First Credit Card

[Anonymous]

Hello All,

I recently got my first credit card the discover it student card. I am looking to gain a solid 12 months of good credit. It has a 1250 credit line. I have some questions and would really appreciate the communities advice. Would it help my score to spend alot then pay in full at due date or would spending less and paying by due date have the same effect on my credit score? Also does it hurt your score to check your credit score as i heard this rumor in the past?

What is your reccomended strategy for the next 8-12 months?

[Anonymous]

Welcome to the board and congrats on your first CC!

What you spend monthly will not matter in terms of your score.  Paying in full also doesn't really impact your score, although it IS what most creditors like to see and is a display of healthy credit behavior.  A solid monthly spend followed by paying in full is what makes you look the best which will help you down the road in obtaining credit line increases to your account.  If you're going to ever leave a balance, for utilization purposes it would be best if you leave a balance of 9% of your limit or less or $112.50 or less.  While this isn't of grave importance now, it's certainly something you will want to do 12 months from now if you decide it's time to apply for credit again.

All you want to do for the next 12 months is use the card and pay it off.  That alone will build your positive credit history and thus your score.  Don't worry much about the dollar amount.  Anything that you would normally use a debit card for, simply use your credit card and then pay it off as soon as you have time from your checking account which is exactly the same thing as using your debit card, just adding one minor credit-building step.

Checking your credit score will not hurt your scores.  You can get all 3 of your FICO 08 scores from creditchecktotal for $1.00 any time you want.  Just don't forget to cancel your free trial membership within 7 days using their automated system over the phone.

[Anonymous]

@brutalbodyshots thanks for the info really do appreciate it

[Anonymous]

My first credit card was a Citibank Thank You Forward Card. It takes me back. That card is now discontinued.

Citibank, I find, is kind towards college students who are looking to build credit. They're Thank you Card for College Students might be a viable option for you eventually down the line if you're looking to add another credit card down the line.

Congrats on your first card !!

[Anonymous]

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@Anonymous wrote:

@Anonymous thanks for the info really do appreciate it

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You got it.  If you have any other questions at all please fire away.  There's a wealth of knowledge on these forums and many people will be able to guide you in the right direction.

[Thomas_Thumb]

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@Anonymous wrote:

Hello All,

I recently got my first credit card the discover it student card. I am looking to gain a solid 12 months of good credit. It has a 1250 credit line. I have some questions and would really appreciate the communities advice. Would it help my score to spend alot then pay in full at due date or would spending less and paying by due date have the same effect on my credit score? Also does it hurt your score to check your credit score as i heard this rumor in the past?

What is your reccomended strategy for the next 8-12 months?

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First, it never hurts to check your own score. However, don't get obsessed about checking it daily. You should get a free monthly TU Fico 08 score through Discover. If you are new to credit, it may be six months before you see a score. I would suggest you get a 2nd card in 6 months or so as that will help with building credit.

- My 21 year old daughter applied for and received her 1st two credit cards back in January of this year (Discover It $1750 CL and Wells Fargo Visa $1200 CL - both student cards). She had no credit file with any of the CRAs at the time but was approved based on an L2C score which considered her rent and utility payment histories in its analysis.

My advice to her was keep aggregate utilization (both cards combined) under 30% and individual card utilization under 50% on either card. Always pay statement balances in full (PIF). She allows balances to report on both cards and maintains aggregate utilization in the 10% to 25% range. When her Fico 08 score started reporting through Discover card it was in the low 730s (both cards report non zero balances each month). It has since dropped to the low 720s partially due to a hard inquiry in August associated with moving to a different apartment complex. Even so, WF auto increased her CL to $1800 in September.

Given you only have one card I would advise allowing charges to accumulate naturally on your credit card and then pay the outstanding statement balance in full each month - ... so long as your accumulated charges are less than 50% of the card's credit limit. If you charge more than 1/2 of the card's CL in a given month, make a partial payment prior to the statement close date. Then after the statement is cut pay off the statement balance in full.

It would be a mistake to micromange card use/payments starting out. Use the KISS principle and just get in a habit of paying statement balances in full every month well before the due date. Avoiding a late payment is critical to establishing a positive credit history.

My recommended guidelines for those new to CCs:

1) If only one card report a non zero balance on card each month and maintain reported balance under 50% of CL.

2) If two cards, report a non zero balance on one or both cards (either way is ok). Maintain reported balance on each CC under 50% of its respective CL AND aggregate CL under 30% (both cards combined).

3) If three cards, report a non zero balance on one or two cards but have at least one card report a zero balance. Again, maintain reported balance on each CC under 50% of its respective CL AND aggregate utilization under 30% (all cards combined).

4) If you are "new" to credit cards, wait 12 months or more before going on a credit card spree to acquire additional cards above the three mentioned above.

Long term it is best to maintain aggregate utilization under 9% and utilization on any given card under 30%. However, doing so has no value in building positive credit history. The positive history comes through using credit and paying off credit obligations responsibly month over month with no delinquencies.