topic Re: Credit Card Ideas for 20 year old Daughter (low history) in Credit Cards

Credit Card Ideas for 20 year old Daughter (low history)

Anonymous — Mon, 29 Mar 2021 17:22:34 GMT

The facts:

20 years old
1 card currently - Discover IT card
- $2800 limit (just increased from 1400). 2nd increase - I believe 200 < 1800 < 2800
- Had card 1 year this month
746 FAKO score
- Has increased consistently over this year
Only uses Discover card 1 time per month for gas and pays it off after it cycles

With all this said, we want to set her up with success to build a solid credit profile. 2 things I am considering are:

Her car is currently in our name, which we pay (and will continue). She is in the market for a trade, and we thought about getting it in her name wholly or co-sign with her if her income won't qualify. We'll continue to pay (we want her to get the credit benefit though)
Get her a 2nd card to sit and hold and still follow AZEO

Which 2nd card would be a decent option with only 1 year of credit history? Any recommendations against or in addition to what I was planning above?

Re: Credit Card Ideas for 20 year old Daughter (low history)

pizza1 — Mon, 29 Mar 2021 17:57:11 GMT

Where does she bank? What is her income? Id say talk to a banker about a basic Plat card, or run the prequel at Capital One and Amex

Re: Credit Card Ideas for 20 year old Daughter (low history)

Anonymous — Mon, 29 Mar 2021 18:07:24 GMT

She's a full time student, so income is only around 10-12k. For banking, she uses a local credit union.

Re: Credit Card Ideas for 20 year old Daughter (low history)

Remedios — Mon, 29 Mar 2021 18:40:38 GMT

AZEO cannot be done with 2 cards, because that means 50% of accounts are reporting. It requires minimum of three cards, with one reporting a small balance.

So, she would need to apply for two cards.

With that said, I am not sure why she would need to do AZEO unless she's buying a house. It's really uncessary, and it doesn't teach anyone how to handle finances, it only causes balance neurosis. Unless one needs to squeeze all the points, there's really very little reason to do it.

Also, the profile as young as hers, applying for the cards just to reach a concept that's only known on the credit card forum isn't the best reason.

You stated her current spend is low, so adding cards will dilute it even further.

Maybe check with CU (or any other lender) and see if they have plain flat rate cashback card.

Unless she has specific plans such as travel, plain cashback might make her life easier.

Re: Credit Card Ideas for 20 year old Daughter (low history)

Anonymous — Mon, 29 Mar 2021 18:39:44 GMT

I appreciate the feedback. The AZEO is more of a methodology statement that I want her to get in the habit of knowing. For her, it's really out of handling the cards effectively, which she currently does.

I guess my ultimate question is: for long term credit growth, are you saying just keep the 1 card for now and build off it? In my mind, I was thinking of long-term benefits as having the credit history of multiple cards may help her down the road quicker without having to build credit at that time. The only thing in her name currently is the one card. As for her car, that was a plan also, which we would continue to pay and help her build that. But if there's no point, I don't mind holding off. This is more of a long-term play as there's absolutely nothing in the next few years she will need credit for. If she needs it, we buy it. She's done with 2 years of college, which we paid 100% out of pocket with no financial asssitance or loans. We'll do the same the next 2 years as well, so she won't have any student loans herself either.

I am just trying to put her in a situation where she has credit established and ready to use when she's in a position of need (buying a house, new car, etc).

Re: Credit Card Ideas for 20 year old Daughter (low history)

Remedios — Mon, 29 Mar 2021 19:42:59 GMT

She does not have to stay with one card, unless she's happy with one card at the moment.

I would say she could benefit from another one, but not for AZEO reason.

Network may fail, card may get damaged, lender gets weird...a spare isn't a bad idea at all.

AZEO may or may not be sustainable long term because at some point almost everybody asks why.

Then, they may or may not know how to manage multiple cards, or they may feel sky is going to fall if balance reports.

It's kinda like putting yourself voluntarily in jail, spending there 10 years, then leaving the jail and really not knowing how to act the way most people act when they aren't forcing themselves to behave certain way.

I like the idea of loan being in her name, but you need to keep in mind that loan would be more representative of your payment history versus hers.

Maybe keep this one in your name, and when she's ready to buy another vehicle, she will have her own history to help her.

Maybe something smaller like Self, so she can practice.

My daughter just got her first cards, and the condition for allowing her to have cards of her own is that I have access and be able to see not what she's spending but to ensure that she's paying on time.

I think, to keep things simple, cashback card would be good. Has she expressed any interest in a particular card?

Re: Credit Card Ideas for 20 year old Daughter (low history)

Anonymous — Mon, 29 Mar 2021 20:58:49 GMT

If it were me I would go to all of the pre-qualify sites and just see what reward offers she might be able to get. Then evaluate what reward offer she might be able to achieve and still pay off. Also another idea is if she is already buying gas and paying it off monthly look at a gas card. My shell card is backed by CITI and they love me at this point. I started with a Shell card (master card) years ago and then one time took advantage of a 18 month 0% deal with them and opened double cash card. A few years later after that they product upgraded me to Rewards + account and that account has the highest limit of all my accounts. I have never once asked for a CLI it just keeps going up. For me that simple Shell Mastercard opened the Citi door and they have been great to me. IMHO right now its more about her establishing a good repour with companies vs trying to get a ton of available credit or lots of cards. Once she has a higher level of income she can start to build up the credit available.

