topic Re: Should I add a credit card? in Credit Cards

Should I add a credit card?

D10001 — Mon, 19 Apr 2021 02:51:48 GMT

After being a debit card user for 15 years and having a poor credit report because of a mortgage that I fell behind on, I resolved to clear up my credit life. The mortgage black mark was resolved in three years ago (paid off in full). In March of 2019, I opened a Capital One Mastercard. In October of 2019, I got Discover and Chase Visa cards. Lastly, in January of 2020, American Express gave me a Cash Magnet card. My scores have increased by near 100 points in that time. Yesterday Honda financed 90% of the purchase of $48,000 of an SUV for 0%.

My Experian FICO -- thanks to "Boost" is at 734. Equifax has me at 711 and Transunion at 709.

I have two hard pulls in the past year.

My file is "thin." My four revolvers are two years or less. I have one other account, a six years old student loan. With the glaring exception of the mortgage issue, the student loan and the four credit cards have perfect payment history. My utilization on the cards is 2%. I use each actively and judiciously. I pay the balance down to 1-2% before the statement date.

So, I need to thicken my file. It'll age on its own -- nothing to do about that.

Now when Honda adds yesterday's car loan to my file, my scores will likely drop in the short term.

So, before my score dips should I add one or two credit cards to bulk up my reports a little?

If so, any recommendations?

Re: Should I add a credit card?

AverageJoesCredit — Mon, 19 Apr 2021 23:59:19 GMT

With a Mortgage, Student loans, a car and 4 Prime credit cards, your file doesnt scream thin to me. Only add a cc if you actually need it. Imo.

Re: Should I add a credit card?

Aim_High — Tue, 20 Apr 2021 01:06:04 GMT

You've got four cards from solid lenders and they are all on the young side, @D10001. I don't see any need for new cards right now and you don't seem to identify any card or type of rewards you are missing. I would agree with letting what you have age awhile.

Just to clarify, do you have the Capital One Quicksilver Mastercard, paying 1.5% cashback with no AF? And the Discover IT with the rotating 5% categories? And which Chase Visa do you have? Between the AMEX Cash Magnet and Quicksilver (if that's your card), you're getting 1.5% back on everything which is a decent return, especially if you're looking to keep things simple. There are cards that pay between 2% and 3% cash back on everything but they all have some sort of strings or complications that you typically don't find in the 1.5% cards. There is something to be said for simplicity. Four cards is plenty at this point for you to bulk up your credit file. You don't really need as many as you see in some other member profiles.

Re: Should I add a credit card?

SouthJamaica — Tue, 20 Apr 2021 01:13:13 GMT

@D10001 wrote:
After being a debit card user for 15 years and having a poor credit report because of a mortgage that I fell behind on, I resolved to clear up my credit life. The mortgage black mark was resolved in three years ago (paid off in full). In March of 2019, I opened a Capital One Mastercard. In October of 2019, I got Discover and Chase Visa cards. Lastly, in January of 2020, American Express gave me a Cash Magnet card. My scores have increased by near 100 points in that time. Yesterday Honda financed 90% of the purchase of $48,000 of an SUV for 0%.

My Experian FICO -- thanks to "Boost" is at 734. Equifax has me at 711 and Transunion at 709.
I have two hard pulls in the past year.

My file is "thin." My four revolvers are two years or less. I have one other account, a six years old student loan. With the glaring exception of the mortgage issue, the student loan and the four credit cards have perfect payment history. My utilization on the cards is 2%. I use each actively and judiciously. I pay the balance down to 1-2% before the statement date.

So, I need to thicken my file. It'll age on its own -- nothing to do about that.

Now when Honda adds yesterday's car loan to my file, my scores will likely drop in the short term.

So, before my score dips should I add one or two credit cards to bulk up my reports a little?

If so, any recommendations?

I do not agree that you need to thicken your file. IMHO you're fine just where you are. With time your scores will increase.

Re: Should I add a credit card?

Anonymous — Tue, 20 Apr 2021 01:36:40 GMT

Agreed with the above responses- you're in with good lenders. While you do not have to by any means, consider asking for a credit line increase CLI every six months/ twice a year. Your present accounts will age by default but increased limits will likely help in actual utilization and a future starting limits when you come across a new card of true benefit.

