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Contributor
sljc
Posts: 102
Registered: ‎07-13-2014
0

New to Credit

Hi everyone,

 

First let me introduce myself...  I'm an 18 year old fulltime college student and I am brand new to anything credit-related. My family members, excluding my brother, have horrible credit, never pay their bills on-time, have lawsuits against them, etc etc. It's a major mess. I've learned from their mistakes and I don't want to go down that path at all. Recently I was approved for my first credit card by Capital One for $300. I'm making all of my payments on time and I absolutely do not spend money that I don't already have available. 

I am still so new to everything and I've heard so many rumors. Some people have told me never to get a credit card because it reflects bad on your credit score... but then others say it's the only way to establish credit... some people say that having more than 4 credit cards with reflect negatively on your credit... others I've heard of having five and six cards (maybe more) and from what I've heard have 750+ credit. 

I'm hearing a mix mash of stories and I'm not quite sure what to believe and I'm looking for some general advice/information from someone knowledgable, if any of you can provide that. Thanks again, I appreciate it!



CapitalOne Quicksilver One $300 - (7/22/14) Gardening it up!
Starting Score (8/22): 718 TU
Current Score (8/22): 718 TU
Goal Score: 750
New Contributor
MrCrabs
Posts: 138
Registered: ‎06-23-2014
0

Re: New to Credit

[ Edited ]

Hi! First of all it's good that you got a credit card, it will not hurt your score at all, in fact it's one of the largest factors in building your credit score, so that is bogus information wherever you got that from. Just never carry a balance and only spend what you have in the bank to cover, don't treat it like "free money" and you'll be okay. Most will say 3-5 cards are good to have but you can have a great score with just your one card for now there are people here with very high scores with only 1-3 cards. Just keep your utilization low (10%-20% lower the better) and never pay late or get a charge-off, they will destroy your score for up to 7 years!

 

I would avoid auto loans unless you absolutely need a new car, because in my experience they do very little to help your score, credit cards will do far more for you and don't require any real commitment to a large balance. Wait until your score is high enough so can get a low interest or 0% interest car loans, that way you're not overpaying for the car. If you have a student loan that will work just fine as an installment loan to help your mix of credit.

 

Just be responsible and your score will grow very fast :smileyhappy:

Current Score: 639 (3.06%) 19pt gain

Contributor
sljc
Posts: 102
Registered: ‎07-13-2014
0

Re: New to Credit

Thank you! :smileyhappy:

 

Great, that information helps me a lot. For future reference, does it affect/hurt my score to apply for credit cards?

Also I'm looking into moving out at the end of the year/early next year... before spring semester... Will my credit go up enough by then, if used correctly, to make a difference on my application? Or is it completely different for every person? Thank you! :smileyhappy:



CapitalOne Quicksilver One $300 - (7/22/14) Gardening it up!
Starting Score (8/22): 718 TU
Current Score (8/22): 718 TU
Goal Score: 750
New Contributor
MrCrabs
Posts: 138
Registered: ‎06-23-2014
0

Re: New to Credit

You're Welcome! Applying for credit will hurt your scores some because of the inquries, so you may want to hold off on getting any new credit right now, It will vary from person to person however.  There are more experienced than me here can give you better guidance on your particular scenario, but seeing as you have no collections or bad marks on your report to start with like me lol I think you should be good to go within the time frame you're seeking, but like I said there are people here with much more experience will be able to give a better answer to your question.

Current Score: 639 (3.06%) 19pt gain

Contributor
sljc
Posts: 102
Registered: ‎07-13-2014
0

Re: New to Credit

Awesome. I did apply for a few others before I found this forum, so I hope that doesn't do much harm to my score. Thanks again! I will be doing some exploring around the forum to scoop up more information. :smileyhappy:



CapitalOne Quicksilver One $300 - (7/22/14) Gardening it up!
Starting Score (8/22): 718 TU
Current Score (8/22): 718 TU
Goal Score: 750
Established Contributor
jamie123
Posts: 874
Registered: ‎03-22-2012
0

Re: New to Credit


sljc wrote:

Awesome. I did apply for a few others before I found this forum, so I hope that doesn't do much harm to my score. Thanks again! I will be doing some exploring around the forum to scoop up more information. :smileyhappy:


You are in a great place with your credit! Take care of it!

 

This is a very short lesson of how credit works:

 

A good credit score and history is a lifelong journey and not a sprint. You want to end up with a really thick file and good scores. By having a thick file (Many accounts) you will lessen the negative impact of any credit that you normally need in life like auto loans and mortgages.

