05-03-2011 03:54 PM - edited 05-03-2011 04:05 PM
Okay all, I'm trying to build credit and have a few questions.
I just graduated undergrad with about $12,000 in student loans. I've been paying a little bit each month on them but the official payments are deferred for six more months, so I don't think they count as a payment history yet. The last time I checked my score was about 730-760.
My oldest credit card account is 1 year old. It has a $1,000 limit and I've never had more than $300 on it at a time. I've always either paid in full (I think that's what it's called when you pay off your statement each month before interest collects?) or paid it all off even before the statement came. All the payments have been on time. Never carried a balance.
Yesterday I just got approved for the Military Star Card for a $6,300 limit. My husband is an authorized user (trying to rebuild his credit!) I'm not planning on using this extensively, I just wanted to get another credit line with the husband.
So, with all that said, I'm eyeing a Victoria's Secret Angel card and Kohl's card, because I'm reading that the more availaible credit you have, the better your FICO score. I'm not interested in really "using" them for their credit limits, their coupons and discounts seem like a good deal along with the extra credit lines.
Since I just got the Mil. Star card, should I wait? Is four cards too much when my oldest credit card account is only a year?
Also, are store cards bad compared to others? I don't want to "waste" cards in the long run.
Thanks for your advice!
05-03-2011 04:50 PM - edited 05-03-2011 05:37 PM
because I'm reading that the more availaible credit you have, the better your FICO score.
I'll let the experts awswer the question as to if you should apply for new cards.
But I will say that having more avail revolving credit alone does not help your scores, what helps your scores with the avail revolving credit you have is keeping your util (debt to avail credt) low, it seems most people see the best results with their util below 9%.
For example you say you have a 1000CC and now have a 6,300CC =7,300 total avail revolving credit.... so if you were to carry a balance you would want to stay under 700 or so, which would have you somewhere around 8-9% util.
The best thing to do is have a 0 balance on one CC and a small balance on the other CC when it reports to the CRA's, pay most of the balance on the one CC by the due date but leave like $20 on the card and then after the statement posts pay that small balance in full to avoid paying interest. Having a 0% util can actually lower your scores rather than having say, a 3% util, as odd as that is, its just the way the Fico system is.
I also wanted to mention that utilization ratio is 30% of your score.
I hope that makes sense.
Best of Luck.
05-03-2011 05:18 PM
With Victoria's Secret just go to their website and create an account, set up billing address and then put something in your cart. Proceed to check out and if a pre-approval offer pops up, take it, as it won't be a hard inquiry on your credit report and therefore has no bearing on your reports or scores as there isn't a hard pull inquiry. It will pop up before you actually click to purchase. If it doesn't you aren't pre-approved and if you apply without the pre-approval it will be a hard pull and depending on your credit and history it could affect it a little.
I found it's better to have a variety of credit to help with scores. I have VS, Pac Sun, and Express store cards, an orchard MC and a NFCU Visa. I also have a mortgage and an auto loan and am paying off the last of my student loans. My scores have increased as I keep utilization 0% on all cards except the NFCU and that one I keep 3% util. or less. Mind you, the three store cards haven't posted to my CR yet as I just got all three last week with no hard inquiry'sGood luck with whatever you decide!
05-03-2011 05:30 PM - edited 05-03-2011 05:35 PM
That is incorrect in regards to having a "variety" of credit cards helps build credit -- nope! The variety everyone is speaking of is a mixture of various "types" of credit such as Revolving, Installment, Mortgage -- not various store cards, those do not build your credit.
Mustang was on the right track with the response, but as always stated, the ultimate decision is yours but be careful applying for too many accounts within a short period of time. If you just opened an account, it is advised to wait up to 6 months before appying for another. That can easily come back around and bite you in a negative way.
05-03-2011 05:42 PM - edited 05-03-2011 06:00 PM
That is incorrect in regards to have a "variety" of credit cards helps build credit -- nope! The variety everyone is speaking of is a mixture of various "types" of credit such as Revolving, Installment, Mortgage -- not various store cards, those do not build your credit.
Mustang was on the right track with the response, but as always stated, the ultimate decision is yours.
* I did say variety of "CREDIT" not credit cards..ie mortgage, store cards, auto loan and cc. Go read my post. I did stipulate the example of what I have and what I recently aquired. I don't think I'm wrong in saying a variety of credit. Maybe you misread? She also wanted a VS card for "perks" and I was just letting her know how I obtained one and if it affected me. OP.. Good luck whatever you decide.
05-03-2011 05:50 PM - edited 05-03-2011 05:52 PM
The only problem with opening new accounts is that it will lower your AAoA (Average Age of Accounts) (Not to mention the hard inquiries) while in the short term it may negativly impact your scores, but in the long term will help your scores.
"Whats in your FICO Score" New accts is 10%, Length of history is 15%, Payment history 35%, Util (amounts owed) 30%, Types of credit used 10%
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