Helping my niece get her first credit card

[Patient957]

My niece asked me to help her build her credit. She's 25 and recently graduated from college. We're pretty much starting from scratch. Her reports have 3 BNPL loans from JPMCB BNPL, 2 closed, one open, all this year, all paid on time. She's an AU on her mom's Chase credit card with a clean 20 year history but also a high utilization of $27K of $32K. Nothing else on the credit reports. She tells me her Experian Fico 8 is currently 711. She works FT with income ~$30K.

She's had a Chase checking account for years, always in good standing. She also told me that last time she was in the Chase branch, the banker mentioned she was pre-approved for a credit card but didn't say which one.

So my first goal is to try to get her approved for a Chase credit card, with the Freedom Rise coming to my mind first. Of course I'd be open to the CFU if she's pre-approved for it.

So here are my questions:

1) How badly is that utilization hurting her chances at approval? Should I have her mom remove her or not?

2) Should I take the mention of pre-approval to mean Chase is okay with that AU account on her report?

3) I don't have a Chase account, so idk how their website works. If she's actually pre-approved would that show up in her online account?

Maybe the safest move is to have her head into the branch and inquire about her pre-approval status, and if she's pre-approved go ahead and apply?

What say you Chase mavens out there?

[Jnbmom]

I would have her try their prequalify link, it's pretty solid if you /her are set on Chase. Discover was pretty friendly as well with young files although not sure now that Cap one had taken over . But Disco also has prequalify link as well 

[FicoMike0]

With a 711, and no baddies, id suggest she look at which card she wants, with a sub.  She's another member of the low spend club. For us, the sub is a bigger deal. She should be able to get $200 on a good card. 

She could try amex, just to see if she's approved don't have to accept. They're offering $200 sub on bce.

I'm not down on chase, if that's her bank, probably a good fit,  but id hold out for a $200 sub on a card I liked.

If keeping the Chase account fee free is a burden, id also suggest there are many no fee accounts that also pay a sub. lobby access may be an issue, where I live, you can't drive down the street without passing a branch of our two local banks, Huntington and chase.

https://www.doctorofcredit.com/best-bank-account-bonuses/hour

Say, has she tried the paze deal? Her Chase debit should qualify. Who doesn't like a nearly free burger and frosty?

[Harvey26]

@Patient957 I would have her mom remove her because the history would remain but the utilization will stop draggin her score down once she is removed she should be able to use the chase preqaulify link or if she logins into her chase account she can look in credit journey or if she has the app she can click the little folder with a + symbol and click just for you. I think the chase freedom unlimited would be a perfect starter card and it has a $200 SUB. She can check now and if she had she preapproved or already approved offers then it wouldnt hurt to pull the trigger now. 

[Patient957]

Thank you for the advice @Jnbmom, @FicoMike0, and @Harvey26.

So here's what happened.

When she logged into her Chase account, she was pre-approved for CFU and CFF. So based off that, I decided to leave her as an AU on her mom's card, for now, and have her apply.

She applied for the CFU. Denied.

I had her try Amex for the BCE, since there's no hard pull unless they approve. Denied.

Now here's the thing. Even though I told her how to calculate her income correctly, she must have forgotten, so on both of those applications, she lowballed her income, which very possibly is the reason for the Chase denial. When I reminded her, she asked if she could apply again with the correct income. "Nope, we're moving forward. Plan C."

So we move on to Capital One pre-approval. "And this time, report your income correctly."

Pre-approved for Savor, QS (both "for good credit" versions) and Platinum. She chose the Savor, and was approved for $2K. Not bad. She escaped the $500 bucket, which honestly I still would have considered a win.

So it went a little squirley there at first, but I think all's well that ends well. She got a very good first credit card and we will revisit her credit card situation in 6 months to a year.

We then had the Golden Rule of credit cards conversation "Never pay interest; it will eat you alive." "Always pay the statement balance.". She understood.  Let's hope she doesn't forget.

[Harvey26]

@Patient957 I would have her call the recon line for chase since she has already taken the pulls , even she got an $500 limit its better than wasting them. Congrats on her Savor !

[SeanA]

Freedom Rise is a great choice, and she should have good odds given that she banks there. I wouldn't overthink it. 

[Realist]

People are going to have their own opinions about this, but we've walked this path multiple times over.  Applying for a CC with a small annual fee, has been the most positive move out of any of the other avenues we've tried to date.  There are a number of those available.

No name + $30 or $50 AF for card one.

Mid level no AF card for card two.

Top tier card for card three.

What we found out is that with the AF, the introduction bar appeared to be lowered, and the increase of credit line seemed to be accelerated.  Once the credit was established, card two and three were basically freebies.

A half dozen cards later, these individuals are essentially on "I'll never need additional credit lines again" mode.

There is one caveat.  The initial foot in the door AF card, is increasing so quickly and so much in credit limit, you have to ask yourself if it's worth closing.  Very large limits, for a mere few dozen dollars per year.  Yes, and no.  Yes technically, but no if you don't want to give anything back.  There are positives for holding a high line like that. 

[Thomas_Thumb]

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@Patient957 wrote:

Thank you for the advice @Jnbmom, @FicoMike0, and @Harvey26.

So here's what happened.

When she logged into her Chase account, she was pre-approved for CFU and CFF. So based off that, I decided to leave her as an AU on her mom's card, for now, and have her apply.

She applied for the CFU. Denied.

I had her try Amex for the BCE, since there's no hard pull unless they approve. Denied.

Now here's the thing. Even though I told her how to calculate her income correctly, she must have forgotten, so on both of those applications, she lowballed her income, which very possibly is the reason for the Chase denial. When I reminded her, she asked if she could apply again with the correct income. "Nope, we're moving forward. Plan C."

So we move on to Capital One pre-approval. "And this time, report your income correctly."

Pre-approved for Savor, QS (both "for good credit" versions) and Platinum. She chose the Savor, and was approved for $2K. Not bad. 

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@Patient957 

Nice ending but you left out one piece of info that leaves me curious: what was the reported income on the applications resulting in denials vs approved?

[FicoMike0]

@Patient957 

Great outcome!

I think I would still remove the au. In 6 months, she should be good for most cards. I still like the bce. Btw, since she's in with Capone now, they have a sub on their no fee, no min account,

https://www.capitalone.com/bank/offer300/