First post, jumped into the "credit card pool". What next?

[Anonymous]

Hello to those paying attention

This is my first time here as a member.

Other than having 1 capital one credit card for the past 7 years (with a low credit limit ~ usually paid in full), my husband and I have never had any other credit cards and we are debt free in the loan department as well. We are both in our early 40's and totally clueless and ignorant to the world of financial strategies.

We both have steady jobs. I have been at mine for 2 years, he has been at his for 15.

We don't have a car payment or a home payment at the moment and we are planning on purchasing our first home in the next few months to year.

After reading alot of advice on here and plans on here last night for increasing credit ratings, I decided to jump in the credit card pool.

One thing I read is that I should apply for a few different cc's at the same time and so that is what I did. 4 out of 6 have been approved, the last two are pending. To my shock (I dont make a lot of money), I was approved for the american express blue cash preferred card which I have heard is hard to get unless you have excellent credit so according to american express, I must have great credit. The last time I checked my credit score (about a year ago), it was only around 720.

I have a couple of questions.

What should the plan be now that I have these credit cards?

If my husbands income is what the home loan will mostly be based on, is it ok for him to get a few credit cards now or should he wait until after we have been approved for a loan on the home?

How many points does applying for a credit card cause your credit score to drop? Once it drops, what is the best way to get it back up and how long does it take?

I realize I probably sound pretty stupid to most of the people on this site and that is ok with me if you dont mind taking the time to stop judging and give some good advice   

Thank you all for any sound advice you may have to offer.

[score_building]

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@Anonymous wrote:

Hello to those paying attention

This is my first time here as a member.

Other than having 1 capital one credit card for the past 7 years (with a low credit limit ~ usually paid in full), my husband and I have never had any other credit cards and we are debt free in the loan department as well. We are both in our early 40's and totally clueless and ignorant to the world of financial strategies.

We both have steady jobs. I have been at mine for 2 years, he has been at his for 15.

We don't have a car payment or a home payment at the moment and we are planning on purchasing our first home in the next few months to year.

After reading alot of advice on here and plans on here last night for increasing credit ratings, I decided to jump in the credit card pool.

One thing I read is that I should apply for a few different cc's at the same time and so that is what I did. 4 out of 6 have been approved, the last two are pending. To my shock (I dont make a lot of money), I was approved for the american express blue cash preferred card which I have heard is hard to get unless you have excellent credit so according to american express, I must have great credit. The last time I checked my credit score (about a year ago), it was only around 720.

I have a couple of questions.

What should the plan be now that I have these credit cards?

Enjoy and build a strong payment history with new lenders, no more app at this point. 

If my husbands income is what the home loan will mostly be based on, is it ok for him to get a few credit cards now or should he wait until after we have been approved for a loan on the home?

Ideally no cards at least 1 year before home loan.

How many points does applying for a credit card cause your credit score to drop? Once it drops, what is the best way to get it back up and how long does it take?

It varies, some opposing forces will raise and ding since you're adding INQ and new accounts, just continue to PIF and scores will rebound+ in a few months.

I realize I probably sound pretty stupid to most of the people on this site and that is ok with me if you dont mind taking the time to stop judging and give some good advice   

Thank you all for any sound advice you may have to offer 

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[smith5879]

You say your husband's income is the one the home loan will be mostly based on. Does this mean you'll also be on the mortgage? If so, they're going to pull both of your credit reports. Does your husband have a good credit score as well? Whoever is going to be on the mortgage should stay away from applying for anymore credit cards, at least 6 months out, preferably a year.

[takeshi74]

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@Anonymous wrote:

We don't have a car payment or a home payment at the moment and we are planning on purchasing our first home in the next few months to year.

After reading alot of advice on here and plans on here last night for increasing credit ratings, I decided to jump in the credit card pool. 

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Make sure you're careful with your research.  While at 2-3 cards are recommended for optimal scoring there's also the recommendation of not applying for any new credit for 6 months to a year prior to a mortgage.

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@Anonymous wrote:

To my shock (I dont make a lot of money), I was approved for the american express blue cash preferred card which I have heard is hard to get unless you have excellent credit so according to american express, I must have great credit.

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You need good credit but you don't have to have excellent credit to qualify for the BCP.

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@Anonymous wrote:

How many points does applying for a credit card cause your credit score to drop?

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It doesn't work that way.  There isn't an X number of points deducted for every new card application.  The impact depends on one's existing credit.  Hard pulls are typically a few points but it's not just a matter of the points.  Creditor will generally be more inquiry sensitive to those with thinner credit profiles and/or poorer credit.  Hard pulls are less of an issue for those with stronger credit profiles.  Mortgage lenders tend to be sensitive to any inquiries in the 6 months to 1 year prior to a mortgage and that's why the advice mentioned earlier exists.

AAoA also matters here since adding a new account drops AAoA.  However, one with a high AAoA and larger number of accounts will generally absorb a new account better than one with a lower AAoA and fewer accounts (consider how averages work).

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@Anonymous wrote:

What should the plan be now that I have these credit cards?

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It's basically just a matter of considering the usual factors:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

Payment History is just built over time with on time payments.  If you have dergos then get them addressed since they impact Payment History.  If you haven't pulled your reports then pull all of them and verify that the information is correct and that the reports are clean.

Utilization falls under Amounts Owed.  Utilization is based on the balances reported by your creditors on your revolving accounts.  You can read up here if want to micromanage your utilization to squeeze out as many points as possible but the general advice is to never exceed 30%.  Ideal is going to be about 10% or less.

Length of Credit History (Average Age of Accounts) is just built up over time.  You've reduced your Average Age of Accounts by opening new accounts.  This is just something that is built up over time.  In future you can leverage AmEx backdating.

New Credit is impacted by the credit pulls.  Those also just require time to taper and fall off.

Types of Credit is based on the variety that you have but it generally isn't advisable to seek out additional types just for scoring purposes.  You'll see an improvement in this area when you get your mortgage.