topic Re: High score, thin file - how to proceed in Credit Cards

High score, thin file - how to proceed

Anonymous — Sat, 16 Sep 2017 21:12:02 GMT

My son and daughter are just starting out with building solid credit, and each have FICO scores in the early 700s. NFCU graciously started my kids out with CashReward cards - my daughter was granted a $3000 cl and her brother was granted a $1500. At six months, my son signed on to find an auto CLI to $3500. while my daughter is only four months in and hoping to get an equally generous CLI in November.

I have advised both kids to app next for the NFCU Amex, as they have demonstrated great responsibility with credit out the gate. So my question is, how soon can my kids apply for products outside of NFCU, given that they are only twent and have brand new thin files? I am almost of the mindset that they should keep building with NFCU, but am curious to hear the opinions of so many of he savvy members on this forum!

Thanks in advance for any guidance!

Re: High score, thin file - how to proceed

UpperNwGuy — Sat, 16 Sep 2017 21:16:00 GMT

I think you have already answered your own question. Let them each get a CLI on the NFCU cashRewards, then let them apply for the NFCU More Rewards. Wait another 6 months and let them attempt a major bank such as Amex, Chase, or Citi.

Re: High score, thin file - how to proceed

Anonymous — Sat, 16 Sep 2017 23:22:30 GMT

Thanks for the input UpperNwGuy. Thanks to NFCU and very generous starting limits my kids should be pretty well established by their 21st birthdays. I was just uncertain as to when they should try for a major bank card - a year out seems like a good idea.

Re: High score, thin file - how to proceed

Anonymous — Sat, 16 Sep 2017 23:50:56 GMT

Disco seems to like thin files... they've been more generous than any other lender I deal with (See my siggy). I would recommend them if the second NFCU card isn't of significant use to their spending habits.

Re: High score, thin file - how to proceed

coldfusion — Sun, 17 Sep 2017 01:21:30 GMT

@Anonymous wrote:
Disco seems to like thin files... they've been more generous than any other lender I deal with (See my siggy). I would recommend them if the second NFCU card isn't of significant use to their spending habits.

This.

Since they're new to the game they'll be better off in getting established by starting off with credit across a few different providers instead of focusing on just NFCU.

I'd suggest a strategy something along the lines of:

If offered a CLI as the result of an AR from NFCU it's OK to accept, but don't apply and take an HP. They should PIF monthly if they can, but if they can't at least minimize reported utilzation.

After 6 months with the NFCU card apply for a Discover IT. If denied, recon as even if denied they may give guidance on next steps and suggest when to reapply. If successful, keep track of the timeline so they know when to apply for a SP CLI.

After another 6 months apply for a Chase Freedom/Freedom Unlimited or an AMEX BCE, a year's positive credit history should be enough to get themselves in with either of them, or even both If they get a BCE, request a SP 3X CLI after 61 days.

I would avoid a Capital One card at this point because of the 3 HPs each application triggers, and if denied Capital One does not recon.

If they pace themselves and make good choices about what to apply for and when to apply for it, they'll be in great shape in a couple of years.

Re: High score, thin file - how to proceed

jamie123 — Sun, 17 Sep 2017 07:29:06 GMT

You've received some great advice from the other posters already but I'd thought that I would add my 2 cents anyway.

Make sure that they have 6 months of paid and reported statements before applying for any new credit.

It can be very difficult to get a top tier lender to give you a credit card without having 1 year of experience in managing multiple credit cards. Some are easier than others and I wholeheartedly agree that Discover would be an excellent choice for the second credit card. Discover seems to like people with thin files but otherwise clean credit.

If they are able to get a Discover card I would then highly recommend that they apply for an Amazon Store Card. It is a pretty easy card to get and is really the only store credit card that I would recommend. You save 5% off most purchases with Amazon (Read the fine print.) and who doesn't buy from Amazon nowadays?

This would give them 3 CCs and would help them from getting nicked points in the following credit scoring calculations:

You get nicked points if 50% or more of your cards report a balance.
You get nicked points if all your cards report a balance of $0. (In my case I lose 18 points if all my CCs report $0 versus having one card report a balance of $3. Yes, $3 reporting earns me 18 points!)

This is why it is mentioned many times in this forum that you need a minimum of 3 credit cards to get the highest scores.

