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Okay, you got approved for a great new credit card deal with amazing Introductory APR, cash access checks, and a high credit limit. After waiting for a week, you finally received your card in the mail. Now that you’ve gotten it, you start to wonder if when this new credit card will start appearing on your credit report so that you could plan your spending around it. It pays to know those little intricate details such as when it would show up on your report so that you could plan accordingly. Knowing it could make you save a lot of hard earned cash from interest rates that are very dependent on your credit score. Depending on what your goals are, I will cover in this article to the best of my ability the multiple intents of your question which may be helpful for different real-world scenarios.
So how long does it take for a new credit card or loan to show up on your credit report?
There’s a consensus amongst consumers that it usually takes two months for it to show up on your credit report, but the official data is 30 to 90 days. Typically, credit card issuers and different loan companies update your credit file with the credit bureaus 3 to 15 days after the end of each billing cycle, but for new credit cards and loans, there are still internal processes that they need to set up and reconcile before they could start furnishing information to the credit bureaus. Thus a delay in reporting happens for new accounts. The delay varies from one company to another depending on their capacity and internal processes.
How much does a new credit card affect your credit score?
It depends, new credit usually is 10% of your total score make up but if you have older credit cards that you’ve been using for more than 2 years, and your debt utilization of it is quite high, then an additional credit card could help you a lot depending on your before and after credit utilization ratio. Here’s an example of a scenario where a new credit card could increase your score drastically.
Scenario: Sarah has a 640 credit score, no derogatory remarks on her report. She has 3 credit cards with the following limits and balance.
|Credit Card||Bank of America||Capital One||Discover||Total||Credit Utilization Ratio|
If you can see on the far right bottom column above, the credit utilization ratio is at 57.5%. It should be at 30% or lower. Her credit score is held back because of that ratio. Adding a new credit card to lower her credit utilization ratio could make a lot of difference as evidence to the simulation below
After, She got approved for a new Amex credit card with a $3000 limit.
|Credit Card||Bank of America||Capital One||Discover||Amex||Total||Credit Utilization Ratio|
So after her new credit card, her credit utilization ratio was brought down to 36.7%, not quite at 30% but better than the 57%. With this kind of change, Sarah could see a 30 to 50 point increase on her credit score in 30 to 60 days.
Can you ask the credit card company to update your credit report?
No you can’t, they do that by batches and they go by their own internal time frame. What you could do though is ask for an account update letter written on their letter head with a direct contact number on it and you could do a rapid rescore service.
How long is an account considered new on your credit report?
An account is considered new on your report for two years.
Is the payment due date and the billing cycle end date the same?
No, it’s not. The billing due date is usually a few days after the billing cycle. Based on my experience it varies from 2 to 10 days give or take. On your credit card statement, you need to look for the billing cycle label or billing start date to find it. It varies for every credit card company if they’d show the date range or not, but as long as you got a start date or an end date, just count 30 days from there including the weekends and holidays and that would be your billing cycle. If you can’t find anything on your statement you could always give you credit card customer support people a call, and ask them about your billing cycle. Make sure you clarify to the customer support people that you’re asking about the billing cycle, not the due date. Sometimes you have to do that because these front in line customer support operators nowadays on 99% of the credit card companies are outsourced offshore. 30% of the time I usually ask to be escalated to a USA based account representative.
Why is there a disconnect between the billing cycle and the due date?
For me, it feels like this is implemented by design to support the credit card company’s business model. Most of us focus on the due date because the credit card companies want us to focus on it. You’ll see it in bold letters and prominent shaded boxes on our monthly statements. Sadly, I couldn’t say the same with the billing cycle. The fact of the matter is, credit card companies make money through interest fees, and those fees only kick in after 30 days, which is the end of the billing cycle. That’s why they’re making us focus on the due date. If you were to pay your credit card within the billing cycle you pay no interest fee at all. You would have used their money basically for free, and no balance will show up on your credit report at the end of the month.
Will my Credit Score get affected when the new credit card shows up?
Yes, depending on your credit situation, to begin with. It could affect your credit score positively or negatively in the short term. Here, I will point out as many scenarios and examples as I can to give you guys a firm understanding on how the credit system works. Let’s start with scenarios where a new credit card showing up affected the credit holder positively.
