The holiday season is here! With that comes gift shopping which without care can lead to poor credit scores.
At this time of year we are all so used to hearing the same old song from the department store clerk singing the words, "If you open a store card today you will get an extra 30% off of your purchase". Well that sounds great but is it really? Let's take a look. Not only does opening a new credit card cause a third party credit review which can drops credit scores but it also impacts your average age of credit making it younger. Younger credit means higher risk and a drop in credit scores. If a mortgage applicant is at a 740 credit score and two new accounts are opened during Holiday shopping the 740 score could drop over 50 points. Depending on the loan amount the difference between a 740 credit score and a 690 credit score could be hundreds and thousands of dollars more over the life of a 30 year loan. It may also mean a rejection. To recover back to the original average age of credit could take years. Be sure to share this with your loan applicants or potential home buyers so they are aware before they start opening new credit cards.
















