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New credit card user looking for some tips

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Anonymous
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New credit card user looking for some tips

Hey everyone! First off I want to say this community is so awesome. I have been reading it for a month or two now just trying to get the hang of things pertaining to credit cards and credit scores. I am a college student and am trying to work on my score so it will be in good shape for the future. I have had a Chase Freedom card for 7 months now with a $500 limit and always pay the full amount off each statement about a week before the due date. Also just got approved for the Discover IT card a couple days ago with a $1500 limit. I was going to stop using the Chase card and start using the IT card because of the better CB options The info I initially received from people was to use <30% then PIF before the due date. I have been using about 20% or less monthly and my score has seemed to stay the same for the most part on Credit Karma. Hovering at 675 for 6 months. It seems after some research that I would be better served to stay in the 1-9% range of usage that posts to my statement correct? Also the most confusing thing for me about usage is with the timing of how things work. My payments are due on the 4th of each month and the monthly cycle ends on the 7th. So does that mean whatever the balance on the card is come the 7th of each month is my usage amount? My statement will arrive in the mail about a week after that on the 14th. Does that mean whatever I use from the 7th to the 4th of the next month will be for the following months cycle and I should just be paying off the amount on the statement and whatever is used during that time will be paid the following month and has no effect on the current month's payment? This part has been super confusing for me and even the manager at Chase was struggling to explain it in his own words haha so I had to ask here. Thank you so much to anyone that can help and sorry for writing so much!

Message 1 of 12
11 REPLIES 11
Anonymous
Not applicable

Re: New credit card user looking for some tips

It sounds like you have a good start with your credit, keep it up!

Since you said you are looking for long term solid credit this is my advice:

1) Pay your bill in full and on time every month.

2) Use the card that has the best rewards for that purchase.

3) Get new credit only when it will benefit your long term plans.

4) Keep your Freedom and It open and in good standing forever!

Using a certain percentage of credit and managing what balance reports when will help get you a few points here and there, month to month,but long term the above is what gets you good scores. (That said the balance on the 7th is what will be reported on your credit)
Message 2 of 12
Anonymous
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Re: New credit card user looking for some tips


@Anonymous wrote:

Hey everyone! First off I want to say this community is so awesome. I have been reading it for a month or two now just trying to get the hang of things pertaining to credit cards and credit scores. I am a college student and am trying to work on my score so it will be in good shape for the future. I have had a Chase Freedom card for 7 months now with a $500 limit and always pay the full amount off each statement about a week before the due date. Also just got approved for the Discover IT card a couple days ago with a $1500 limit. I was going to stop using the Chase card and start using the IT card because of the better CB options The info I initially received from people was to use <30% then PIF before the due date. I have been using about 20% or less monthly and my score has seemed to stay the same for the most part on Credit Karma. Hovering at 675 for 6 months. It seems after some research that I would be better served to stay in the 1-9% range of usage that posts to my statement correct? Also the most confusing thing for me about usage is with the timing of how things work. My payments are due on the 4th of each month and the monthly cycle ends on the 7th. So does that mean whatever the balance on the card is come the 7th of each month is my usage amount? Yes My statement will arrive in the mail about a week after that on the 14th. Does that mean whatever I use from the 7th to the 4th of the next month will be for the following months cycle and I should just be paying off the amount on the statement and whatever is used during that time will be paid the following month and has no effect on the current month's payment? from the eigth to the seventh. This part has been super confusing for me and even the manager at Chase was struggling to explain it in his own words haha so I had to ask here. Thank you so much to anyone that can help and sorry for writing so much!


I added some answers in green.

 

Credit Karma's score means nothing.  Mine was in the low 600s  and didnt budge for 8 months even when I had an over 800 tu fico.  After a few months of your Discover card you will get a monthly score from them which is a FICO.

 

If your goal is to increase your score (to apply for more credit such as cards a home or car) then the 1-9% on one card rule *may* apply.  If your goal is to acquire good credit habits then use what you need to use and can pay off before your due date. 

 

To keep your utilization down you can pay new charges before they post on the seventh. This is easiest if you monitor your account online. 

Message 3 of 12
Anonymous
Not applicable

Re: New credit card user looking for some tips

Hi V,

Don't even think about utilization unless you are planning to apply for something in the next two months. Utilization tweaks impact the current cycle only and have no long term benefit to your score DJ it is a wasted effort to tweak it if you aren't actually going to use your score before the effect is gone.

Also our isn't bad for you to spike up near your limit, let that report, then pay in full. It does show the card issuer that you can pay down balances at your limits and that will encourage them to raise your limit.

Definitely if you are planning to apply for something tweak the balances so only one card reports and it is under 9 percent.

And always pay in full.

I'm going to go against the grain and suggest you app one or two more GOOD cards, cards you will likely app one day, and cards you can keep forever. That means no fee and ideally complements what you have already.

Maybe an Amex BCE or Everyday, or the Citi Double Cash card.

Reason is that having a few extra accounts at the beginning of your credit history will help prevent your AAoA (average age of accounts) from getting slammed when you apply for stuff in the future.

You seem to be able to get good cards, get two more!

But caveat, this will hit your score for 10 or 15 points, but only for a year. After a year it will help keep your score high by protecting your AAoA.

