“If you’re applying for a bunch of new credit, the algorithm assumes something’s wrong.”

– Sam Parker, CEO of MyCreditGuy

🧠 Understand the Credit Score Algorithm – Part 4: New Credit

Featuring Sam Parker, CEO of My Credit Guy Credit Restoration

When it comes to improving your credit score, sometimes what you don’t do matters just as much as what you do. That’s especially true with new credit, the fourth key factor in the credit score algorithm.

In this fourth installment of our 5-part series, Sam Parker, CEO of My Credit Guy Credit Restoration, breaks down why opening new credit accounts can trigger red flags—and what you should keep in mind, especially if you’re preparing for a major purchase like a home.

🎥 Watch Part 4 Now ⬇️

🧾 Why New Credit Matters

New credit makes up 10% of your total FICO® credit score. This section evaluates how often you apply for or open new credit accounts—and whether those behaviors suggest financial instability or risk.

In the video, Sam explains:

• The credit score is a risk model—and applying for a lot of new credit signals that something might be wrong

• The algorithm assumes you may be low on cash or living beyond your means

• Too many new accounts or credit inquiries at once can make you look like a risky borrower

• If a credit expert or loan officer tells you to open an account for a specific reason, that’s a valid exception—but otherwise, hold off

🧠 Sam’s key reminder: “Don’t go out applying all over the place. It sends up red flags to the scoring algorithm.”

✅ Take Action: Apply for Credit Strategically

New credit isn’t bad—it’s just something to handle with care. If you’re working on improving your score or preparing for home financing, here’s what to do:

• Avoid applying for new credit cards or loans unless absolutely necessary

• Space out any new applications by several months to reduce the impact

• Don’t open retail cards impulsively for a one-time discount

• Ask your lender or credit coach before applying if you’re in the middle of the mortgage process

• Monitor your credit report for new inquiries and account openings

📌 Coming Up Next: Part 5 – Mix of Credit

In the final installment of this series, we’ll explore the value of having different types of credit—like revolving accounts and installment loans—and why the mix of credit can give your score an extra boost when managed properly.

💬 Final Thought

New credit might only account for 10% of your score, but it can cause instant setbacks if you’re not careful. Before you say “yes” to that store card or car loan, ask yourself—is this helping my long-term goal, or hurting it?

When in doubt, pause and ask. The best credit moves are the ones made on purpose—not in the checkout line.