Once all these cards are a year old they should be golden and then can apply for credit cards from the so called prime banks which are:

AMEX

Bank of America

Chase

CitiBank

Discover

Wells Fargo (Stay Away from these guys IMHO)

They should try and have 5 to 8 credit cards when they are done building their credit foundation. Having well aged credit cards with a long history of on time payments is really the only way to build top credit scores that are stable for when you do need to use your credit for mortgages and auto loans.

Good luck!

Re: High score, thin file - how to proceed

CantSmashThis — Sun, 17 Sep 2017 08:53:55 GMT

Hi there!

I just wanted to give my input of how I went with my credit so far with having a thin file itself. First, I applied for a Wells Fargo card recently as I have had a banking relationship with them for 8 years now. I started with a basic WF card with 1%, they have me a SL of $1k. After 6 months, when I finally generated a score, I applied for the Amex BCE, and they seem quite generous for people with thin files, and I got approved instantly with a SL of $1k. I waited for the 61 days and tripled my CL to $3k. A month after that, I went with another WF card since they had a nice bonus of $200 for spending $1k. I got insta-approved with a SL of 1.5k, and they also gave me an auto CLI on my older card to $1.6k.

Now I've finally hit the 1 year mark about 2 1/2 weeks ago. Waited for all my statements to close (so that I can bring down utilization since I was on vacation last month and paid all that off). Applied for the Chase FU and got insta-approved for SL of 4.5k (I kept checking their prequalifeid page but nothing came up and I just decided why not just apply). So I'm happy I finally have a foot in the door with Chase (my end goal is the CSR card).

I think the Amex BCE card is a good choice because of the 3x CLI you can get it in 61 days, then 6 months afterwards (they also had a nice restaurant deal of 10% back in 6 months up to $2k, I spent a lot on food at the time). I think after 8 months of getting my WF card, I've gotten offers for the Citi DoubleCash card, and starting from last month, I've been receiving offers for the Amex Premier Gold Charge Card. My score right now according to Chase is 748.

Hoping all the luck for your children!

Re: High score, thin file - how to proceed

Anonymous — Sun, 17 Sep 2017 09:45:16 GMT

The major banks will take people with high credit scores and thin files.

If someone has six months of credit history, though, I wouldn't count on any of them will approving that person. I would say someone needs at least two years of credit history to get a card at a major bank that has a relatively solid APR.

Re: High score, thin file - how to proceed

HeavenOhio — Sun, 17 Sep 2017 12:56:41 GMT

The second NFCU card seems like a reasonable route right now.

After that, I'd take it slow. They'd have two keeper cards, and they'd be at a point where they can afford to be choosy. But a lot of the good cards from the good banks require an older file. While they wait it out, they'd have plenty of charging power to cover their needs.

I agree with the advice above to bypass Capital One for now. Down the road, if a Capital One product fits their needs, they can apply at that point. The no-FTF Quicksilver or Dining Card might be appealing, for instance. Also, given the way Capital One seems to work, your kids would be better positioned for a good starting limit and decent CLIs if they waited.

Re: High score, thin file - how to proceed

Anonymous — Sun, 17 Sep 2017 19:16:45 GMT

@Anonymous wrote:
The major banks will take people with high credit scores and thin files.

If someone has six months of credit history, though, I wouldn't count on any of them will approving that person. I would say someone needs at least two years of credit history to get a card at a major bank that has a relatively solid APR.

Relatively solid APR?

You don't need 2 years of credit history to be approved at a major bank. Far from it. 6 months or less will do it. I got my Freedom with very little history.

Re: High score, thin file - how to proceed

Anonymous — Sun, 17 Sep 2017 21:50:01 GMT

@Anonymous wrote:
@Anonymous wrote:
The major banks will take people with high credit scores and thin files.

If someone has six months of credit history, though, I wouldn't count on any of them will approving that person. I would say someone needs at least two years of credit history to get a card at a major bank that has a relatively solid APR.
Relatively solid APR?

You don't need 2 years of credit history to be approved at a major bank. Far from it. 6 months or less will do it. I got my Freedom with very little history.

At a relatively solid APR. Chances are your APR will be at the highest available if you don't have much history.

Re: High score, thin file - how to proceed

Anonymous — Mon, 18 Sep 2017 00:18:32 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
The major banks will take people with high credit scores and thin files.

If someone has six months of credit history, though, I wouldn't count on any of them will approving that person. I would say someone needs at least two years of credit history to get a card at a major bank that has a relatively solid APR.
Relatively solid APR?

You don't need 2 years of credit history to be approved at a major bank. Far from it. 6 months or less will do it. I got my Freedom with very little history.
At a relatively solid APR. Chances are your APR will be at the highest available if you don't have much history.

