topic Re: Where would you start? in Credit Cards

Where would you start?

slowlyclimbing — Sat, 16 Jan 2021 16:01:03 GMT

I'm helping my 18 year old daughter start her credit profile

she has over 750 on all files because of AU accounts but she needs her own cards to start out

what would you recommend? Start with just 1 card or what would be your plan?

Re: Where would you start?

Jnbmom — Sat, 16 Jan 2021 16:10:57 GMT

Is she a student?

I would have her try discover's prequalify and see what comes up. Disco is a good starter card for newer profiles .

Re: Where would you start?

slowlyclimbing — Sat, 16 Jan 2021 16:16:02 GMT

She is not a student unfortunately

Re: Where would you start?

Jnbmom — Sat, 16 Jan 2021 16:21:42 GMT

@slowlyclimbing wrote:
She is not a student unfortunately

Well she can still apply for the discover card have her check the prequalify site .

Re: Where would you start?

Bankrupt2019 — Sat, 16 Jan 2021 16:29:14 GMT

Personally I'd get 3 cards right out of the gate and start building a profile.

here's links for Discover and Capital One pre-qualification

https://www.discovercard.com/application/preapproval/initial?ICMPGN=PUB_HDR_CARDS_PQ

https://www.capitalone.com/credit-cards/preapprove/?external_id=WWW_XXXXX_ZZZ_ONL-SE_ZZZZZ_T_SEM2_ZZZZ_m_Zg__kenshoo_clickid__469405657811_666287&target_id=kwd-301495953260&gclid=CjwKCAiAuoqABhAsEiwAdSkVVHOPf_O-Hz1D6-rTK-BxmalKF1GIN4gFTTWEufENTdZqNJHjSbJR5xoCOiQQAvD_BwE

Re: Where would you start?

Loquat — Sat, 16 Jan 2021 16:33:04 GMT

OP I agree with @Jnbmom. I would start with someone like Discover. They seem to be pretty decent with new, clean files. The limit may not be extremely high but I don't think that'd be needed anyway as a starter card. CapOne is also an option but I'd really try with Discover first.

I don't agree with the getting 3 new cards out of the gate. I think it's overkill for a new profile and even more so for someone new to having credit on their own. After being around these here parts for quite some time now, I've adopted the mindset that more isn't better when you're just getting out of the gate.

Best of luck to your daughter as she starts out on her financial journey.

Re: Where would you start?

Bankrupt2019 — Sat, 16 Jan 2021 16:36:38 GMT

@Loquat wrote:
OP I agree with @Jnbmom. I would start with someone like Discover. They seem to be pretty decent with new, clean files. The limit may not be extremely high but I don't think that'd be needed anyway as a starter card. CapOne is also an option but I'd really try with Discover first.

I don't agree with the getting 3 new cards out of the gate. I think it's overkill for a new profile and even more so for someone new to having credit on their own. After being around these here parts for quite some time now, I've adopted the mindset that more isn't better when you're just getting out of the gate.

Best of luck to your daughter as she starts out on her financial journey.

You're probably right, I based my "3 out of the gate" on already knowing what I'm doing and wanting to start a base for AAoA later.

Re: Where would you start?

Jnbmom — Sat, 16 Jan 2021 16:39:07 GMT

@Loquat wrote:
OP I agree with @Jnbmom. I would start with someone like Discover. They seem to be pretty decent with new, clean files. The limit may not be extremely high but I don't think that'd be needed anyway as a starter card. CapOne is also an option but I'd really try with Discover first.

I don't agree with the getting 3 new cards out of the gate. I think it's overkill for a new profile and even more so for someone new to having credit on their own. After being around these here parts for quite some time now, I've adopted the mindset that more isn't better when you're just getting out of the gate.

Best of luck to your daughter as she starts out on her financial journey.

I also agree you don't need to get 3 cards right out of the gate . Have her try discover ( I prefer them way over cap one) and let her build from there . Wait 6 months and she may get some preaporovals sent to her .

