards for a while and just be happy with the free travel I was able to get.

Are you being serious OP?  795 is a fantastic score and you know it.  Stop humblebragging.

I'm not humblebragging. I think if you read everything you'll understand why I'm asking these questions. I'm just not seeing any recovery in my credit score and I plan on applying for more cards. I don't want a bunch of consecutive 20 point drops further pushing my score into a lower range for an extended period of time. Some people have been very helpful and now I feel confident that probably won't happen.

When people on this forum post a case study and they show that they've been able to save over 1 million dollars in assets at an early age, is this humblebragging? No, they're just trying to get opinions, advice and reassurance. I thought that's what you do around here.  I'm fairly new so perhaps discussing credit scores is a taboo subject for some people.

For those who have taken the time to post and provide me with constructive feedback...I greatly appreciate it.

channtheman

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Re: Credit score won't recover from travel hacking
« Reply #27 on: October 14, 2017, 06:01:25 AM »
I'm not humblebragging. I think if you read everything you'll understand why I'm asking these questions. I'm just not seeing any recovery in my credit score and I plan on applying for more cards. I don't want a bunch of consecutive 20 point drops further pushing my score into a lower range for an extended period of time. Some people have been very helpful and now I feel confident that probably won't happen.

When people on this forum post a case study and they show that they've been able to save over 1 million dollars in assets at an early age, is this humblebragging? No, they're just trying to get opinions, advice and reassurance. I thought that's what you do around here.  I'm fairly new so perhaps discussing credit scores is a taboo subject for some people.

For those who have taken the time to post and provide me with constructive feedback...I greatly appreciate it.

Pretty much any score over 760 is just fine for loans or anything else you'd ever want to do.  You're at 795 after a dip.  How many rewards cards are you planning on opening in the next few months?  And you already posted that you know not to open accounts if you are planning on obtaining a loan for a home.  It just seemed like you already know what to do, and I find it odd/hard to believe you wouldn't know that your score is fantastic. 

The people asking what to do with a specific situation and 1 millions dollars aren't humblebrags, unless they post stupid crap like "I've got 1.6 million in taxable, another 1 million in 401k and a paid off house at 34.  Am I doing ok?"   The second scenario isn't really asking a question and that's just kind of how your topic came across.

chasesfish

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Re: Credit score won't recover from travel hacking
« Reply #28 on: October 14, 2017, 06:10:26 AM »
I'm going to pile on to this conversation as a banker who's looked at credit scores for 15 years...

Its a bell curve after the mid 700's.  You aren't getting much value over 740 or 760 depending on the lender.   You shouldn't stress out too badly trying to get from the 97th percentile to the 99th percentile of credit scores.  The people with the highest credit scores tend to have one mortgage, two credit cards they pay in full, and haven't made a single change to any of their loans in 10 years.
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Dicey

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Re: Credit score won't recover from travel hacking
« Reply #29 on: October 14, 2017, 06:21:05 AM »
You're asking questions in facepunch land and you're whinging when you receive them?

For the type of information you're seeking, have you tried sitting down with an actual mortgage broker? You wanna buy a house? Go get pre-qualified and pre-approved. You'll learn a lot from someone who's a trained professional. They want your business, so they'll be really nice to you.

The rest of us want nothing from you, and only take the time to answer in order to help. B42 can be brutally direct, but he knows his shit. We respect that here.

And expecting full bounce back in only three months is totally a tad unrealistic, hence the questions you've been receiving.

Best of luck to you.
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ChpBstrd

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Re: Credit score won't recover from travel hacking
« Reply #30 on: October 14, 2017, 08:22:37 AM »
The OP was not worried about their current credit score, which remains great. They were trying to figure out if they continued to card hack how much farther/faster would their credit score decline, or how fast it recovers.

These are valid questions, because the answer informs us about the pace we should open new cards. For example, I'm getting multiple offers to open cards with no annual fee, and get a $100 bonus for spending $1-2k in 60-90 days. This is FREE MONEY, but the question is if I opened a new card every month would I be looking at a 600 credit score one day? A lower credit score matters because I might want to downsize my housing and get a new mortgage in the next few years. It also affects my insurance rates. Also, the most lucrative credit card offers are limited to those with high credit, so over-utilization might kill the golden goose.

On the other hand, why leave $1,200/year in FREE MONEY on the table for the sake of a credit score that would heal in 8-9 months anyway?

Here's my contribution: I signed up for 4 cards this year (about 1-2 months apart) and earned about $500 in cash bonuses. My credit score declined from 810 to 795 in that time. I am currently watching the heal rate.

