topic Re: Maybe starters should open 10+ account? in Credit Cards

Maybe starters should open 10+ account?

Anonymous — Wed, 24 Apr 2013 19:26:30 GMT

I've just read how AAOA is calculated, so I'm thinking, should credit starters have as 10+ accounts? Starter credit cards issued by Credit One or Orchard bank or whatever it is, normall have an annual fee or monthly fee and give people low limit.

However, one can open 10+ these subprime credit cards and then close them immediately after they show up on your credit report, leaving only one card in the end, say Capital One or some secured credit card that you really want to grow up with. For those cards you have closed, they will remain on your credit report and make your AAOA look better in the future.

For example, you got 10 subprime cards and closed 9 of them after a month. And you regularly use and PIF the remaining one. After two years, you start a mini app spree and got three quasi-prime cards, say Discover it or Chase Freedom. Then your AAOA will drop a bit to something like 21 months. If you only have one subprime card from the start, then you AAOA will drop to 6 months.

And these closed starter cards will remain on your report, thus affecting your AAOA, for seven years. In return, you have to pay an average of $20~$30 for the activation and/or first month fee of each card. For some people, this might be worthwhile.

Any ideas?

Update: When I said "subprime" cards, I actually meant both these unsecured starter cards and secured credit cards, as long as they're easy to obtain. I just want them show up on my report to extend my future AAOA and it doesn't matter they're secured or unsecured, subprime or prime.

Re: Maybe starters should open 10+ account?

Anonymous — Mon, 22 Apr 2013 20:36:15 GMT

I would think that if somebody did something like this they would have lots of questions to answer under a manual review of their credit files - in fact most places might not even bother calling you back asking you to explain.

Plus, from the way I see it: there's no where near 10 plus unsecured sub-prime cards out there to even pull that off with.

My vote for this is four thumbs down LOL

Re: Maybe starters should open 10+ account?

FinStar — Mon, 22 Apr 2013 20:56:18 GMT

@Anonymous wrote:
I would think that if somebody did something like this they would have lots of questions to answer under a manual review of their credit files - in fact most places might not even bother calling you back asking you to explain.

Plus, from the way I see it: there's no where near 10 plus unsecured sub-prime cards out there to even pull that off with.

My vote for this is four thumbs down LOL

I think the OP's suggested strategy will actually hurt - not help - anyone in the rebuilding process. Creditors look for more than just AAoA. And as Unusuallyconfused mentioned, if any lender was to perform a manual review within a 12-18 month span, they would likely see this as a poor handling of reestablishing credit.

Re: Maybe starters should open 10+ account?

rebuildingmission2013 — Mon, 22 Apr 2013 21:08:52 GMT

I have 9 subprime credit accounts open to reestablish credit and I don't plan on closing any of them anytime soon...

Re: Maybe starters should open 10+ account?

MazdaSpeed — Mon, 22 Apr 2013 21:34:47 GMT

I consider myself a credit starter, considering I'm not even 21 yet, I have 4 closed credit cards, and 8 open credit cards, I know my 6 recent open cards will decrease my score for the time being but, it'll go back up, and them when I am older it will be even thicker and stronger and less affected from new accounts

Plus I'm getting a bunch of bonuses haha

Edit: and had I understood credit when I was younger, as much as I do now(or think I do haha) I wouldnt closed most of those 4 cards especially the Walmart card I had(wish I still had it for the TU FICO scores)

Re: Maybe starters should open 10+ account?

hawesda1 — Mon, 22 Apr 2013 22:01:48 GMT

This is precisely what I did. In January I opened up a secured card with Bank of America and Wells Fargo, then I opened up a account with Matrix. Two month later I qualified for four GE cards. Finally this month I opened a flagship card and a Navchek LOC with Navy Federal. I started out with a 565 TU score and I'm currently at 673. Didnt seem to hurt me one bit. Planning to repair my credit for about two years, then mortgage.

Re: Maybe starters should open 10+ account?