Re: Credit Card Ideas for 20 year old Daughter (low history)

Anonymous — Tue, 30 Mar 2021 03:24:30 GMT

First off, as someone in his 20s, kudos on setting your daughter up for success. I figured it out mostly on my own, and made a lot of mistakes despite having this forum as a resource.

To answer your question, I would suggest credit-seeking for relationship building since your daughter really doesn't need the card(s). You have Discover, so find your favorite cards from Chase, Citi, Cap1, and AMEX and apply for those. Or pick 2 of the 4. It never hurts to have a broad base.

Re: Credit Card Ideas for 20 year old Daughter (low history)

surferchris — Tue, 30 Mar 2021 04:11:55 GMT

Congrats on the great work you have already done!

I would definitely add an American Express card to the mix. Our daughter is about to turn 20 and in grad school and has a handful of cards on which she rotates spend. One is a Hilton American Express and one is a Platinum. She is also an AU on a couple of our cards.

I agree with the others, in that the important thing is to start relationships with quality companies.

Re: Credit Card Ideas for 20 year old Daughter (low history)

HeavenOhio — Tue, 30 Mar 2021 21:38:45 GMT

I'd prioritize a Mastercard or Visa at this point. She could check out the prequal tool at Chase given that she has a year of history on a card with a good limit.

She should definitely zero in on good cards. There's no need for anything in the starter category.

Re: Credit Card Ideas for 20 year old Daughter (low history)

Anonymous — Tue, 30 Mar 2021 21:46:29 GMT

@Remedios wrote:
AZEO cannot be done with 2 cards, because that means 50% of accounts are reporting. It requires minimum of three cards, with one reporting a small balance.
So, she would need to apply for two cards.

I'm not sure what you mean by this. AZEO certainly can be done with 2 cards... All Zero Except One by definition means one card not at zero and all others at zero. AZEO with a 2-card profile as you identified results in 50% of cards with a balance yes, but it's still AZEO. AZEO on a 2-card profile / 50% of cards with balances is still going to return higher Fico scores than a 2-card profile with both / 100% of cards with a balance under many circumstances. The full benefits of AZEO perhaps can't be achieved without 3+ cards, but the theory/method behind it can still be applied with 2 cards and can still be beneficial.

Re: Credit Card Ideas for 20 year old Daughter (low history)

Anonymous — Tue, 30 Mar 2021 21:55:42 GMT

I think her scooping up another card or two would be a great idea at her age to help thicken her file. It will also allow her AAoRA to remain higher later in life with the opening of future cards. As for which cards to go for, she's probably in a decent place with 1 year of Discover history. Definite shoe-ins IMO would be Capital One and Amex, but there are probably plenty of others like Chase etc. that would give her a shot. I think a local CU card would be worth considering as well.

OP you also mentioned a FAKO score. With the Discover account she can get her TU Fico 8 score for free, so definitely check that. In addition to that she can also head to creditscorecard.com (by Discover) and grab her EX Fico 8 score as well monthly. Getting both of those will give a decent Fico score snapshot of what CCCs may be pulling with a CC app. That EX8 score for example is what Amex would see if she were to apply for one of their cards.

Another thing, you suggested that an additional card added would be sat on, possibly unused and kept at a $0 balance. This really isn't a good idea, as CCs can be closed down for non-use. A general rule to keep cards alive is at least a swipe every 6 months (some suggest 3 months). Whatever card(s) she gets, I'd recommend a purchase right away with immediate payoff just to show initial activity... then a swipe every 3-6 months to keep it safe from possible closure. All lenders have different rules on non-use, so better safe than sorry.

Re: Credit Card Ideas for 20 year old Daughter (low history)

Remedios — Tue, 30 Mar 2021 22:08:34 GMT

@Anonymous wrote:
@Remedios wrote:
AZEO cannot be done with 2 cards, because that means 50% of accounts are reporting. It requires minimum of three cards, with one reporting a small balance.
So, she would need to apply for two cards.

I'm not sure what you mean by this. AZEO certainly can be done with 2 cards... All Zero Except One by definition means one card not at zero and all others at zero. AZEO with a 2-card profile as you identified results in 50% of cards with a balance yes, but it's still AZEO. AZEO on a 2-card profile / 50% of cards with balances is still going to return higher Fico scores than a 2-card profile with both / 100% of cards with a balance under many circumstances. The full benefits of AZEO perhaps can't be achieved without 3+ cards, but the theory/method behind it can still be applied with 2 cards and can still be beneficial.

I'm sorry, what is it that you didn't understand?

Clearly you stated that full benefit of AZEO cannot be realized with 2 cards, and OP is asking about AZEO not ALMOST-AZEO.

Sure, we could have gotten into greater detail, but if OP has additional questions about scoring effects of AZEO, they (and everyone else who wishes to participate in that conversation) is free to start a thread in UFS.

In other words, AZEO as an idea is appropriate to address here.

Scoring effects of AZEO, off topic, better served elsewhere.

So, back on topic it is.

Re: Credit Card Ideas for 20 year old Daughter (low history)

coldfusion — Tue, 30 Mar 2021 22:54:08 GMT

@Remedios wrote:
I'm sorry, what is it that you didn't understand?

The part about staying on topic? 😇