Would I trade the next 15 points of my credit score for another $500? F*** YEA! But I want to optimize so that my insurance bill and a potential future mortgage don't eat up all my gains later. I want to "harvest" as much of my credit score as possible, and convert it to cash or travel points without incurring other costs. Metering your credit score while doing this makes perfect sense.

PizzaSteve

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Re: Credit score won't recover from travel hacking
« Reply #31 on: October 14, 2017, 10:30:25 AM »
I will add that not all lenders mechanically use credit scores to determine rates offered.  A loan officer will look at other factors.  When you are wanting to buy that rental property, dont be lazy, shop for a good loan.  As a mustacian you will likely be able to point to your stash and say.. "Dude...give me the best rate or I walk across the street...I don't care what your credit formula says."  He or she will rationally see that you are likely in the upper 90th percentile of savers for your age (as most of us are) and know your assets will far exceed liabilities (unless you are super leveraged, in which case your score may actually reflect your risk and you will deserve a higher rate). I have travel hacked for decades and had lower than perfect credit and always shopped loans down to rock bottom rates, without much effort.  I avoid the big banks that generally are higher cost anyway and find the most aggressive lenders.  It is not such hard work, especially these days with the Internet.

In terms of the posters who feel entitled to give face punching right and left, because of the MMM style of blog, in these forums I suggest we ask OPs if they want a facepunch first.  It is good form.  Some want advice (aka critical or affirming guidance) and some just want information.  Offering advice on their behavior without being asked for it is IMHO being a troll or at best rude.  Those are my suggestions for forum guidelines.
« Last Edit: October 14, 2017, 10:59:28 PM by PizzaSteve »
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Bicycle_B

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Re: Credit score won't recover from travel hacking
« Reply #32 on: October 14, 2017, 11:22:20 AM »
ChpBstrd, great job articulating the tradeoffs and concerns that seem to be motivating the OP.  They make sense to me. 

Having just re-read almost the whole thread, I am baffled at the high numbers of posts that ignored OP's clear and consistent statements.  For those who feel the value in the site comes from keeping foolishness in check by calling it out, perhaps be a little slower in the future to assert humblebragging when simple caution is an equally plausible explanation.

On topic -
1) MrBeardedBigBucks, when checking my own credit scores, it appears that mine only get updated every three months.  Is it possible that the delay in your bounceback is just due to a short measurement period?  Perhaps more knowledgeable posters (like B42!) can confirm or deny this.

2) MBBB, I don't think that getting that getting one or two more cards will cause you problems.  Like the other posters, I think that the more cards you get, the less effect each one will have.  And of course you have 35 points of wiggle room before you risk a reduction in the value you get from the score.  I suspect the smart thing to do is seize the benefits of one or two more signup offers this fall, and monitor your score.  I'm pretty sure you'll see that it stays safely above 760, and your future options will be reliably safe.  Anyway, I admire your persistence.  Good luck!

« Last Edit: October 14, 2017, 11:25:20 AM by Bicycle_B »

boarder42

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Re: Credit score won't recover from travel hacking
« Reply #33 on: October 14, 2017, 12:04:19 PM »
at the end of the day my point wasnt to attack MBBB but to demonstrate that he needs to learn.  Taking one off statements from online people in a forum is not the way to learn how it works.  He should be researching this on his own and experimenting what his comfort level is.  If a 20 point drop from two cards makes you go holy shit you really should re-evaluate if this is something you want to do. 

Credit scores are overly emphasized as pizzasteve indicated above you can negotiate rates every time you get a loan.  The title of this post was your down fall - I only clicked on this post b/c "wont recover" in the travel hacking world would be a sub 700 score that wont bounce back and if thats your issue then there may have been some ways to help. 

there is no way to put together a formula that works for all parties on how a credit score is calcluated but until you drop below 740 for a sustained period of time you have 0 reason to be concerned about anything. 

if dropping below 800 bothers you to the point you're insulting people on the forums and calling them trolls this is probably not something that is acutally adding value to your life and you should just pay cash for your vacations.
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Dicey

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Re: Credit score won't recover from travel hacking
« Reply #34 on: October 15, 2017, 12:52:45 AM »
 
...if dropping below 800 bothers you to the point you're insulting people on the forums and calling them trolls this is probably not something that is acutally adding value to your life...
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Mrbeardedbigbucks

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Re: Credit score won't recover from travel hacking
« Reply #35 on: October 15, 2017, 05:47:06 AM »

Wow, folks are being tough on the OP. 


