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Starting my credit journey

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Anonymous
Not applicable

Starting my credit journey

Hello everyone, 

 

I have been reading this forum for about a month and I can't believe my luck running into all of this great information! I am getting married next month, and decided to apply for a 0 interest credit card to help finance the whole deal and pay it off right away when I get back. I believed my credit score was around 660, with no credit other than a student loan I will begin paying back in December. Imagine my shock and surprise when I was approved for a 1000 SL with US Bank Visa! I expected it to be much smaller. I have never had a credit card. I believe my credit score may be higher than what was indicated on sites like Credit Karma, because US Bank indicated a higher score (in the 700 range). Is this usually the case where websites like that are off? 

 

With that being said, my utilization is going to be very high for the next 2-3 months, maybe even at 100%. I don't want to completely ruin my credit before I even begin. (I can and will pay it off, it's just a matter of timing) I have read on here that having a few credit lines is better. Would you recommend that I apply for another credit card right now, perhaps before this one even reports? I have my eye on the Chase Freedom or the Amazon Rewards. I am not sure whether or not I will be approved for either of those. I'd appreciate your input on whether or not I should apply for more cards right now and then just "garden" those, or if I should hold off on applying until my score recovers from the inquiry. 

 

I am brand new to all of this and appreciate any help. Thank you! 

Message 1 of 10
9 REPLIES 9
Malcono
Regular Contributor

Re: Starting my credit journey

Hey there and welcome to the forums.

 

Your real FICO scores will vary from sites like Creditkarma, who will show you Vantage/FAKO scores.

The only way to see your real FICO scores is to request them.

Creditchecktotal gives you a 7 day trial for $1 which I would recommend.

Just remember to cancel before the 7 days are up.

 

I would definitely hold off on app'ing with Chase or Amazon until you've shown some more history.

Discover and Amex are usually pretty friendly with thin files, so I would recommend trying those two.

 

Try to keep your util as low as you can, because it doesn't look too great if you immediately charge it up to 100%.

 

After you've gotten 2/3 cards set up, just garden for a year or so while showing responsible use.

 

Good luck!



                                                  
                                                                                              
Total Credit: $107,000Utilization: 1%AAoA: 2yrs, 4mthsAoOA: 3yrs, 1mthAoYA: 1yrs, 10mthsBaddies: 0

Message 2 of 10
Anonymous
Not applicable

Re: Starting my credit journey


@Anonymous wrote:

Hello everyone, 

 

I have been reading this forum for about a month and I can't believe my luck running into all of this great information! I am getting married next month, and decided to apply for a 0 interest credit card to help finance the whole deal and pay it off right away when I get back. I believed my credit score was around 660, with no credit other than a student loan I will begin paying back in December. Imagine my shock and surprise when I was approved for a 1000 SL with US Bank Visa! I expected it to be much smaller. I have never had a credit card. I believe my credit score may be higher than what was indicated on sites like Credit Karma, because US Bank indicated a higher score (in the 700 range). Is this usually the case where websites like that are off? 

 

With that being said, my utilization is going to be very high for the next 2-3 months, maybe even at 100%. I don't want to completely ruin my credit before I even begin. (I can and will pay it off, it's just a matter of timing) I have read on here that having a few credit lines is better. Would you recommend that I apply for another credit card right now, perhaps before this one even reports? I have my eye on the Chase Freedom or the Amazon Rewards. I am not sure whether or not I will be approved for either of those. I'd appreciate your input on whether or not I should apply for more cards right now and then just "garden" those, or if I should hold off on applying until my score recovers from the inquiry. 

 

I am brand new to all of this and appreciate any help. Thank you! 


Welcome to MyFICO.

 

Credit Karma provides Vantage Score 3.0 scores which to my knowledge is not used by any of the major credit card companies so those scores should be ignored.  US Bank typically pulls TransUnion FICO Score 8 so if they told you your scores were in the 700s you're off to a good start.  Its not unusual for someone new to credit to have FICO 8 scores in the 700-730 range; from that point they will either increase or decrease based on how you handle your credit.

 

In addition to the suggestion to pull your scores from all three credit bureaus using CreditCheckTotal; you can also get your Experian credit score for free by signing up for Discover's CreditScorecard.

 

Its unlikely that you will be approved for either the Chase Freedom or Amazon card.  Typically Chase prefers to see at least one year of credit history before approving one of their core cards; the Amazon card is a co-branded card so the underwriting standards are a little less than the Chase issued cards, but the odds are still not in your favor.

 

If you want to add other accounts I would suggest checking out the pre-qualified sites for American Express and Discover to see if you have any offers.  Both of those lenders are much more amenable to people new to credit than most of the others.

 

Finally, absolutely do not max out your cards; find another way to pay.  Lenders consider a card maxed out at 88.9% utilization.  When that occurs you can easily lose 40 points on your credit score until the balance is paid down.  And since you're new to credit there's a strong possibility that a lender will close your account if you max it out so soon.

Message 3 of 10
Anonymous
Not applicable

Re: Starting my credit journey

The point of setting and keeping a good profile is to work for you when you'll need it(applying for credit).