LS2982 — Mon, 22 Apr 2013 22:51:32 GMT

@Anonymous wrote:
I would think that if somebody did something like this they would have lots of questions to answer under a manual review of their credit files - in fact most places might not even bother calling you back asking you to explain.

Plus, from the way I see it: there's no where near 10 plus unsecured sub-prime cards out there to even pull that off with.

My vote for this is four thumbs down LOL

Totally agree, I would be asking a bunch of questions too if I were an analyst!

Re: Maybe starters should open 10+ account?

Anonymous — Tue, 23 Apr 2013 02:22:04 GMT

@Anonymous wrote:
I've just read how AAOA is calculated, so I'm thinking, should credit starters have as 10+ accounts? Starter credit cards issued by Credit One or Orchard bank or whatever it is, normall have an annual fee or monthly fee and give people low limit.

However, one can open 10+ these subprime credit cards and then close them immediately after they show up on your credit report, leaving only one card in the end, say Capital One or some secured credit card that you really want to grow up with. For those cards you have closed, they will remain on your credit report and make your AAOA look better in the future.

For example, you got 10 subprime cards and closed 9 of them after a month. And you regularly use and PIF the remaining one. After two years, you start a mini app spree and got three quasi-prime cards, say Discover it or Chase Freedom. Then your AAOA will drop a bit to something like 21 months. If you only have one subprime card from the start, then you AAOA will drop to 6 months.

And these closed starter cards will remain on your report, thus affecting your AAOA, for seven years. In return, you have to pay an average of $20~$30 for the activation and/or first month fee of each card. For some people, this might be worthwhile.

Any ideas?

A much better plan to open several store cards from stores where you are likely to shop now and in the future. And never close them. No AF are invovled. Occasional use and payment will keep them open.

So 10 years from now you have a large AAoA with enough cards that adding a card will have little impact. And it keeps growing from there.

DW has a Sears MC( 40 years +).

Re: Maybe starters should open 10+ account?

HiLine — Tue, 23 Apr 2013 02:28:33 GMT

First of all, subprime cards are a bad idea. Avoid them like the plague unless you have no other options.

Second of all, closing trade lines soon after opening raises a tall red flag.

Thirdly, for consumers with a thin file, only open accounts make a positive impact in a manual review.

On the other hand, opening 10+ accounts that do not charge an annual fee is the ideal way to start building credit. After 2 years you can apply for whatever credit cards you want without being concerned about the impact on AAoA.

Re: Maybe starters should open 10+ account?

webhopper — Tue, 23 Apr 2013 02:30:12 GMT

@HiLine wrote:
First of all, subprime cards are a bad idea. Avoid them like the plague unless you have no other options.
Second of all, closing trade lines soon after opening raises a tall red flag.
Thirdly, for consumers with a thin file, only open accounts make a positive impact in a manual review.

On the other hand, opening 10+ accounts that do not charge an annual fee is the ideal way to start building credit. After 2 years you can apply for whatever credit cards you want without being concerned about the impact on AAoA.

2 years is still a relatively short AAoA. Ideal would be 6+ years.

Re: Maybe starters should open 10+ account?

parakleet — Tue, 23 Apr 2013 02:55:23 GMT

I don't know. At a certain point, it just becomes ridiculous, jumping through made-up hoops and making things more complicated than they need to be. I think the better route would be to just - pay your bills on time, don't open too many cards you don't need, and keep track of your cards to make sure that you get some cli love 1-2 times per year. Maybe that's just too simple for some people but I think I'll just stick to what I know.

Re: Maybe starters should open 10+ account?

HiLine — Tue, 23 Apr 2013 02:59:07 GMT

@parakleet wrote:
I don't know. At a certain point, it just becomes ridiculous, jumping through made-up hoops and making things more complicated than they need to be. I think the better route would be to just - pay your bills on time, don't open too many cards you don't need, and keep track of your cards to make sure that you get some cli love 1-2 times per year. Maybe that's just too simple for some people but I think I'll just stick to what I know.