This


In terms of the posters who feel entitled to give face punching right and left, because of the MMM style of blog, in these forums I suggest we ask OPs if they want a facepunch first.  It is good form.  Some want advice (aka critical or affirming guidance) and some just want information.  Offering advice on their behavior without being asked for it is IMHO being a troll or at best rude.  Those are my suggestions for forum guidelines.

This

The OP was not worried about their current credit score, which remains great. They were trying to figure out if they continued to card hack how much farther/faster would their credit score decline, or how fast it recovers.

These are valid questions, because the answer informs us about the pace we should open new cards.

This


Having just re-read almost the whole thread, I am baffled at the high numbers of posts that ignored OP's clear and consistent statements.  For those who feel the value in the site comes from keeping foolishness in check by calling it out, perhaps be a little slower in the future to assert humblebragging when simple caution is an equally plausible explanation.


And This

 
...if dropping below 800 bothers you to the point you're insulting people on the forums and calling them trolls this is probably not something that is acutally adding value to your life...
^This^

But you're right, my apologies for insulting you and calling you a troll. I can take face punches when they're deserved but comments like "Is this a joke", "you're being irrational" and my concern is "laughable" and assuming I'm measuring my life by a credit score are not face punches, they're just condescending. It's obvious that many people understood my question and provided valuable feedback but for some reason a few people chose to interpret my question a different way.

Again, sorry for calling you a troll. You're probably a good person in real life. My advice going forward - if you don't have anything meaningful to say, just don't say it. I'll do the same thing. Take care.

For everyone else who understood my question and responded, I greatly appreciate the information and hearing about your experiences, you gave me some reassurance.  I applied for the Chase Sapphire preferred. I'll wait and see how that impacts my credit score. If it's not another 20 point drop, I'll move on to another card. Thanks again. 

Dicey

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Re: Credit score won't recover from travel hacking
« Reply #36 on: October 15, 2017, 07:04:47 AM »
Again, sorry for calling you a troll. You're probably a good person in real life. My advice going forward - if you don't have anything meaningful to say, just don't say it.
B42 did not ask for advice, but you did. There's no reason for you to call him out. B42 did have something meaningful to say, you just didn't like it or the direct way it was delivered.

Your post count seems to indicate that you don't spend much time interacting here. You've been registered for less than six months, and post roughly once per week. The variety and depth of responses you received is pretty typical for this amazing forum.

Perhaps you could please take your question to a travel site and stop criticizing the people who took the time to try to help you here.
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Mrbeardedbigbucks

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Re: Credit score won't recover from travel hacking
« Reply #37 on: October 15, 2017, 11:48:00 AM »
Again, sorry for calling you a troll. You're probably a good person in real life. My advice going forward - if you don't have anything meaningful to say, just don't say it.
B42 did not ask for advice, but you did. There's no reason for you to call him out. B42 did have something meaningful to say, you just didn't like it or the direct way it was delivered.

Your post count seems to indicate that you don't spend much time interacting here. You've been registered for less than six months, and post roughly once per week. The variety and depth of responses you received is pretty typical for this amazing forum.

Perhaps you could please take your question to a travel site and stop criticizing the people who took the time to try to help you here.

Agreed. You’re right. You both gave some good advice so thank you. I’ll have to read and interact more so I understand the tone of some of the people here.

We’re all on the same side.. early retirement, financial independence, frugality...now let’s move on.

pbkmaine

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Re: Credit score won't recover from travel hacking
« Reply #38 on: October 15, 2017, 11:50:40 AM »
Face punches are an honored tradition here, since Mr. Money Mustache himself is fond of giving them.

Slee_stack

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Re: Credit score won't recover from travel hacking
« Reply #39 on: October 16, 2017, 10:46:30 AM »
I'm not sure anyone is privy to the exact scoring models used in the credit industry.

The broader public has general knowledge (hard inquires, age of accounts, late payments, etc) but its still a somewhat cryptic calculation.


I would presume that if a travel hacker has a shorter history and/or smaller number of total accounts, that any change will have a more dramatic effect than someone with a larger one.

If you have 6 open accounts (vs 40), I would wager you score will drop more significantly and stay lower, longer.


Personally, I see changes in the 7 point range per new acct, and they tend to smooth out within 4 months.  I also have tens of accounts....

jezebel

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Re: Credit score won't recover from travel hacking
« Reply #40 on: October 16, 2017, 02:21:25 PM »
I've been doing this for over 3 years at a high rate of of new/closed cards, sometimes one every other month.  Currently I'm about 15 points below where I started in the 770s.  My highest score was about a year ago in the 800s.  It dips and bounces back.  I have a longer credit history and a much higher number of accounts than you appear to.