 

So...There are 2 main components: Scores and history. You can't build history without credit so most people get a credit card. By getting a new credit card your scores take a hit by having a new inquiry, lower AAoA and new account. As time goes by you start building history and your scores are rising. After 6 months your scores are back to where you started from or higher! Time to get another credit card or two. The new cards tank your scores but after 6 months your scores have rebounded or are even higher than before! Rinse and repeat.

 

You have to temporarily sacrifice your scores to get new credit so you can build history. You really only want to apply for new credit about once every 6 months or you can tank your scores too much when just starting your journey.

 

So, what kind of cards do you have and what are their credit lines?



Starting Score: EQ 658 6/18/12
Current Score: EQ 700 10/12/14 - EX 687 7/21/14 - TU 682 7/21/14
Goal Score: EQ 720+
Take the FICO Fitness Challenge

Contributor
sljc
Posts: 102
Registered: ‎07-13-2014
0

Re: New to Credit

Thank you so much! I didn't know any of this... thank god I found this forum before I wrecked myself in my first year. I wasn't aware that's how it worked. :smileyhappy:

 

I have a Capital One Quicksilver (it's a mastercard with 1.5% rewards on every purchase) and the credit line is currently $300.00. From previous applications I've submitted, I haven't got another card that I know of... however, if I'm approved for one I may get it. But I will not be applying for any more for quite a while.



CapitalOne Quicksilver One $300 - (7/22/14) Gardening it up!
Starting Score (8/22): 718 TU
Current Score (8/22): 718 TU
Goal Score: 750
Established Contributor
MT936
Posts: 658
Registered: ‎06-28-2014
0

Re: New to Credit

[ Edited ]

 

i have a 751 fico and 7 cards (6 credit cards 1 charge card)

 

I was in a similar situation as you. Im 21 now. start it off slow let your account age and always pay on time. i would say after a year of this you can start applying for more cards i would say go for another capital one then. once you get a higher total limit try to keep total utilization % at 1-9. As for number of cards there is no magic number it doesnt matter how many you have as long as you manage them well and are responsible with them but the more you have the more your total limit goes up and your total utilization % will go down with it but you are off to a good start, good luck!

 

having a credit card is only harmful if you are not responsible with it. having creditcards is crucial to your credit scores and they in turn are essential when you need to take out loans, lenders look at your score because it is an indication of how responsible you are with managing your debt


NPSL...................$7500..................$5100...................$2500...................$2500..................$1300..................$500..........

21 year old college student. 751 FICO. Been building credit since age 17. Last APP 7/14/14

Contributor
sljc
Posts: 102
Registered: ‎07-13-2014
0

Re: New to Credit

[ Edited ]

Another myth busted! :smileyhappy: Thank you.

Apparently that's not true that having more than four cards will definitely affect your credit negetively.

 

And MT936, you definitely give me some hope that I can be just as successful at such an early age. Getting a home in the future, a car, etc. is definitely in the plans and I had no idea how much credit affected it up until a month ago. It seems to be that it's entirely how you play your cards... and this is a skill I think I already have in other areas, it's just a matter of applying it to this senario. So far I've paid off $148.00 on my newly opened card (I now owe $0).

 

Here's something I'm curious about: When you make a purchase on a card, does it positively affect your credit MORE (or the same/less) if you pay it as soon as the payment posts, or if you let it sit there for a couple of days/week or for it to appear on your monthly statement? So far I've been paying mine off as soon as they post.



CapitalOne Quicksilver One $300 - (7/22/14) Gardening it up!
Starting Score (8/22): 718 TU
Current Score (8/22): 718 TU
Goal Score: 750
Established Contributor
MT936
Posts: 658
Registered: ‎06-28-2014
0

Re: New to Credit

[ Edited ]

You can pay it off early if you are in high utilization % but I usually pay my balances off when the statement closes. You should not pay all of it off before the statement closes though as it is seen as a negative when the card reports a 0 balance so I would leave some 1-9% on so when the statement closes the credit card company will report a balance. Do not let the balance reported be over 20% but since you are new and have a low limit I would just focus on paying on time right now.

 

And something else about what I did... I got my first card when I was 17 at my bank by having my parents cosign. I then got my first real card at 18 and only used those 2 for 2 years until age 20 then I went all out within the past year I applied for and got approved for 5 new cards so my advice is to take it easy to start off. For you since you only have one card with a low limit,  within a couple months I would apply for another capital one and hopefully get at least a 1000 limit. But it is key to let your accounts age to boost your average age of credit history 

 

You can do it, you have already taken the first step by showing that you care about your credit score, If you ever need any help just message me :smileyhappy:


NPSL...................$7500..................$5100...................$2500...................$2500..................$1300..................$500..........

21 year old college student. 751 FICO. Been building credit since age 17. Last APP 7/14/14


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