Your approach is totally fine. Some people get by with just 1-2 cards. Then there are credit card/credit score fanatics like some of us here that like to devise clever strategies to maximize our credit score and leverage that for other goals that we pursue.

Re: Maybe starters should open 10+ account?

parakleet — Tue, 23 Apr 2013 03:07:43 GMT

@HiLine oh don't you worry, I've got pleeeeenty of cards I don't "need" lol. And I've definitely got my eye on cards that I never really thought about before coming on this forum. I'm also patiently waiting for my 3x Amex cli on the 61st day!

Re: Maybe starters should open 10+ account?

HiLine — Tue, 23 Apr 2013 03:31:08 GMT

Ah OK! I guess you've had a fair share of the credit craze perpetrating this board. The trick is to reach the equilibrium where you have just the amount of credit with some wiggle room to move either up or down slightly when need be. Slowing down is just as important as speeding up.

Re: Maybe starters should open 10+ account?

Revelate — Tue, 23 Apr 2013 06:08:48 GMT

@HiLine wrote:
First of all, subprime cards are a bad idea. Avoid them like the plague unless you have no other options.
Second of all, closing trade lines soon after opening raises a tall red flag.
Thirdly, for consumers with a thin file, only open accounts make a positive impact in a manual review.

On the other hand, opening 10+ accounts that do not charge an annual fee is the ideal way to start building credit. After 2 years you can apply for whatever credit cards you want without being concerned about the impact on AAoA.

As compared to what? There's different classes of subprime, and I'd suggest if I looked in your wallet I'd find a card which based on approval criteria would be considered subprime by every major lender on the planet.

When you're rebuilding or establishing credit, work one's way down through unsecured rebuilders or new to credit cards (lucky if you're a student doing this), if those fail, chase secured cards, and if that doesn't work, go the deep subprime route though this usually can be skipped as there are a few secured cards which don't check credit period. Or if you have money to play with, establish a big secured card and shortcut some of the more annoying things regarding credit building.

Not exactly magic, but realistically wrap your arms around the 2-3 best revolving tradelines you can obtain when starting and go on with life. If that's subprime, fine, I'll stack my old BOFA 1-2-3 secured card up against many of the people with better credit than I have, sometimes even on this forum too. I would strongly encourage anyone not to throw out useful tools over some silly label.

As for the OP's question: I thought about doing this, and felt the disadvantages were too large. It fundamentally doesn't show stability, and I'm willing to bet there's a penalty for short-tradelines in the FICO model just as there are bonuses for tradeline seasoning. AAoA is not a large enough portion of the model to try to game in this fashion, the downsides greatly overshadow the upsides.

That's in addition to the difficult questions as others have intimated that'll possibly come up in the next 10 years, and I would suggest that either "I was just trying to establish accounts for AAoA purposes" or "I realized I didn't really need all those cards" both are going to be viewed as negatives.

Re: Maybe starters should open 10+ account?

HiLine — Tue, 23 Apr 2013 06:41:28 GMT

@Revelate wrote:
@HiLine wrote:
First of all, subprime cards are a bad idea. Avoid them like the plague unless you have no other options.
Second of all, closing trade lines soon after opening raises a tall red flag.
Thirdly, for consumers with a thin file, only open accounts make a positive impact in a manual review.

On the other hand, opening 10+ accounts that do not charge an annual fee is the ideal way to start building credit. After 2 years you can apply for whatever credit cards you want without being concerned about the impact on AAoA.
As compared to what? There's different classes of subprime, and I'd suggest if I looked in your wallet I'd find a card which based on approval criteria would be considered subprime by every major lender on the planet.

By definition, a subprime credit card is one that is issued to people with substandard credit scores or limited credit histories. It is widely understood that subprime cards include cards that charge maintenance fees, have high APR's, and have low credit limits (in the hundreds), and that get issued to people who have no credit history or major negative items on their credit reports, such as those offered by First Premier, Credit One, the former Orchard Bank, and the likes. Secured credit cards can also be considered subprime, but once they graduate they become prime cards. You want to avoid subprime cards because future lenders will see their records on your credit profile, and that may raise a red flag.

