What does it mean if the time certain accounts have been opened indicates high risk?
In short, this means that you have been flagged as a high risk to lend to, due to the timing of when you applied for new credit. When you shop around and apply for new credit, a hard enquiry is done on your credit report. It’s also important to note that you could be flagged as a high risk depending on the time that you apply for specific credit accounts.
How does the time of opening credit accounts affect my credit score?
If you do not have a long credit history, opening several new credit accounts can indicate a higher risk. Because of this, your credit score could take a hit. If you are applying for new credit, this could be an indication that you are in desperate need of credit. How your credit score is calculated considers a range of factors and how you shop around for credit is one of these factors. If you check your own credit score, this will be a soft enquiry and it will not affect your credit score. However, whenever you apply for a new line of credit, credit providers will do a look up on you and this is a hard enquiry. Hard enquiries do affect your credit score. If you are applying for new accounts too rapidly, your credit score will decrease significantly.
What if I have been successfully granted the new credit accounts?
Even if you are accepted for a new line of credit, your credit score can be affected. This is because your credit report also considers how many new credit accounts that you have by type of account. For example, your credit report may indicate that you have new credit cards. This could position you as a higher risk. You need to remember that opening new accounts will also affect your average account age and this is a factor that is used to calculate your credit score.