Slow and steady

Re: Where would you start?

fatcomic — Sat, 16 Jan 2021 16:47:38 GMT

I agree with Discover, their CS is awesome and she will probably still qualify for their student card. I feel she will grow a better future relationship with Discover than with CapOne as well, CapOne doesn't seem interesting in growing credit limits and relationships right now.

Also, Disco offers 2 flavors of student cards, a traditional 5% revolving category card with 1% on all other purchases or a 2% on dining and gas with 1% on all other purchases. CapOne is going to max at 1.5% that is if she qualifies for a no fee QS, otherwise the cash back will be less. She might as well take advantage of the most cashback too.

Re: Where would you start?

thornback — Sat, 16 Jan 2021 16:52:27 GMT

If she has a bank account/good relationship history, you could start there too.

I'd start her with just one card for the first year so she can become accustomed to managing her own credit. Then add another, and 6 months later another (assuming she's doing well). Then let all 3 just age for a while.

Re: Where would you start?

KJinNC — Sat, 16 Jan 2021 21:22:46 GMT

There are pros and cons to starting with more accounts and starting with fewer accounts. I think starting slow is sometimes presented here as the only correct option, but, it is not. It mainly depends on your goals. For example, if you hope to get a mortgage in 6-12 months, go slow. If you don't expect to apply for anything other than credit cards and secured loans in the next two years, I'd suggest a fast start. JMO.

ETA, a lot of people in the thread are focusing on the small FICO boost you get for having three cards. The larger factor is at what point in time, in the future, you no longer have thin or new credit. When starting out, you have two basic paths you can follow. One is that you minimize how many cards/accounts you open, which means you will have slightly better scores but a thin file for further into the future. The other is that you open a lot of accounts early, which means that you can have more credit-seeking behavior the first two plus years (two years from when you stop adding accounts). That is what I mean when I say there are pros and cons. Lots of people with 800 FICOs can't qualify for very much because they have thin files or credit-seeking; the difference being that credit-seeking is probably more problematic for a while but goes away on its own in time. A high FICO score and a very thin file, and $2, will get you a cup of coffee, and the same could be said for a high FICO score and credit-seeking behavior. Either path can result in high FICO scores. End edit.

With your daughter, I would suggest going a little slow at first, though, since opening a flurry of cards will likely drop her score and may result in getting worse initial cards than if you space it out a bit. There is a difference between simply getting "a card" and getting a good card that can grow with her and save her money in the long run. I think she can get some pretty good cards and I wouldn't want to sabotage that by adding a bunch of lower quality cards in a hurry. I would suggest opening one card and seeing how that goes for two or three months, then maybe a second card, then wait a while (six months or so). Then selecting a third card, and at that point, she will have all the credit cards she needs for FICO scoring purposes, though she may over time want other cards for rewards or to increase total CL or something along those lines. If she is not a credit nerd, three decent cards will stand her in good stead for the long run.

Discover is a good option. I'd also consider American Express, which is known to be friendly to clean thin profiles. She may be able to get a Chase card, but I don't know b/c I am 17/24. Chase would throw things at me if I came asking them for a card.

JMO, good luck to your daughter!

Re: Where would you start?

Loquat — Sat, 16 Jan 2021 18:01:47 GMT

At 18 years old most teenagers are navigating their final year of high school and preparing for college. While building is important I don't think that there needs to be any sort of hurry to add a bunch of cards.

The OP said that daughter is an AU on some cards already so the the "establishing" of credit is already in place. Slow and steady would be my suggestion for any 18 year old new to credit.

Re: Where would you start?

KJinNC — Sat, 16 Jan 2021 18:05:07 GMT

That is a good point in terms of maturity level and responsibility. I am 49, and tend to just assume that balances won't get outrageous and everything will be paid on time. But for someone new to credit, it is probably best to go slow to avoid getting yourself into trouble. Anyway in this case, I'd start with a Discover or Amex (or maybe Chase, I am not the person to tell you about getting a Chase approval) and see how it goes for a while!

Re: Where would you start?