I wasn't aware of classes of subprime. Please enlighten me.

I assume you did not mean to convey a literal meaning in your second phrase? I suggest that subprime cards be avoided like the plague unless there are no other options, and I follow that principle myself.

Re: Maybe starters should open 10+ account?

Revelate — Tue, 23 Apr 2013 07:59:27 GMT

@HiLine wrote:
@Revelate wrote:
@HiLine wrote:
First of all, subprime cards are a bad idea. Avoid them like the plague unless you have no other options.
Second of all, closing trade lines soon after opening raises a tall red flag.
Thirdly, for consumers with a thin file, only open accounts make a positive impact in a manual review.

On the other hand, opening 10+ accounts that do not charge an annual fee is the ideal way to start building credit. After 2 years you can apply for whatever credit cards you want without being concerned about the impact on AAoA.
As compared to what? There's different classes of subprime, and I'd suggest if I looked in your wallet I'd find a card which based on approval criteria would be considered subprime by every major lender on the planet.

By definition, a subprime credit card is one that is issued to people with substandard credit scores or limited credit histories. It is widely understood that subprime cards include cards that charge maintenance fees, have high APR's, and have low credit limits (in the hundreds), and that get issued to people who have no credit history or major negative items on their credit reports, such as those offered by First Premier, Credit One, the former Orchard Bank, and the likes. Secured credit cards can also be considered subprime, but once they graduate they become prime cards. You want to avoid subprime cards because future lenders will see their records on your credit profile, and that may raise a red flag.

I wasn't aware of classes of subprime. Please enlighten me.

I assume you did not mean to convey a literal meaning in your second phrase? I suggest that subprime cards be avoided like the plague unless there are no other options, and I follow that principle myself.

Deep subprime: FP, Credit One, OpenSky, SDFCU secured or any other which doesn't do a credit check

Subprime: Capital One, Fingerhut, vast majority of store cards, most secured cards

Subprime approval criteria, call em near prime if you want to split hairs (even though I think that's 660? I forget my mortgage tiers offhand which is classic prime vs subprime definition): Freedom, all Amex charge cards, old Citi Forward, Discover More/It, etc. If you can be approved at 640 FICO /shrug.

I don't accept the argument that maintenance fees, or high APR's, or low CL's equates to subprime. By that definition, my BCP is subprime, and admittedly the fact that they approved me suggests it's getting near that category the same way Chase's Freedom has. We tend to make up monikers on this forum that aren't necessarily accurate, though I'll admit my own are just as much opinion.

Secured cards still have their purposes regardless of credit strata as well.

A label of prime means less than zero rationally. A card that works for me, whatever the reason, and that I can establish payment history on, is really all that matters when it comes to building credit.

I'll just ask, what other options do adult non-college student thin, mixed, or negative files have? You're stuck taking a "subprime" (stupid label in my estimation, again see Chase Freedom with subprime approval criteria and it's a good card for almost anyone) somewhere along the lines, and there's no negative moniker to it. The whole "oh lenders may think badly of me in the future" has been long since debunked, plenty of people are in with Chase and Amex with FP tradelines on record, even on this forum. Banks don't chase away profitable customers in general.

Re: Maybe starters should open 10+ account?

dodfire — Tue, 23 Apr 2013 08:50:42 GMT

@Revelate wrote:
@HiLine wrote:
@Revelate wrote:
@HiLine wrote:
First of all, subprime cards are a bad idea. Avoid them like the plague unless you have no other options.
Second of all, closing trade lines soon after opening raises a tall red flag.
Thirdly, for consumers with a thin file, only open accounts make a positive impact in a manual review.

