Thoughts on taking a HP for a CLI?

[Revelate]

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@BluePoodle wrote:

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@Revelate wrote:

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@BluePoodle wrote:

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@Revelate wrote:

If she only has 2 cards currently, new account + HP > CLI in my opinion.  Actually in the thin file situation I'd say <4 tradelines get a new account though getting a car loan will solve that with the bonus of installment history on the report.

I'm assuming she's still in college or earlier by the summer job comment: get the tradelines and payment history under the belt, CLI's are stupidly easy later when she has full employment income and all those pretty OK's from when she was still in school.  Get her an entry Amex for backdating purposes if you really want to be report stylish if you haven't already added her as an AU and set that date in stone.

If she does have enough revolvers, sure go for it if you/she want but it's not important.  What are you hoping to get out of the CLI?  It's not like she won't get that and more later in the long-term journey that is credit.  Future AAOA buffer > current CLI on limited income too.  Also relationship building if you care about that, maybe even 2 HP's to open up a local credit union now rather than later.  Better uses of the inquiry than a rather meaningless (in my opinion) CLI.

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She actually is a Junior in college, so she has three years worth of student loans reporting which covers the installment category to maximize scores for credit mix. I think an auto loan will help but not really much overall.

She is an AU on my amex and it will be reporting the new CL of $13.5K this week. I am guessing we will have her apply for an Amex Jan of 2016 and she will receive a 2014 backdating. Her AAoA keeps taking a hit because every semester she gets 2 new student loans reporting. So her AAoA is only at 1 year. Her scores flutuate between 715 and 730.  I just figured since she didn't plan to apply for any more CC's that taking a HP for a CLI would be a good investment to boost her own CL's. Like I said, the auto loan will be the only other anticipated HP for the year in May. 

We do not have a relationship currently with a Credit Union. But I planned on us both applying at DCU in May to keep the auto loan HP's to two. Since she is away at school and I like to explain what we are doing and why, we do these things when she is home for breaks. 

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Overall I think you two have a great plan, but I would reiterate a CLI right now buys, well, not much.  When she graduates and finds a job for 3x+ that income or whatever, that's when CLI's should be chased.  Limited income = limited spending, just keep farming the payment history would be my recommendation.  Sure she can afford the inquiry, and DCU almost assuredly won't quibble over a CLI on a credit card even, but Barclays will know, and you may want to save that CLI for when she can really use it especially as it would be expected in your plan when she graduates and 2 paychecks later to be doing a CLI right then and there anyway especially on the Barclays card.  

Since a CLI is instant in time, whether you get 1K now and 2K later, or 3K later makes no difference, so taking the inquiry doesn't serve much purpose and I would submit might be training the wrong thing regarding credit building rather than to apply for things when you need to, and make the application as favorable as possible when you do apply.

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Thanks! I think that is good advise! So I'll have her just wait for now.

I am debating on the AMEX ap this year or next though. I want her to apply in Jan though.  And Amex would be nice for a cli even if she starts out low.  I just don't want her juggling too many card.

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IF she can get approved now, take it now is my opinion.  Waiting till 2016 is just losing 12 months of payment history.

A backdated account has no payment history on it, just a goofy looking open date for anyone that looks at it.  General advice, if opening a new account that you're going to use in the future, if you can get it approved right now, put that application in ASAP unless you have a big ticket item like a mortgage on a short time horizon.  That's advice I'd give anyone on this forum; yeah the juggling too many cards when starting out is a concern, but realistically it's better to do it now for practice in my opinion than when she's fully employed and spending a lot more money which makes it a lot harder to pay back if things go a little sideways.  That would arguably be another reason not to go for the CLI on the Barclays card heh.

The goal of this in my opinion is two fold: teach DD about the value of credit, and that when she needs credit, she's gold plated unlike the vast majority of us that found this forum later after something went wrong in our financial life.  Had I gone through the process with my parents as you are now, my life would unquestionably have been different: likely would've been in the equity cycle 15 years ago as one example, maybe even earlier actually, nearly 20 since I probably would've just bought a house in Austin back in 1997 had I been smarter about things.

