I got two new credit cards and my scores fell. I am making the payments on time. What is the problem?
There is no doubt that new credit cards are absolutely essential to your credit repair success. Without the new cards your credit scores will flounder. And those two new cards are capable of rocketing your scores up, perhaps more than 100 points. But you must give them enough time to deliver the credit repair benefit, and equally important, you must manage them properly.
A Temporary Score Dip
When you open a new credit card your credit scores will fall when it is initially reported to the credit bureaus. While your credit card is new and untested the FICO model will lower your scores as a warning to prospective lenders. The downward pressure on your scores will last between two and four months depending on the overall content of your report. After the fourth month you will start to realize a significant credit repair benefit in the form of higher scores.
Make Timely Payments
It is also essential to your credit repair results that you manage your cards very carefully. As powerful and beneficial as your new cards are, they are equally capable of wrecking your scores if you make late payments or run your balances up too high. You are in a credit repair program because you want to improve your credit so make sure your payments are made promptly. You might consider setting up automatic payments.
Keep Your Balances Low
You must also keep your payments low. The FICO scoring model is very sensitive to the relationship between your revolving balances and the account limits. For the best results only use 20 percent of the full amount of the cards limit. If you scores are down because of high balances, no worry, there is no lasting credit repair damage. Just pay them down and your scores will pop right up.