The point is that you have a very high score, which will be strengthened as you keep your oldest lines of credit.  If you are actually concerned about how it's dipping/recovering, then pace yourself or stop churning.  No one here can tell you with certainty how much your credit score will fluctuate.

DarkandStormy

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Re: Credit score won't recover from travel hacking
« Reply #41 on: October 16, 2017, 02:51:32 PM »
If you're above 740, you're fine for the best rates on loans.

The credit pulls (applying for new credit) will ding you a bit.  Your average credit length also dips, but presumably you also benefit from a lower credit utilization rate.

Check Credit Karma and Credit.com (both free) or other sites - I'm sure there are more.  Just make sure you're seeing it correctly and someone didn't open an account in your name or anything like that.

795 is still in the top percentile in the country.  There's literally no benefit to you maintaining an 815 score over a 795.  As your SW accounts age and the hard pulls fall off, your score will rise again.
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nexus

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Re: Credit score won't recover from travel hacking
« Reply #42 on: October 16, 2017, 05:14:33 PM »
I was in the 800s as well, but have dropped to 757. If you're a wells fargo customer you can see your credit report for free each month. They actually give you explanations for your scores. Also being a travel hacker and on my 3rd or 4th card for the year, here's what mine says...

Length of time accounts have been established
FICO® Scores consider the age of a person’s oldest account and/or the average age of accounts. Your score was impacted by the relatively low age of your oldest account and/or the average age of your accounts.
-makes sense because I closed an old credit card (8+ years old) when I applied for a new one. Now I only have two from 2011 that I never use and 3 that were opened this year, one of which I plan on closing before the annual fee kicks in.

Too many accounts recently opened
FICO® Scores consider the number of recent credit account openings. Your FICO® Score was impacted because of too many recent credit account openings.

Too many inquiries in the last 12 months
FICO® Scores look at the number of times a person applies for credit, since people who are actively seeking credit tend to pose more of a risk to lenders than those who are not. Your FICO® Score was impacted due to the number of applications for credit, or credit inquiries, within the last 12 months.
- Makes sense, Chase Sapphire, WF Cash Wise, Hilton HHonors, & I swear there was one more but I can't remember which one it was! Update: it was a Capital One card ^,^

Length of time installment loans have been established
FICO® Scores consider the age of the oldest and/or the average age of installment loans on a person’s credit report. Your score was impacted because the age of the oldest installment loan and/or the average age of installment loans on your credit report is relatively low.
-Not sure what this one's all about since I don't have any loans. Could be for a car I co-signed for a couple years ago.
« Last Edit: October 16, 2017, 05:21:23 PM by nexus »

Mrbeardedbigbucks

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Re: Credit score won't recover from travel hacking
« Reply #43 on: October 16, 2017, 05:43:45 PM »
I'm not sure anyone is privy to the exact scoring models used in the credit industry.

The broader public has general knowledge (hard inquires, age of accounts, late payments, etc) but its still a somewhat cryptic calculation.


I would presume that if a travel hacker has a shorter history and/or smaller number of total accounts, that any change will have a more dramatic effect than someone with a larger one.

If you have 6 open accounts (vs 40), I would wager you score will drop more significantly and stay lower, longer.



That's likely what's happened in my situation. Along with my mortgage, I built up good credit without really trying by just having the same credit card since 2005. It had a nice 40k limit, paid it off every month. That card came with a $95 annual fee. About three years ago, when I started to get serious about early retirement, I took a close look at my budget and cut out the low hanging fruit. I closed the card because I really couldn't justify the $95 fee.  I got another card with similar benefits and no fee. Closing that card shortened my credit history by quite a bit. Then add in a refinance to my mortgage recently. There's my short credit history right there.

Now I have three open cards (well four as of a couple days ago) and a mortgage.  Smaller number of accounts and shorter credit history = sharper drop and slow recovery.

If we ever decide on that rental property, it sounds like it could still drop another 40-50 points and still be in good shape but I also like PizzaSteve approach:

As a mustacian you will likely be able to point to your stash and say.. "Dude...give me the best rate or I walk across the street...I don't care what your credit formula says."

kendallf

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Re: Credit score won't recover from travel hacking
« Reply #44 on: October 16, 2017, 06:04:34 PM »
Face punches are an honored tradition here, since Mr. Money Mustache himself is fond of giving them.

pbkmaine, I'm quoting you for the MMM mention, not because I think you're contentious here.