Slabenstein — Sat, 16 Jan 2021 18:47:51 GMT

@KJinNC wrote:
That is a good point in terms of maturity level and responsibility. I am 49, and tend to just assume that balances won't get outrageous and everything will be paid on time. But for someone new to credit, it is probably best to go slow to avoid getting yourself into trouble. Anyway in this case, I'd start with a Discover or Amex (or maybe Chase, I am not the person to tell you about getting a Chase approval) and see how it goes for a while!

I think Chase wants to see at least a year of revolving credit in the applicant's own name, so they probably wouldn't be a good choice for a first app.

Re: Where would you start?

Remedios — Sat, 16 Jan 2021 19:06:12 GMT

@Loquat wrote:
OP I agree with @Jnbmom. I would start with someone like Discover. They seem to be pretty decent with new, clean files. The limit may not be extremely high but I don't think that'd be needed anyway as a starter card. CapOne is also an option but I'd really try with Discover first.

I don't agree with the getting 3 new cards out of the gate. I think it's overkill for a new profile and even more so for someone new to having credit on their own. After being around these here parts for quite some time now, I've adopted the mindset that more isn't better when you're just getting out of the gate.

Best of luck to your daughter as she starts out on her financial journey.

I agree.

It's total overkill trying to "maximize" scores with three cards.

Regardless of the few points gained this way, short credit history is going to be a roadblock for a while, not those few points.

One card is all one needs to start handling their own finances and learning about healthy ways to manage one's finances, unless the goal is multiple useless cards with toy limits that will only beget the need for better cards sooner than needed.

Re: Where would you start?

Jnbmom — Sat, 16 Jan 2021 19:42:30 GMT

My daughter started with a discover card about 2 1/2 years ago when she was 19. That's all she wanted . About 6 months later I had her join navy and she got the CRs card.

Her scores are around 765 . She just wants these 2 cards and she also has a deferred student loan that's she paid down to 800. She will start grad school soon and will have to get some loans but she has been very financially responsible.

She gets preapprovals in the mail all the time and is happy with what she has .

Re: Where would you start?

Kforce — Sat, 16 Jan 2021 21:04:16 GMT

@Loquat wrote:
OP I agree with @Jnbmom. I would start with someone like Discover. They seem to be pretty decent with new, clean files. The limit may not be extremely high but I don't think that'd be needed anyway as a starter card. CapOne is also an option but I'd really try with Discover first.

I don't agree with the getting 3 new cards out of the gate. I think it's overkill for a new profile and even more so for someone new to having credit on their own. After being around these here parts for quite some time now, I've adopted the mindset that more isn't better when you're just getting out of the gate.

Best of luck to your daughter as she starts out on her financial journey.

+100

Re: Where would you start?

Kforce — Sat, 16 Jan 2021 21:10:54 GMT

@Loquat wrote:
At 18 years old most teenagers are navigating their final year of high school and preparing for college. While building is important I don't think that there needs to be any sort of hurry to add a bunch of cards.

The OP said that daughter is an AU on some cards already so the the "establishing" of credit is already in place. Slow and steady would be my suggestion for any 18 year old new to credit.

My daughter started with one card after 3 years added a discover and now at 5 years of credit history has 830 ficos.

I think the Discover is a great first or second card.

No need to get 3 off the bat.

Re: Where would you start?

Taurus22 — Sat, 16 Jan 2021 21:22:15 GMT

I'm going to reconfirm what everyone else here has stated...

Discover. Perfect for new profiles. They also double the rewards points the first year, so it would be a decent gauge of her credit responsibility. If she aces year #1 with no issues, then she could consider maybe applying for 2 cards after her first anniversary. I did something similar...started with a secured card from my local bank, converted it to unsecured after my first year, then applied for Discover and Citi DC back-to-back. Having those 2 cards age together really helps the AAoA, especially if I ever decided to close my oldest one.

Re: Where would you start?

Taurus22 — Sat, 16 Jan 2021 21:26:34 GMT

Oh, I also meant to mention.... I would avoid Capital One. I have aggressively avoided Capital One simply because they do 3 credit pulls, one for each bureau. That would hit the credit score a bit harder than a single pull from Discover. Just a thought....