And another reason, if you are likely to app av Amex or CITI card one day anyway might as well get it over with, take the hard pull hit now rather than later, and let those accounts start aging. You wind up in the same place if you app them in five years, but with five less years of history.

But ONLY stuff you think you could keep for life. No point in this if you just close them later.

And if you have a car loan or something coming up, do that first before you do this. But don't be scared of adding accounts at the beginning: think of it as getting that over with so you don't add them later.
Message 4 of 12
Anonymous
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Re: New credit card user looking for some tips

Apologies for the typos from my phone hope you could follow me.
Message 5 of 12
SouthJamaica
Mega Contributor

Re: New credit card user looking for some tips


@Anonymous wrote:

Hey everyone! First off I want to say this community is so awesome. I have been reading it for a month or two now just trying to get the hang of things pertaining to credit cards and credit scores. I am a college student and am trying to work on my score so it will be in good shape for the future. I have had a Chase Freedom card for 7 months now with a $500 limit and always pay the full amount off each statement about a week before the due date. Also just got approved for the Discover IT card a couple days ago with a $1500 limit. I was going to stop using the Chase card and start using the IT card because of the better CB options The info I initially received from people was to use <30% then PIF before the due date. I have been using about 20% or less monthly and my score has seemed to stay the same for the most part on Credit Karma. Hovering at 675 for 6 months. It seems after some research that I would be better served to stay in the 1-9% range of usage that posts to my statement correct? Also the most confusing thing for me about usage is with the timing of how things work. My payments are due on the 4th of each month and the monthly cycle ends on the 7th. So does that mean whatever the balance on the card is come the 7th of each month is my usage amount? My statement will arrive in the mail about a week after that on the 14th. Does that mean whatever I use from the 7th to the 4th of the next month will be for the following months cycle and I should just be paying off the amount on the statement and whatever is used during that time will be paid the following month and has no effect on the current month's payment? This part has been super confusing for me and even the manager at Chase was struggling to explain it in his own words haha so I had to ask here. Thank you so much to anyone that can help and sorry for writing so much!


1. Utilization is almost invariably based on the amount on your statement or closing date. So if you have a statement balance that is 80% of your credit limit, your utilization on that card will show up as 80%.

 

2. You can make payments before the statement date, and probably should if you want to keep utilization low.

 

3. If you totally stop using a card, it will be closed by the bank eventually. So don't stop using either card, just use one less perhaps.

 

4. The date you receive a paper statement is completely meaningless.

 

5. IMHO you should monitor your accounts online so you know what's what at all times.

 

6. IMHO one shouldn't obsess onesself with rewards; it's more important to build your credit, and to get good credit terms.

 

7. IMHO the reason the bank officer couldn't explain it is that he didn't know.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 6 of 12
Anonymous
Not applicable

Re: New credit card user looking for some tips

Congrats on starting your journey and having a good hea don your shoulder. While you should not obsess over utilization right now, utilization is important. 

 

I agree with 

See if you prequalify for an Amex card and another one. Use https://www.creditcards.com/cardmatch/?action=clear_results to see what you might qualify for. 

 

Who do you bank with? Are you a member of a credit union? I wish I had this when I started out and people giving me invaluable information. 

Best wishes on your journey. Get at least 1 other card, but no more than 2. 

Message 7 of 12
Anonymous
Not applicable

Re: New credit card user looking for some tips

Thanks for your help everyone, you guys are awesome!!! So I used the link you posted Redeyz and it said based on my credit I should apply for the Chase Slate or Chase Sapphire Preferred Card. The Sapphire is a very nice card, but at this current time I feel like that is not the card for me especially with a $100 annual fee. Good to know that I have a good chance of qualifying for that card though. It seems the citi bank card is the most intriguing to me at this time. Good to know about the statements and payments as well. I am definitely going to PIF every month no matter what. I don't spend outside my means at all, honestly only using CCs to build my credit while I'm younger. I have been struggling a couple months to even have any usage on my card haha. I appreciate everyones help and if anyone has any other advice I will gladly listen with open ears.

 

Edit: Here is a question I have. I was reading a lot about how you should only use one card per month and not to have multiple cards report a balance. Is that only if you are in a situation where you want to manipulate your scores to rise before you need it to be higher for a certain reason? Would I be ok if I used my 2 cards and possibly 3 if I get the citi card or amex and using like just 10% on each card and PIF on each every month?

Message 8 of 12
Anonymous
Not applicable

Re: New credit card user looking for some tips

The whole "only use this card up to 9.87%, then pay it off at midnight during a full moon" thing is to maximize a score short term, for getting a car loan or mortgage. Unless you need every fico point you can get, it's not nessessary to stress it.

I use the card that gives the best reward for whatever purchase I make. Just today, I used Cap1 to pay a dentist bill, CSP to buy lunch, and my Freedom card to gas up the car. I don't care if it cost me 5 or 10 points because it saved me real money. I pay in full, but frequently have something post right before my statement cuts. And that's ok.
Message 9 of 12
Anonymous
Not applicable

Re: New credit card user looking for some tips

since you guys said to get 1 or 2 more cards while my AAoA is young, what are the better cards out of these AMEX cards? the blue cash everyday or the everyday credit card? I was thinking of getting the citi double cash card plus one of the amex cards unless someone knows of a better option for me.

Message 10 of 12
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