You mentioned paying down before statement cuts so higher limits often negate most of those needs for scoring purposes.

AmEx, Discover, and Capital One should be soft pulls and no harm/no foul if declined.

Re: Should I add a credit card?

D10001 — Tue, 20 Apr 2021 01:47:28 GMT

Thank you all for your consensus. I see some users' signatures with so many cards displayed that I figured my inventory is skimpy. I do get rebates on each card and pay no fees. So, I guess that I'm in decent position. Having gotten a loan recently at a favorable rate does show that I'm in decent shape.

Thanks again.

Re: Should I add a credit card?

Anonymous — Tue, 20 Apr 2021 01:47:53 GMT

@D10001 wrote:
After being a debit card user for 15 years and having a poor credit report because of a mortgage that I fell behind on, I resolved to clear up my credit life. The mortgage black mark was resolved in three years ago (paid off in full). In March of 2019, I opened a Capital One Mastercard. In October of 2019, I got Discover and Chase Visa cards. Lastly, in January of 2020, American Express gave me a Cash Magnet card. My scores have increased by near 100 points in that time. Yesterday Honda financed 90% of the purchase of $48,000 of an SUV for 0%.

My Experian FICO -- thanks to "Boost" is at 734. Equifax has me at 711 and Transunion at 709.
I have two hard pulls in the past year.

My file is "thin." My four revolvers are two years or less. I have one other account, a six years old student loan. With the glaring exception of the mortgage issue, the student loan and the four credit cards have perfect payment history. My utilization on the cards is 2%. I use each actively and judiciously. I pay the balance down to 1-2% before the statement date.

So, I need to thicken my file. It'll age on its own -- nothing to do about that.

Now when Honda adds yesterday's car loan to my file, my scores will likely drop in the short term.

So, before my score dips should I add one or two credit cards to bulk up my reports a little?

If so, any recommendations?

You got credit cards and installment loans. You don't need anything else from this point. Just keep what you have, let them age then if you need to pick up a card that you need do so. Don't go out getting cards just because you think you have to have a certain amount of cards. You can get to a 800 score with what you currently have as long as you don't default or get any late payments.

Re: Should I add a credit card?

805orbust — Tue, 20 Apr 2021 16:04:20 GMT

Personally I think your file is statistically and structurally perfect. Remember whom you've chosen to hang out with here... we are NOT normal. You are good my friend.

Re: Should I add a credit card?

Aim_High — Tue, 20 Apr 2021 16:33:48 GMT

@D10001 wrote:
Thank you all for your consensus. I see some users' signatures with so many cards displayed that I figured my inventory is skimpy. I do get rebates on each card and pay no fees. So, I guess that I'm in decent position. Having gotten a loan recently at a favorable rate does show that I'm in decent shape.

Thanks again.

Our signatures are not representative of the general population by any means, @D10001. While we have some members with only a handful of cards, our community errs towards the card enthusiast and collector category of cardholders. According to Experian data, the average US consumer had 3.84 credit cards in Q4 2020, which puts you right at if not slightly above average! And supposedly, the minimum number of revolving accounts you need to optimize a credit score is only three.

*Web article from Experian:

https://www.experian.com/blogs/ask-experian/average-number-of-credit-cards-a-person-has/

Our members have so many cards for a variety of reasons. Many of these may not apply to everyone on the forums.

