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New Member
NMCTech
Posts: 4
Registered: ‎04-20-2011
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Just starting my credit quest with some questions...

[ Edited ]

Hi Everyone, 

 

I'm fairly new to these forums and have very little understanding of credit as a whole. As such I have some questions that you may be able to answer. 

 

Just yesterday I got my first two "big name" approvals (i.e.. Not store credit cards). I posted about those yesterday but I find my self with a Discover it card and a Amex True Earnings card from Costco on the way and I am very excited that I got my credit to a point where I could be approved for them (the CLs were very good as well (4500 and 4700).

 

My questions mainly stem from my desire to gain better credit in order to get a good mortgage in the next several years.

 

My first question is about what I have observed in this forum. I have seen several posters that have a LOT of different cards, is there an advantage to this or is it just something people do for fun? I know that right now (and in the foreseeable future) I have absolutely no need for any additional cards but I want to know if this is something I should be looking towards in the future even if I don't need any additional credit.

 

Secondly what is the best way to proceed for the best affect on my credit? My current plan is to begin using the cards I was approved for to buy my normal monthly expenses and pay it off in full at the end of each month. I have no intention of applying for any additional credit for a while (I have several inquiries that will fall off in late April and I would like to see these new accounts gain some age) and I plan to pay off the no interest debt I have in full (should take me  about 5 months from now). Is the best thing to look at raising my credit limits in a few months (I have seen something about about a 3x CLI from Amex that does a soft pull) or should I just hold off on any pulls until I need more credit (which I don't ever see happening but you never know).

 

Lastly I was just curious if there was glossary of terms or acronyms that are used on the forum somewhere, I think I have gathered the meaning of most things but it would be very helpful in my journey to get better credit!

 

Thanks! 

 

 

Edit: never mind about the glossary question, I completely missed the sticky thread about useful threads :smileyvery-happy:


Starting Score: 652
Current Score: 652
Goal Score: 720


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Frequent Contributor
_jb_
Posts: 321
Registered: ‎01-16-2013
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Re: Just starting my credit quest with some questions...

Hello.

 

First off, congrats on your first 'big name' approvals. I know that is a great feeling, having been in the same boat just this past year.

 

About your first question, it is all personal choice. Some people have 10-20 (or more) credit cards that they rotate through for different rewards and/or sign up bonus. Some sign up for cards, use them, and then sign up for new (better?) cards while leaving the older ones in the SD. Some add new cards in an attempt to lower their utilization, therefore boosting their scores a few points. Others (myself included) don't want to deal with so many open accounts, so minimize the number of accounts that they open.

 

As an example, I currently have 5 cards that are listed in my signature. The CSP, Discover It, and Chase Amazon have their obvious uses. The Capital One is currently my highest cashback card (1.5%) for 'other purchases' and also my oldest account. The NFCU is a simple cashback card as well. Within the next 6 months, I will hopefully pick up an AmEx BCP and then either open a Chase Freedom or PC my Amazon card. At that point, I will move all of my spending to the CSP/Freedom, with the exception of 5% categories on the Discover and Groceries on the BCP. The NFCU and Capital One cards will get the SD for good at that point (I prefer the UR points for travel). That will leave me with 4 cards that I use, and the others will just help with utilization/AAoA. I have no plans to open other accounts past that. (I say that now... ha.)

 

As to your second question, I would do like you suggest and use those cards for 6 months+ and not apply for more credit until you need it. As you dive further into the credit world, you will figure out what cards you can pick up and use to your advantage.


Starting Scores: myFICO EX: ???, myFICO EQ: 678, myFICO TU: 676 (01/2013)
Latest Scores: myFICO EX: 699, myFICO EQ: 700, myFICO TU: 699
My Wallet: Chase Sapphire Preferred, Discover It, NFCU cashRewards, Capital One Quicksilver, Chase Amazon Rewards
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Valued Contributor
dddewdrop
Posts: 1,060
Registered: ‎02-06-2013
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Re: Just starting my credit quest with some questions...

   Welcome, Here is a link to abbreviations: http://ficoforums.myfico.com/t5/User-Guidelines-General/Common-Abbreviations/m-p/88458#U88458

 

     I think you are doing great and you have a good plan. I read somewhere that the opitimum number of credit cards is 3 but the formula for FICO scores is very complicated and the optimum number of cards may vary by bu cket. Either way,  you just got 2 good cards and use them responsibly and let them age and you should be in good shape.

0/10001100/13001346/16001699/2000Prepaid ,,Recent scores:FICO EX 632,EQ 635,TU 632...Link to my Rebuild Log
Valued Contributor
MovingForward_2012
Posts: 3,406
Registered: ‎12-19-2012
0

Re: Just starting my credit quest with some questions...

3-4 open trade lines are required by most lenders for a mortgage loan. I think less CCs is better for a mortgage loan because each card that has a balance, the min monthly payment is factored into your DTI and can lower the amount of home you can afford. I think 5-6 cards should be the max and if you want more cards for the different rewards after you are a homeowner, you can apply then.

I think you will be in a good position to buy in a year or two once you have 1-2 years of history on those trade lines. Wishing you the best!
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014

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