In your case, i'd say you probably need it right now since you have expenses coming up so don't focus on rewards so much but to get good credit lines and good 0% promos.

AMEX is your best bet followed up by discover. Don't try to start business with stingy lenders like chase yet. Also having a student loan means you already have a credit history as long as the lenght of that loan and a decent score too if you paid as agreed so far, so lenders like discover and amex would love you. There is a big likelyhood that chase would approve you for a freedom as well but it would certainly not give you a big credit line. Check the pre-qual sites.

Lastly try to not ever max out a card. Not for scoring reasons(when you pay it the score will recover anyway) but i'm pretty sure that raises red flags on your account and you don't want lenders paying too much attention on your account because that gives them reason to take action in certain cases.

Message 4 of 10
Anonymous
Not applicable

Re: Starting my credit journey

Thank you for your responses! I appreciate the info about the credit score, I will look into that. The student loan I believe is what makes my credit age I think 5 or 6 years... would Chase not consider this credit history? Do they only consider credit card history when offering approvals? 

 

I don't want to max out the card, but there is only a 1k limit and the sole purpose of opening it at this time is to pay wedding expenses and pay it off in december-february. I don't have any other way to pay for this stuff unfortunately, and I figure the credit card was a better idea than taking out a loan. (So essentially, I make enough money to afford to pay it off, but this wedding is sort of last minute so I didn't have enough TIME to save. I have no plans to be irresponsible with the card in the future.) 

 

It sounds like I may have a better chance at some of the other cards you mentioned... I haven't found much on here yet regarding opinions on doing "app sprees" (I doubt 2 credit cards is considered a spree) so you think it would be fine to open up one more now just to get the overall utilization down? thanks! Smiley Happy 

Message 5 of 10
Anonymous
Not applicable

Re: Starting my credit journey

The first thing you need to do is get your FICO Score 8 scores from the 3 major credit bureaus as suggested earlier.  One imporant bit of infomation your scores will show is the Average Age of Accounts.  Once you have that information you will have a better idea on how to proceed.

Message 6 of 10
Anonymous
Not applicable

Re: Starting my credit journey

Okay great... so I know it will depend on the FICO and just personal preference, but any general opinion on AMEX Everday vs. Discover IT vs. Chase Freedom? thanks! 

Message 7 of 10
Anonymous
Not applicable

Re: Starting my credit journey


@Anonymous wrote:

Okay great... so I know it will depend on the FICO and just personal preference, but any general opinion on AMEX Everday vs. Discover IT vs. Chase Freedom? thanks! 


 

The Discover IT is probably the best of the three since it offers a 5% Cashback up to a certain spending limit for the first year; then matches the total cashback at the end of the year so you can get up to a 10% cashback on your purchases.  Chase Freedom and Amex Everyday give points rewards (Ultimate Rewards vs Membership Rewards) so you'd have to figure out if you want to buy into a rewards points program.

Message 8 of 10
Anonymous
Not applicable

Re: Starting my credit journey


@Anonymous wrote:

Thank you for your responses! I appreciate the info about the credit score, I will look into that. The student loan I believe is what makes my credit age I think 5 or 6 years... would Chase not consider this credit history? Do they only consider credit card history when offering approvals? 

 

I don't want to max out the card, but there is only a 1k limit and the sole purpose of opening it at this time is to pay wedding expenses and pay it off in december-february. I don't have any other way to pay for this stuff unfortunately, and I figure the credit card was a better idea than taking out a loan. (So essentially, I make enough money to afford to pay it off, but this wedding is sort of last minute so I didn't have enough TIME to save. I have no plans to be irresponsible with the card in the future.) 

 

It sounds like I may have a better chance at some of the other cards you mentioned... I haven't found much on here yet regarding opinions on doing "app sprees" (I doubt 2 credit cards is considered a spree) so you think it would be fine to open up one more now just to get the overall utilization down? thanks! Smiley Happy 


App spree usually is 3+ cards in a very short amount of time(like one week/month or even one day in crazy cases). Don't do that. Seems bad on your profile for someone who's gonna look over it manually. But that's just my opinion if you want to go crazy you can do that and it will fade off after a year or two.

However in your case knowing your scores is nice but ultimately checking whether you are prequalified for the card is the best thing to do. Getting a second card is normal and good for your credit profile and your credit needs apparently at the moment. Both Amex and discover provide FICO scores to card members so get access to that as well should you approved(which you will most likely). 

We keep advise you to go for either an AMEX or discover because they tend to grant decent credit lines to new comers. I know someone with only a 7-8 month AU card on his profile(nothing prior to that) getting approved by AMEX for 6k and the AU credit line was less than half that so you might be surprised by what you may get by them.

With discover you get better rewards though because 5% categories give you straight cash back and you might spend on those anyways.

My opinion would be to to apply for one card now to take care of your expenses and later if you want to go reward chasing see what works for you best. Eventually you'll set up some credit card history as well and every lender will welcome you with open arms probably if you have a clean no credit chasing profile.

Message 9 of 10
Anonymous
Not applicable

Re: Starting my credit journey

Thank you for being so helpful! 

Message 10 of 10
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