Does it hurt to pay off your credit card balance before the billing cycle ends?: https://t.co/oG0Gz198st pic.twitter.com/OifjseDV4m
— The Points Guy (@thepointsguy) January 8, 2019
Positive Scenario #1: First Credit Card, No Credit File.
This is all positive right here. The first credit card becomes one’s passport to the credit system. Before this, he was basically non-existent in the credit system, no credit score or even a file. This occurrence opened up a new financial possibility from there on forward.
Positive Scenario #2: 670 Credit Score, 60% credit utilization ratio on all credit cards.
So this is a little bit below-average credit score with a moderately high credit utilization ratio. What this means is, if his total credit limit for all his credit cards is $10,000 he’s using a total of $6,000 of that $10,000. As a basic rule, credit utilization ratios should be at 30% or below. In his case, he was able to get another $7,000 in credit limit for his new credit card so his credit utilization ratio went down to 35%. Not quite at 30% but close enough. As a result, his credit score went up by 80 points in 45 days, from 670 to 750.
Positive Scenario #3: 700 Credit Score,2 credit cards with 30% credit utilization ratio, One auto loan, Haven’t opened a new credit card in 4 years.
This one is an average model citizen in the personal credit world, but he couldn’t get his credit score to break out the 700 and 710 range. He applied for a very good low APR credit card and got a $4,800 limit. His total credit limit for his existing credit cards was $2,000 and he owes about $600. Together with his new credit card showing up, his total credit limit went up to $6,800 and his credit utilization limit went down to 8%. His score shot up to 750 in 30 days.
Now that you’ve seen the different positive scenarios, let’s head to the opposite side of the coin scenarios, here are a few negative ones that you guys could also learn from
Negative Scenario #1: 690 Credit score got approved for a credit card 45 days ago, decided to buy a car
This one is really unfortunate, that’s why you really need planning when it comes to credit and buying big purchases. The moment she went to the dealership to buy a car her credit was down to 660 because the new credit card account already showed up. So she was forced to add more to her down payment and she got a little bit higher interest rate. If she were able to get a car within 30 days since that new credit card approval, her credit score would have still stayed at 690 more and less, and she’d be able to save significantly on the purchase.
Negative Scenario #2: 680 Credit Score applying for a Personal line of credit.
Here’s another unfortunate scenario. Got approved for an AMEX card 2 months ago and started using it. He then applied for a pre approved personal line of credit. The moment he went to the bank to avail the preapproval he’s no longer qualified for it. His score went down by 30 points from 680 to 650 as soon as that credit card purchase kicked in. Quite unfortunate, but this is how the credit system works. To know it in its entirety is very critical to manage your personal finance.
It’s been 90 days now, and my new credit card hasn’t shown up yet. What Should I do?
If it hasn’t shown up yet I suggest calling your credit card company to see what’s going on. It’s very unlikely to take this long for it to show up, but below are some of the reasons why it’s still not showing up.
It’s a business credit card
Business credit cards will not show up on your personal report if you use your Employer Identification Number (EIN) and Social Security Number (SSN) on the application. For business owners, it’s a good thing because usually, businesses use a lot of debt to finance daily operations, and for it to show up on the business owner’s credit report will wreak havoc to his personal credit. If structured well, using a business credit card for business in most cases is beneficial.
The credit card company doesn’t report to the bureaus.
Check if the credit card company that you went with reports to all 3 credit bureaus, Experian, Transunion, and Equifax. There’s a lot of credit card companies right now that send you offers through the mail that doesn’t report to the bureaus. Also, in some cases when they report, they only report to 1 or 2 so I suggest to check all bureaus first if it’s there.
Identification errors and mix up
In cases where there’s a mix up of information on your Social Security Number or Name the account will not show up on your report. You need to inform your credit card company about it so that they could fix it right away. In some cases, you would need to inform all 3 credit bureaus of the mix up so that they could merge your files. A single or more number mix up on your social security, the first two letters of your first and last name combined with other things could trigger a new credit file creation with credit bureaus.