In the hyperbole of a blog post, directed at a group or a generalized example person, MMM's face punches are illustrative and funny.  For many people here on this forum, they're used to excuse a lack of interpersonal skills, condescension, or being judgemental. 

TLDR:  Don't be a dick.
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Telecaster

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Re: Credit score won't recover from travel hacking
« Reply #45 on: October 16, 2017, 06:28:49 PM »

Agreed. You’re right. You both gave some good advice so thank you. I’ll have to read and interact more so I understand the tone of some of the people here.

We’re all on the same side.. early retirement, financial independence, frugality...now let’s move on.

I must say, this post has restored my faith in humanity.  You were a little over your skis at first, but recovered and instead of hunkering down, you decided simply not to go there.*  Bravo!  And well done.  We should all do as well. 


*Sorry for the mixed metaphor.

2Birds1Stone

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Re: Credit score won't recover from travel hacking
« Reply #46 on: October 16, 2017, 06:30:43 PM »
Who cares.....you need to spend your energy on more important things
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Mrbeardedbigbucks

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Re: Credit score won't recover from travel hacking
« Reply #47 on: October 17, 2017, 06:39:50 AM »

Agreed. You’re right. You both gave some good advice so thank you. I’ll have to read and interact more so I understand the tone of some of the people here.

We’re all on the same side.. early retirement, financial independence, frugality...now let’s move on.

I must say, this post has restored my faith in humanity.  You were a little over your skis at first, but recovered and instead of hunkering down, you decided simply not to go there.*  Bravo!  And well done.  We should all do as well. 


*Sorry for the mixed metaphor.

What restored my faith in humanity is my good friend, who volunteered for the Hillary Clinton campaign last year, just got engaged to a die hard Donald Trump supporter. If they can manage to put their opinions and beliefs aside to find common ground then anyone can do it.

Appreciate the kind words.

Mrbeardedbigbucks

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Re: Credit score won't recover from travel hacking
« Reply #48 on: October 17, 2017, 06:52:01 AM »
I was in the 800s as well, but have dropped to 757. If you're a wells fargo customer you can see your credit report for free each month. They actually give you explanations for your scores. Also being a travel hacker and on my 3rd or 4th card for the year, here's what mine says...

Length of time accounts have been established
FICO® Scores consider the age of a person’s oldest account and/or the average age of accounts. Your score was impacted by the relatively low age of your oldest account and/or the average age of your accounts.
-makes sense because I closed an old credit card (8+ years old) when I applied for a new one. Now I only have two from 2011 that I never use and 3 that were opened this year, one of which I plan on closing before the annual fee kicks in.

Too many accounts recently opened
FICO® Scores consider the number of recent credit account openings. Your FICO® Score was impacted because of too many recent credit account openings.

Too many inquiries in the last 12 months
FICO® Scores look at the number of times a person applies for credit, since people who are actively seeking credit tend to pose more of a risk to lenders than those who are not. Your FICO® Score was impacted due to the number of applications for credit, or credit inquiries, within the last 12 months.
- Makes sense, Chase Sapphire, WF Cash Wise, Hilton HHonors, & I swear there was one more but I can't remember which one it was! Update: it was a Capital One card ^,^

Length of time installment loans have been established
FICO® Scores consider the age of the oldest and/or the average age of installment loans on a person’s credit report. Your score was impacted because the age of the oldest installment loan and/or the average age of installment loans on your credit report is relatively low.
-Not sure what this one's all about since I don't have any loans. Could be for a car I co-signed for a couple years ago.

Thanks for sharing that. It's good to see other peoples experiences to get a general idea of what to expect. I think I've come to the conclusion that if your average credit age is not long, any new cards will drop your score more dramatically with a much slower recovery compared to someone who has a longer history and more cards open. Hopefully if anyone else reads this and is new to credit card churning, this will help them to manage expectations around their score if they want to keep it in the 740+ range.

Bourbon

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Re: Credit score won't recover from travel hacking
« Reply #49 on: October 17, 2017, 07:15:39 AM »
I have 15+ open cards from travel hacking. I honestly don't know the actual number.

The hit you took with your recent batch of applications isn't a hit you will take ever time.  There's only so much of a hit you will get for signing up on cards.  I do recommend leaving them open.  If there is an annual fee on a card, often times you can convert that card to a fee-free version from the same company.  Throw it in a drawer or throw it away, and it will continue to contribute to the average age of your accounts and act as a hedge against the new accounts you are opening.

Just logged into mint and my fake free score is sitting at 817. Was 809 last time it updated.  Whatever, it's above 760.