I would suggest there's opportunities for both with an Amex application now rather than later.  Again my thoughts, in all honesty you're doing fantastic, I'm just attempting to help you in the margins as you've already done the heavy lifting.

[BluePoodle]

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@Revelate wrote:

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@BluePoodle wrote:

---

@Revelate wrote:

---

@BluePoodle wrote:

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@Revelate wrote:

If she only has 2 cards currently, new account + HP > CLI in my opinion.  Actually in the thin file situation I'd say <4 tradelines get a new account though getting a car loan will solve that with the bonus of installment history on the report.

I'm assuming she's still in college or earlier by the summer job comment: get the tradelines and payment history under the belt, CLI's are stupidly easy later when she has full employment income and all those pretty OK's from when she was still in school.  Get her an entry Amex for backdating purposes if you really want to be report stylish if you haven't already added her as an AU and set that date in stone.

If she does have enough revolvers, sure go for it if you/she want but it's not important.  What are you hoping to get out of the CLI?  It's not like she won't get that and more later in the long-term journey that is credit.  Future AAOA buffer > current CLI on limited income too.  Also relationship building if you care about that, maybe even 2 HP's to open up a local credit union now rather than later.  Better uses of the inquiry than a rather meaningless (in my opinion) CLI.

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She actually is a Junior in college, so she has three years worth of student loans reporting which covers the installment category to maximize scores for credit mix. I think an auto loan will help but not really much overall.

She is an AU on my amex and it will be reporting the new CL of $13.5K this week. I am guessing we will have her apply for an Amex Jan of 2016 and she will receive a 2014 backdating. Her AAoA keeps taking a hit because every semester she gets 2 new student loans reporting. So her AAoA is only at 1 year. Her scores flutuate between 715 and 730.  I just figured since she didn't plan to apply for any more CC's that taking a HP for a CLI would be a good investment to boost her own CL's. Like I said, the auto loan will be the only other anticipated HP for the year in May. 

We do not have a relationship currently with a Credit Union. But I planned on us both applying at DCU in May to keep the auto loan HP's to two. Since she is away at school and I like to explain what we are doing and why, we do these things when she is home for breaks. 

---

Overall I think you two have a great plan, but I would reiterate a CLI right now buys, well, not much.  When she graduates and finds a job for 3x+ that income or whatever, that's when CLI's should be chased.  Limited income = limited spending, just keep farming the payment history would be my recommendation.  Sure she can afford the inquiry, and DCU almost assuredly won't quibble over a CLI on a credit card even, but Barclays will know, and you may want to save that CLI for when she can really use it especially as it would be expected in your plan when she graduates and 2 paychecks later to be doing a CLI right then and there anyway especially on the Barclays card.  

Since a CLI is instant in time, whether you get 1K now and 2K later, or 3K later makes no difference, so taking the inquiry doesn't serve much purpose and I would submit might be training the wrong thing regarding credit building rather than to apply for things when you need to, and make the application as favorable as possible when you do apply.

---

Thanks! I think that is good advise! So I'll have her just wait for now.

I am debating on the AMEX ap this year or next though. I want her to apply in Jan though.  And Amex would be nice for a cli even if she starts out low.  I just don't want her juggling too many card.

---

IF she can get approved now, take it now is my opinion.  Waiting till 2016 is just losing 12 months of payment history.

A backdated account has no payment history on it, just a goofy looking open date for anyone that looks at it.  General advice, if opening a new account that you're going to use in the future, if you can get it approved right now, put that application in ASAP unless you have a big ticket item like a mortgage on a short time horizon.  That's advice I'd give anyone on this forum; yeah the juggling too many cards when starting out is a concern, but realistically it's better to do it now for practice in my opinion than when she's fully employed and spending a lot more money which makes it a lot harder to pay back if things go a little sideways.  That would arguably be another reason not to go for the CLI on the Barclays card heh.

The goal of this in my opinion is two fold: teach DD about the value of credit, and that when she needs credit, she's gold plated unlike the vast majority of us that found this forum later after something went wrong in our financial life.  Had I gone through the process with my parents as you are now, my life would unquestionably have been different: likely would've been in the equity cycle 15 years ago as one example, maybe even earlier actually, nearly 20 since I probably would've just bought a house in Austin back in 1997 had I been smarter about things.