On the other hand, opening 10+ accounts that do not charge an annual fee is the ideal way to start building credit. After 2 years you can apply for whatever credit cards you want without being concerned about the impact on AAoA.
As compared to what? There's different classes of subprime, and I'd suggest if I looked in your wallet I'd find a card which based on approval criteria would be considered subprime by every major lender on the planet.

By definition, a subprime credit card is one that is issued to people with substandard credit scores or limited credit histories. It is widely understood that subprime cards include cards that charge maintenance fees, have high APR's, and have low credit limits (in the hundreds), and that get issued to people who have no credit history or major negative items on their credit reports, such as those offered by First Premier, Credit One, the former Orchard Bank, and the likes. Secured credit cards can also be considered subprime, but once they graduate they become prime cards. You want to avoid subprime cards because future lenders will see their records on your credit profile, and that may raise a red flag.

I wasn't aware of classes of subprime. Please enlighten me.

I assume you did not mean to convey a literal meaning in your second phrase? I suggest that subprime cards be avoided like the plague unless there are no other options, and I follow that principle myself.
Deep subprime: FP, Credit One, OpenSky, SDFCU secured or any other which doesn't do a credit check
Subprime: Capital One, Fingerhut, vast majority of store cards, most secured cards
Subprime approval criteria, call em near prime if you want to split hairs (even though I think that's 660? I forget my mortgage tiers offhand which is classic prime vs subprime definition): Freedom, all Amex charge cards, old Citi Forward, Discover More/It, etc. If you can be approved at 640 FICO /shrug.

I don't accept the argument that maintenance fees, or high APR's, or low CL's equates to subprime. By that definition, my BCP is subprime, and admittedly the fact that they approved me suggests it's getting near that category the same way Chase's Freedom has. We tend to make up monikers on this forum that aren't necessarily accurate, though I'll admit my own are just as much opinion.

Secured cards still have their purposes regardless of credit strata as well.

A label of prime means less than zero rationally. A card that works for me, whatever the reason, and that I can establish payment history on, is really all that matters when it comes to building credit.

I'll just ask, what other options do adult non-college student thin, mixed, or negative files have? You're stuck taking a "subprime" (stupid label in my estimation, again see Chase Freedom with subprime approval criteria and it's a good card for almost anyone) somewhere along the lines, and there's no negative moniker to it. The whole "oh lenders may think badly of me in the future" has been long since debunked, plenty of people are in with Chase and Amex with FP tradelines on record, even on this forum. Banks don't chase away profitable customers in general.

I would have to agree with this statement.

In my situation it might not have been the "best" thing to do, opening so many new lines of credit at once but......

For two years I had only FP, Credit One and Cap One.

By the definition in this thread....ALL sub-prime cards.

In a period of about 90 days...I opened...

USAA x3

NFCU x2

AMEX x3

Discover x1

Barclays x1

So, I do not think that lenders look at these "sub-prime" cards as a risk factor considering that I went from; $2500 revolving credit to over $50k in 3 months.

Re: Maybe starters should open 10+ account?

webhopper — Tue, 23 Apr 2013 13:03:38 GMT

@Revelate wrote:
@HiLine wrote:
@Revelate wrote:
@HiLine wrote:
First of all, subprime cards are a bad idea. Avoid them like the plague unless you have no other options.
Second of all, closing trade lines soon after opening raises a tall red flag.
Thirdly, for consumers with a thin file, only open accounts make a positive impact in a manual review.

On the other hand, opening 10+ accounts that do not charge an annual fee is the ideal way to start building credit. After 2 years you can apply for whatever credit cards you want without being concerned about the impact on AAoA.
As compared to what? There's different classes of subprime, and I'd suggest if I looked in your wallet I'd find a card which based on approval criteria would be considered subprime by every major lender on the planet.

