Which statement best describes the effect of opening new credit lines on average age and score?

Which statement best describes the effect of opening new credit lines on average age and score?

• A. New accounts always increase average age of accounts.
• B. New accounts do not affect credit scores.
• C. New accounts lower average age and can temporarily lower score; with prudent use, scores can recover over time.
• D. Opening new lines immediately doubles your score.

Answer: (C)

Opening a new credit line affects both the average age of your accounts and your credit score. Adding a brand-new account pulls the average age down because you’re introducing a very young account into your mix. A shorter average age tends to weigh on your score, often causing a temporary dip. In addition, the initial hard inquiry to open the new line and the change in credit mix can contribute to a short-term drop. Over time, as the new account ages and you use credit responsibly (pay on time, keep balances low relative to limits), the score can recover and even improve. The overall idea is that new accounts can lower the average age and may cause a temporary decrease in score, but prudent use helps scores rebound as the new account ages.

Opening a new credit line affects both the average age of your accounts and your credit score. Adding a brand-new account pulls the average age down because you’re introducing a very young account into your mix. A shorter average age tends to weigh on your score, often causing a temporary dip. In addition, the initial hard inquiry to open the new line and the change in credit mix can contribute to a short-term drop.

Over time, as the new account ages and you use credit responsibly (pay on time, keep balances low relative to limits), the score can recover and even improve. The overall idea is that new accounts can lower the average age and may cause a temporary decrease in score, but prudent use helps scores rebound as the new account ages.