07-15-2013 07:49 PM
I am 23 years old, full time college student, Im trying to build great credit now, and hope to get a new car next fall. Here is what's going on, first I have students loans totaling 11,000$ starting 1.5 years ago. I checked my credit on credit Karma and my score on there was 666. Since then I have applied and received 2 store cards both with 500$ limits and have had them a little over a month. One with walmart and one with Jc penney. I have spent $125 on the walmart and $135 on the Jc penney both of which I paid off in full tonight to avoid paying interest. Im guessing the next step would be getting a major credit card? But when and are any recommended? How much would my score increase? What would be the next step as Im trying to get a new car in a little over a year with a good sized downpayment.
07-16-2013 07:00 AM
Adding new credit can ding your score. It'll ding it due to the new acct and the potential change to AAoA (average age of accts). Because of that I'm always leary about suggesting others to add new accounts. You can certainly hit close to 800 with what you have, though provided util comes down and provided you let what you have age over the next several years. Despite all of this, I don't think there's terrible harm in adding a 3rd revolving. I'd do so via a secured CC though because your credit is too new. The limit does not matter per FICO. If you were to do so, I'd do it now and not app for anything until the car. The new account ding will have fully disappeared by a year. Your AAoA will not take a hit because you cannot go lower than 1 year, but you might have an unrealized loss in points compared to had you not applied. I think the gain from the added mix outweighs the unrealized loss of hitting a 2 yr AAoA (which won't happen until after 1.5 yrs, which is your goal for a new car). Gain from the added mix? Single digits I bet.
Don't rely on the score provided by CK. Lenders don't use it.