I would suggest there's opportunities for both with an Amex application now rather than later.  Again my thoughts, in all honesty you're doing fantastic, I'm just attempting to help you in the margins as you've already done the heavy lifting.

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Thanks Revelate!  Yeah, I am much more cautious on decisions with my DD's apping, CLI, etc than with myself.  I don't want to screw things up for her later on down the line. I feel like I have learned a lot but I also still feel like I have a lot to learn!  

The big ticket item would be the car purchase in May. I think she will be solid on it regardless of if she apped for the AMEX or not. I am slowly pulling her off my cards as AU too and I am trying to watch how that impacts her scores. She has no interest in reading these boards to learn about it but she does listen to my advise and ask me questions so that's good at least.  I think she could get approved for the Amex, it might only be 1 or 2 K and she might not get a cli increase. But I do want to make sure she can meet the spend requirement for the bonus, so I will have to take a look at that. She has a trip planned for May and I think she will be able to put $1k on in spend during that time but normally she is spending under $500 in any given month while on campus. 

Thanks too for the kind words. I'm trying! LOL

[TiggerDat]

I would much rather have a HP for a new card than a CLI.  Adding another card to her portfolio will help to build the score.  It is suggested that 4 is the good minimum number of revolvers to max out a score.  Maybe you shoud get her a few cards she won't use now much or she will use but pay in full.  Does she shop at Walmart?  How about Target?  Maybe Meijer?  A card which can only be used at that store would help a little, especially if she is in school and might need a card for emergencies or food.  Choosing the right card isn't always based on what you can use, but what you can't use often!  In building credit, sometimes the strategy is to restrict yourself to something you really won't be able to use much, but will age and build history!  Don't get her cards she will be tempted to use, get cards she needs and some she will have a hard time using everyday, but can be useful.

Think about it.  Target gives 5% discount on purchases.  There are some things she will buy there, but maybe not a whole lot of things.  Even if she does switch to shopping there more often, the 5% can be handy.  If they start her off at $500, it might also stay there for a long time, which would reduce risk.  It will build her history with credit bureaus.  Since it isn't a Visa it will also not be useful at other places.  Yeah, this type of account won't have the full benefits for reporting as a Visa/Amex/MC, but it will provide good history. 

I am not saying don't apply for the Freedom, I am saying adding a few now can have much better benefits later on.  Get the Freedom, or other card first, then get the others which will also help and limit spending either through limits or acceptance.

[Anonymous]

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@TiggerDat wrote:

I would much rather have a HP for a new card than a CLI.  Adding another card to her portfolio will help to build the score.  It is suggested that 4 is the good minimum number of revolvers to max out a score.  Maybe you shoud get her a few cards she won't use now much or she will use but pay in full.  Does she shop at Walmart?  How about Target?  Maybe Meijer?  A card which can only be used at that store would help a little, especially if she is in school and might need a card for emergencies or food.  Choosing the right card isn't always based on what you can use, but what you can't use often!  In building credit, sometimes the strategy is to restrict yourself to something you really won't be able to use much, but will age and build history!  Don't get her cards she will be tempted to use, get cards she needs and some she will have a hard time using everyday, but can be useful.

Think about it.  Target gives 5% discount on purchases.  There are some things she will buy there, but maybe not a whole lot of things.  Even if she does switch to shopping there more often, the 5% can be handy.  If they start her off at $500, it might also stay there for a long time, which would reduce risk.  It will build her history with credit bureaus.  Since it isn't a Visa it will also not be useful at other places.  Yeah, this type of account won't have the full benefits for reporting as a Visa/Amex/MC, but it will provide good history. 

I am not saying don't apply for the Freedom, I am saying adding a few now can have much better benefits later on.  Get the Freedom, or other card first, then get the others which will also help and limit spending either through limits or acceptance.

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I wouldn't waste an HP on a target card. At all.

Target debit gives the same benefit.

[Kenny]

Definitely not worth it with Barclays. They do so many auto-CLIs no need for most people.