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FutureHomeBuyer12
Posts: 1
Registered: ‎07-24-2013

Should I Get Another Credit Card?

I'm looking to build my credit score to apply for a home loan.

 

I've paid-off the 2 credit cards I got back in college that went delinquent (so they've been removed from my reports) and currently have a WF student loan that has less than $700 left on it (NEVER a late payment) There is nothing else on my report - no collections, other accts, etc)

 

To build my score I got a Mastercard 3 months ago and have never charged over 20% of the limit and have always paid it in full - which of course has helped - and I'm aware time, and continuing to do that will help, but I was wondering should I get another card to help build? Or will that just damage my credit score?

 

I know the credit check to apply will knock me down a few points, but I want to do the most I can to boost my score, which is currently 692.

 

Do I stick with the 1 card? Or get another?

 

 

Frequent Contributor
OptimalCS
Posts: 401
Registered: ‎07-31-2010

Re: Should I Get Another Credit Card?

Welcome to the forum,

It depends on how heavily you use your card.

One more wouldn't hurt if you want to decrease util.

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Established Contributor
Crossdivided
Posts: 534
Registered: ‎01-23-2013

Re: Should I Get Another Credit Card?

Be advised, unless the charge-offs (the 2 old cards) had a prior arrangement to be removed upon payment ("pay for delete"), they will still be listed. They would have changed status to "closed" (would have been listed as "open" if there was a balance owed, even if the card itself was closed), with the annotation "paid in full after charge-off". The only fico algorithm benefit that would be realized is util, assuming the info furnisher reported balance AND original CL (ie 500 CL with a 1000 charge-off after the fees etc is read as 200% util, and is also factored into overall util).

Fico algorithm (not manual review) scans the word "charge-off" and scores it the same, paid or not. A bad flaw in the model IMO, but it is what it is...

Just some general info for a common misconception...spent a lot of time rebuilding credit.
Established Contributor
takeshi74
Posts: 1,479
Registered: ‎06-05-2013

Re: Should I Get Another Credit Card?

[ Edited ]

FutureHomeBuyer12 wrote:

To build my score I got a Mastercard 3 months ago and have never charged over 20% of the limit and have always paid it in full - which of course has helped

You can use more jut don't let it report more.

 


FutureHomeBuyer12 wrote:

Do I stick with the 1 card? Or get another?

How soon are you looking to buy a home? More accounts is generally better and your file sounds thin. More available credit makes it easier to keep utilization low. However, you have to consider your specific goals.  If you're applying for a mortgage in the near future you'll want to be careful with applying for new credit.

Valued Contributor
Jutz
Posts: 1,216
Registered: ‎05-10-2012

Re: Should I Get Another Credit Card?

Agree with the others.  If you're looking to begin the pre-qualification process in the next say, 90 days, just avoid adding unneeded INQ and new accounts.  Might as well leave well enough alone.  If your FICO is 690+ you won't have any issues being qualified at whatever your income allows.  If it's still 6+ months off, no real harm.  2-3 open revolving accounts would normally help.  I also agree with the other poster about checking into the charged-off/closed cards.

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Valued Contributor
SnackTrader
Posts: 1,533
Registered: ‎09-15-2012

Re: Should I Get Another Credit Card?

In addition to what others have said, many mortgage lenders will require a certain number of tradelines open and shown as paid in order to fulfill credit requirements. Score alone is not often enough.

For example, a banker I discussed mortgages with about 6 months ago informed me that a borrower needs a minimum of 4 open tradelines with at least 24 months history to qualify for a typical 30 year mortgage at his bank. That is on top of other requirements, such as score, income, etc. You would not meet this type of tradeline requirement in the situation you currently have. Every lender has different requirements though.

Secured cards, unsecured cards, car loans (if you need a new car) and personal loans are all good ways to obtain positive tradelines. You should do research first on the requirements of some of the lenders around you, of course. See what type of requirements they have outside of score, DTI, etc. Some lenders are very willing to tell you if they think they can get your business someday, some wont ever tell you.

Best of luck!
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