Need to Apply for New Credit Card for Mortgage Score Increase

[Anonymous]

Hi all,

I'm a newbie.  At the age of 45, I have always been against getting a credit card and have never had one.  However I'm learning this can in the long run hurt you rather than help you.  I am in the process of purchasing a new build home and all looks good and have no hits against my credit score but it's low because I have no revolving credit.  I took out a secured credit card for $1,000 just so I can show a credit card on my credit report, but it's only a month old.  My home will not be completed for another 6 months, so my lender is telling me that I need to take out another credit card to bump my credit score up.  Credit cards are so foreign to me and I don't even know where to start or to determine what type of card I should get.  Any help, assistance would be appreciated.

EQ - 669

TU - 676

EX - 673

[BmoreBull]

I think it's kind of odd that they would have you applying for a card so close before a mortgage loan, but what do I know?  Who is your secured card with? Have you tried any of the prequalifications? What do you spend on most and what would you be looking for? Cash back? Rewards towards travel? There's no need to get a card to just have it and not get any benefits from it. So think about your spend and what fits your spending habits the best. 

[M_Smart007]

"Need to Apply for New Credit Card for Mortgage Score Increase"

Edited, So others could better Advise OP.

[Anonymous]

I'm just as surprised as well as it goes against everything I ever thought about the lending process, but according to their simulator me taking out a CC will bump me to the next lower interest rate level...but like you, what do I know.  I feel like it's a stupid game to play in my opinion.

1. Who is your secured card with? - Discover IT with a $1,000 limit
2. Have you tried any of the prequalifications? - Yes, with Capital One.  I prequalified for the Platinum and Quick Silver card, but found teh interest rates were ridiculous at 26.49%.
3. What do you spend on most and what would you be looking for? Cash back? Rewards towards travel? - I'm not a believer in CC's, so just plan to do minimal spending to show some activity.  I usually spend more money on general purchases, so guess I would be looking for a decent interest rate with cash back rewards. 

Hope this helps, and thank you for your help...I'm like a fish out of water when it comes to CC's and the best one's to work with.

[CreditInspired]

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@Anonymous wrote:

I'm just as surprised as well as it goes against everything I ever thought about the lending process, but according to their simulator me taking out a CC will bump me to the next lower interest rate level...but like you, what do I know.  I feel like it's a stupid game to play in my opinion.

1. Who is your secured card with? - Discover IT with a $1,000 limit
2. Have you tried any of the prequalifications? - Yes, with Capital One.  I prequalified for the Platinum and Quick Silver card, but found teh interest rates were ridiculous at 26.49%.
3. What do you spend on most and what would you be looking for? Cash back? Rewards towards travel? - I'm not a believer in CC's, so just plan to do minimal spending to show some activity.  I usually spend more money on general purchases, so guess I would be looking for a decent interest rate with cash back rewards. 

Hope this helps, and thank you for your help...I'm like a fish out of water when it comes to CC's and the best one's to work with.

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Hi OP and welcome to myFICO

Since you're a pay with cash kind of guy, don't worry about what interest rate you get. You could apply for a cashback rewards card, put organic spend on it (groceries, streaming, utilities), and PIF (pay in full). Your interest is 0%. 

Now my concern is since you have a secured card and <700 scores, CCCs are really not giving out as many CCs as they were prior to the pandemic. The last thing you want on your CRs are inquiries, which will further decrease your scores. 

I suggest going over to the mortgage forum and ask your question there about acquiring another CC, and see what the lenders say. 
https://ficoforums.myfico.com/t5/Mortgage-Loans/bd-p/loans

GL2U

[Anonymous]

Welcome to the forums! I honestly respect your cash only life style. You end up saving money in some ways and avoid serious trouble with defaults.

I agree with the advice that has been given here.

If I had to guess, they probably suggested another card to help bulk up your profile (usually lenders like to see at least a few cards. Your scores are maximized with 3 cards). If you opened a new card this month, (and made on time payments, kept utilization low) I could see it boosting your scores beyond the initial hit after 6 months. 

You chose wisely with Discover, if you manage the account well you can graduate within 8 months. 

Some tips, your current Discover card gives you 2% on gas and restaurant purchases but if you want you can request a product change to the 5% rotating categories through customer service. Discover will match your cashback earned during the first year so take advantage. 

In terms of card suggestion, while I don't doubt you would be approved for the Capital One Quicksilver1 or Platinum I would avoid both unless they are your only option.

Chase and Amex both have prequal pages as well. With your scores you might not qualify for either but its worth checking anyways.

If you are a member of any credit unions, you can try checking for a card with them. If you have a way in Navy FCU is a generous lender and you could probably get an unsecured card with them. SDFCU has a secured card that graduates (and almost anyone can join). 

Whatever you do, I wish you best. Keep reading this forum for information. It's never too late to take advantage of credit.

[KLEXH25]

Hi @Anonymous and welcome.

Don't worry about paying interest...it's not a requirement when using credit cards. I only used my debit card for years until I realized I needed to re-establish my credit history. I learned I can use my CCs as a debit card and then pay each statement in full to avoid paying interest, PLUS I can make money at the same time. Also, credit cards offer protections for the consumer that debit cards can't. And because debit cards are tied to your bank accounts, you are vulnerable to having your accounts drained in cases of fraud. 

The quicksilver card is a good, easy 1.5% cashback card to use and you're already prequalified. An alternative is if you're a member of any credit unions, you can apply for one of their cards. They usually have excellent, low interest rates. 

Just one thing...if you've only had a credit card for 1 month, how do you already have credit scores? Those take 6 months to generate for new credit profiles. Do you have an old student loan or something?

[Anonymous]

Thank you for the feedback.  It's very useful.  I do have a student loan and monthly car payment that with no dings.  I have about $28K in student loans, and a monthly $750 car payment.  

[Anonymous]

Thank you so much.  It's definitely hard for me to get past the mental stubborness of utilizing CC's.  I've been struggling with taking out another card for the past 2 weeks.  I appreaciate your advice on the different cards and the great tip on the Discover card.  I'm going to do that right away!  I've found this forum to be so helpful, so very appreciative of everyone's help!

[M_Smart007]

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@Anonymous wrote:

Thank you so much.  It's definitely hard for me to get past the mental stubborness of utilizing CC's.  I've been struggling with taking out another card for the past 2 weeks.  I appreaciate your advice on the different cards and the great tip on the Discover card.  I'm going to do that right away!  I've found this forum to be so helpful, so very appreciative of everyone's help!

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Good Luck on your Mortgage!