Increasing Credit for Student

[Anonymous]

Hi,

I'm completely new to the "credit world." I just recently got a lease for a Toyota Prius under my name with my mom as a cosigner. I'll be paying it off for about 3 years. I also got a BankAmericard Cash Rewards Platinum with Visa yesterday. I didn't get it through a traditional sense; I actually e-mailed the CEO of BOA (because I got rejected for the Students rewards card twice already), and his assistant called me back the day of and I got the card the next day. She said I'd be getting the card in about 2-3 weeks. I actually didn't get any information about the rewards plan or anything. I've looked it up online though, so I think I'm okay.

I've heard that if I apply to many credit companies and keep getting rejected, it'll decrease my credit score. Is that true? I've applied to quite a few places and rejected.

What should I be doing now to help increase my score other than paying off the car payments and credit card payments? I also know to stay under 30% (I think) of the credit limit. 

Thanks for any and all advice!

[RobertEG]

A couple of basics.

First, as a future build of credit score, FICO places great weight upon the successful showing of use of discretionary, revolving credit, with at least two accounts being helpful.

So, in my opinion, addition of the revolving was a great future move. 

Application for new credit, whether approved or denied, permits the addition of the inquiry to your credit report.  However, FICO discontinues the scoring of inquiries after one year.  Approval of new credit, once the account is reported, necessarily lowers your average age of accounts, entering with an age of zero.

So it is best to get new revolving far in advance of your future need to actually use your score, and most of the negative impact will have evaporated.

Determine when you plan to use your score for app for new credit, and try to keep other inquires at a min in the one year period prior to that date.  When you go for that second revolving, investigate what is available and try to keep inquiries down by having a reasonable expectation of approval. 

You are on the right track for building.  Just dont be late, and keep your util low. 

[brother7]

I suggest sticking with the what you have for at least 6 months and don't app any more during that period.

"Hard" credit inquiries will affect your credit score adversely, but this diminishes with time. By the 1-year mark, they hardly affect your score at all, but will remain on your report for 1 or 2 years, depending on the credit reporting agency.

I'm always worried when a young adult suddenly gets access to a lot of credit. Been there, done that. Lesson learned the hard way. 

Therefore, I'm suggesting that you stick with your current loan and card. And learn how to responsibly manage them. Since you're new, for now, I suggest following this rule without exception: Always pay your statement balance off in full. In my opinion, once you start the habit of carrying a balance over into the next billiing cycle, that's a BAD sign. So PAY IN FULL.

During your 6-month "gardening" period, you can still have some fun by researching which card you want next. The myFICO Credit Cards forum is great for that. In my opinion, you're lucky to have the card you have now as your first card. Most people don't have a rewards card as their first card. Sound like you have a prime card, ie not for newcomers or rebuilders. So treat it well and you'll do fine. 

Hope that helps.