Lengthy credit file and elected to not close older cards to keep the long credit history (beyond the 10 years they might still report if they were closed.) In my case, with over 35 years of credit, I have four cards that fall in the 20+ year old category, all of which I've updated by product changes over the years to keep them relatively fresh.
Some of our members are rewards optimizers who strive to get a certain higher-than-average rewards rates on their highest spending categories. To do this, it usually takes many different cards and years of building the profile, especially since offerings continue to evolve. Some just target their highest three or four categories, while others take it even farther and try to cover all the bases. Usually, these profiles are targeting cash back rewards cards.
Some of our members are travel optimizers who focus more on various travel point systems and enjoy the gamesmanship of finding the best opportunities for point redemptions, usually by transfers to airline or hotel travel partners. Some of these members do either a lot of business or personal travel and may have a legitimate use for multiple high-fee cards. Besides the major travel point currencies from AMEX (Member Rewards), Chase (Ultimate Rewards), or Citi (Thank You Points), they may also target specific airlines or hotel chains where they achieve loyalty status with related perks. Travel optimizers probably have either all or mostly travel point cards instead of cash back. However, we have some members with a mixture between the cash back and rewards cards which provides another type of diversification, depending on their goals at the time.
Some of our members have many cards to have greater diversity of lenders, which gives greater protection from any lender's adverse action against accounts and also provides options for alternate but equivalent rewards to other cards they carry, product changes into future cards, and 'relationships' with various lenders. You'll notice I have 20 cards but 14 different lenders and quite a few of these I also have some banking relationship.
Because of the FICO penalties for high utilization rates on either an individual account or across the aggregate of accounts, many of members have tried to achieve at least some level of utilization "padding" of limits by either requesting credit limit increases on their primary accounts, or having secondary accounts which see little regular usage but provide aggregate utilization benefits. Having the secondary accounts is much more work than just trying to raise limits on cards you naturally and regularly use.
Some of our members have many cards from strategically targeting SUBs for opening new accounts.
Some of our members are card collectors who just enjoy getting approved for many cards! This may be to experience different cards for a "test drive" but also could be to pursue a high number of total cards, credit limits, or lenders simply for the fun of it.
Besides rewards, some of our members like to have one or more cards with the lowest permanent APR, just in case they need them for emergencies when they don't have the cash on hand. For example, in my lineup I have the Navy Federal Platinum Visa (5.99% variable) and AOD FCU Visa (7.50% fixed.)

Of course, there is a "dark side" to overdoing the number of accounts. There is more to monitor for fraud, to remember to use them often enough to prevent closures, to make payments, etc. They all take a certain degree of work, so as I said, there's a lot to be said for simplicity! Also, if someone has a huge amount of open credit relative to their income and/or assets, they can run into cases of being denied for new credit lines due to the lenders being concerned of over-extension.

Re: Should I add a credit card?

Anonymous — Wed, 21 Apr 2021 17:18:51 GMT

I really want to echo the prior posts. After you have substantial paydown on your Honda installment loan, additional length of history on your cards, the obvious stuff, most any credit card is going to be within reach. I would emphasize usage on your Capital One card which has a real opportunity to grow with PCLI. Same with Discover (both CLI request and potential PCLI). Just wait a year, and after that, you can get two new cards. Depending on how much you've paid down your installment loans, maybe even three. Something to look forward to, and something really awesome.

Re: Should I add a credit card?

Anonymous — Sat, 01 May 2021 01:20:05 GMT

@D10001 wrote:
After being a debit card user for 15 years and having a poor credit report because of a mortgage that I fell behind on, I resolved to clear up my credit life. The mortgage black mark was resolved in three years ago (paid off in full). In March of 2019, I opened a Capital One Mastercard. In October of 2019, I got Discover and Chase Visa cards. Lastly, in January of 2020, American Express gave me a Cash Magnet card. My scores have increased by near 100 points in that time. Yesterday Honda financed 90% of the purchase of $48,000 of an SUV for 0%.

My Experian FICO -- thanks to "Boost" is at 734. Equifax has me at 711 and Transunion at 709.
I have two hard pulls in the past year.

My file is "thin." My four revolvers are two years or less. I have one other account, a six years old student loan. With the glaring exception of the mortgage issue, the student loan and the four credit cards have perfect payment history. My utilization on the cards is 2%. I use each actively and judiciously. I pay the balance down to 1-2% before the statement date.

So, I need to thicken my file. It'll age on its own -- nothing to do about that.

Now when Honda adds yesterday's car loan to my file, my scores will likely drop in the short term.

So, before my score dips should I add one or two credit cards to bulk up my reports a little?

If so, any recommendations?

Hi 🙋‍♀️. I'm going to go a little bit against the tide of what's been said to-date. Being on the young side, keeping things conservative is a good thing. However, I would look into establishing a relationship and 1 CC each with 2 CU's. 1 Larger. NFCU. PenFed. DCU. Where you can get in. And one either a second large one or local region to you. That CU relationship can be great to cultivate and court slowly and gently over the years. Likely get the CU's Rewards CC if travel is not yet a biggie.

IMO 🙏🏻🙏🏻🙏🏻