By definition, a subprime credit card is one that is issued to people with substandard credit scores or limited credit histories. It is widely understood that subprime cards include cards that charge maintenance fees, have high APR's, and have low credit limits (in the hundreds), and that get issued to people who have no credit history or major negative items on their credit reports, such as those offered by First Premier, Credit One, the former Orchard Bank, and the likes. Secured credit cards can also be considered subprime, but once they graduate they become prime cards. You want to avoid subprime cards because future lenders will see their records on your credit profile, and that may raise a red flag.

I wasn't aware of classes of subprime. Please enlighten me.

I assume you did not mean to convey a literal meaning in your second phrase? I suggest that subprime cards be avoided like the plague unless there are no other options, and I follow that principle myself.
Deep subprime: FP, Credit One, OpenSky, SDFCU secured or any other which doesn't do a credit check
Subprime: Capital One, Fingerhut, vast majority of store cards, most secured cards
Subprime approval criteria, call em near prime if you want to split hairs (even though I think that's 660? I forget my mortgage tiers offhand which is classic prime vs subprime definition): Freedom, all Amex charge cards, old Citi Forward, Discover More/It, etc. If you can be approved at 640 FICO /shrug.

I don't accept the argument that maintenance fees, or high APR's, or low CL's equates to subprime. By that definition, my BCP is subprime, and admittedly the fact that they approved me suggests it's getting near that category the same way Chase's Freedom has. We tend to make up monikers on this forum that aren't necessarily accurate, though I'll admit my own are just as much opinion.

Secured cards still have their purposes regardless of credit strata as well.

A label of prime means less than zero rationally. A card that works for me, whatever the reason, and that I can establish payment history on, is really all that matters when it comes to building credit.

I'll just ask, what other options do adult non-college student thin, mixed, or negative files have? You're stuck taking a "subprime" (stupid label in my estimation, again see Chase Freedom with subprime approval criteria and it's a good card for almost anyone) somewhere along the lines, and there's no negative moniker to it. The whole "oh lenders may think badly of me in the future" has been long since debunked, plenty of people are in with Chase and Amex with FP tradelines on record, even on this forum. Banks don't chase away profitable customers in general.

FYI,

Chase freedom used to have a subprime catagory. I used to have one with a $200 limit that I kept for about 2 years until I finally gave it the axe.

These cards have their purpose, and they can be a good option for folks who otherwise don't have a lot of options. I prefer to steer folks towards secured cards rather than First Premier or Credit One.

Re: Maybe starters should open 10+ account?

MazdaSpeed — Tue, 23 Apr 2013 13:39:47 GMT

My opinion in this matter is that when building credit, you should only have 2 or 3 cards and then once you have good enough credit to be above for rewards cards and other cards that will benefit you with bonuses and things you should apply for a few more cards ( 7 if you wanted to and your scores can back it up, so you're at 10 like OP said)

but that said I only think you should do that if you don't need credit in the next 2 years after doing the spree, because the in the short term it would look worth to lenders

but in 2, 3, even 10 years if you have say 8 cards for the entire 10 years, (and they all either offset their AF or don't have one) managing 8 cards for a decent period of time I can not see any lender seeing that number as anything but good, and it will be your AAoA is much thicker

that said, if you do need your credit for an Auto loan or mortgage or something, I would think getting 2 or 3 cards (probably without good rewards) to start and then just picking 1 or maybe 2 rewards cards to apply for once your credit is good enough, and just keeping that and not worrying about your AAoA down the road so much considering you need to take out a loan or something in the near future

for me, I got my credit to a spot a I wanted to be, about mid 700s and just went app crazy and got 6 cards in 3 weeks, on top of 2 other cards I already had open (and 4 closed accounts that will help my AAoA for another 8 or 9 years)

I don't need an auto loan or mortgage in the next 3 or 4 years and that why I decided to take the hit in my FICO now, so my AAoA will be thicker, and I hope it will look better to lenders in the years to come when the accounts are aged

but I would not recommend anyone open up 10 cards just to close 9 of them, I would think the benefit of you AAoA wouldn't be enough to out weigh what the lenders thought of you doing that when they do a manual review, I can't imagine it would be a good thing, but hey, im no expert!