Who cares if you don't carry a balance. My freedom when approved and still is 23%. If I get a high APR I will NEVER carry a balance on it.

Whenever I need to carry a balance or just feel like carrying a balance i will charge it to my best rewards card and as soon as it posts I immediately put it on a 0% BT offer that I always have available to me.

Re: High score, thin file - how to proceed

joltdude — Mon, 18 Sep 2017 01:17:49 GMT

I'd also consider adding an Alliant Secure Share loan to both kids accounts... Do not want to do this through NFCU.... 1. Diversity and 2. Alliant doesnt shorten the loan just by paying more on it.....You basically take out the loan. then pay most of it off... If they have savings you can use this for this AND then leave it in the high APR savings account that Alliant has by default =)

The other thing... Id tend to go for a discover but wait the 6 months.... Yes you can probably get a chase in a few months.. but it will be at the worst APR and it wont go downward... Discover entertains apr reductions and actually can grow with SP CLIs... And likes thin but clean files... Chase tends to like a year of experience with another card ...... and they dont entertain any sort of apr reduction and will likely shoehorn them into a low CL that will not grow much without some HP ....

Also if you want to try to reduce the HPs for the Disco... have both sign up for credit scorecard... It will also give them one free FICO score a month.... BUT it also may (YMMV) mean discover only does ONE HP vs TWO.. which i think is a winning proposition...

Id say go for an amex but since youre likely to have the navy one... id just use it for a bit if you get it and let it grow... You dont need two amexes right now... and they are still young with credit... one less login to worry about and track for the time being...

Re: High score, thin file - how to proceed

driftless — Mon, 18 Sep 2017 01:35:24 GMT

OP. how old are your children?

Re: High score, thin file - how to proceed

Anonymous — Mon, 18 Sep 2017 03:00:33 GMT

My twins are twenty years old, and are already astonishly tuned in to the importance of managing credit. Meaning, they use their cards heavily and still manage to close with a 1-3 % utilization at the end of each cycle.

Re: High score, thin file - how to proceed

Anonymous — Mon, 18 Sep 2017 23:28:18 GMT

@Anonymous wrote:
@Anonymous wrote:

Relatively solid APR?
You don't need 2 years of credit history to be approved at a major bank. Far from it. 6 months or less will do it. I got my Freedom with very little history.
At a relatively solid APR. Chances are your APR will be at the highest available if you don't have much history.

Seconded. All mine are in the high 20s. My significant other's recent approvals are in the teens after having a WF card for two years.

I'll throw my experience in if it helps:

10 years as AU on two cards, then 2 years without, and my FICO score disappeared but I still had *something* on my credit file. Apped for 3 cards all in one go, since I figured if you don't have a score, 3 HPs isn't going to affect it at all.

I'm a grad student, so I apped for the Discover IT Student. Instant approval for $500, no credit inquiry. My SO, also a grad student, got one for $1500, but she already has a two-year-old card. I think your kids would have a good shot with the Student card, provided they qualify (though they did not ask me for proof of enrollment, despite being around 30; it just automatically applied for that version when I put in "student" as employment), and would also get a decent starting limit, too.

Card #2: through my local bank, issued by Elan/USBank. Says on their website they *do* take bank relationship into account for approval. (I was approved; been with them for 10 years and one of those AU accounts was with Elan).

Card 3: Amex BCE. Approved after 8 weeks dealing with income verification. Didn't instantly deny me for lack of credit history, but gave me the benefit of the doubt, presumably because of my age/income; i.e. I'm not a college freshman with an allowance.

So its possible, though I understand my experience as a 'thin file' is unique--not new to credit cards, but just haven't had any in a long time. I'd say wait for those to age out a bit to get the better terms, and like others said, don't close them. NFCU seems to be a popular small-bank card to have around here.

Re: High score, thin file - how to proceed

Anonymous — Tue, 19 Sep 2017 01:04:10 GMT

Thanks everyone for the very helpful advice! I am not a Helicopter Mama as a rule, but given my less than stellar start regarding credit decades ago, I am huge on encouraging a solid start with my kids. It is my experience that NFCU offers up more credit than the average individual needs - getting two cards with $25,000 limits is in the realm of possibility within a calender year, so long as you treat your accounts with respect. Neither kid seems terribly interested in having a dozen cards in their wallet, and we got our mortgage with a very thin file after decades of living a cash only lifestyle. Still, having age credit certainly makes life easier!