Am I Using Credit Right?

[Anonymous]

I'm new to credit and have applied for a lot of cards in the past few weeks to build my credit profile so I will have good credit. I just have a few questions. Here are the cards I currently have:

Capital One Journey ($300 credit limit)

Walmart Store Card ($500 Limit)

Another Capital One Journey ($500 limit)

Macy's Store Card ($800 limit)

American Eagle Store Card ($150 limit)

Kohl's Charge ($300 limit)

Old Navy Store Card ($200 limit)

Discover it Chrome for Students Secured ($200 limit)

Here is how I plan to use the cards, so tell me if I'm doing this right: I visit Walmart pretty often, so I'm wanting to use it a couple of times a month (less than the 30% utilization) and paying it off in full as soon as the statement cuts. I don't shop at Macy's often (there isn't one around here, but I shop online every few months, so I plan on using the card every few months and paying it completely in full when the statement cuts. I do shop at American Eagle all of the time, so I plan to heavily use this card monthly and paying it off in full completely. I do not shop at Old Navy or any of the GAP stores that often; however, I do plan on using it every couple of months or so to get new work clothes and shorts for the summer time and of course, paying it off in full as soon as the statement cuts. Just like the other store cards, I do not shop at Kohl's too often, but I do every once in a while, so I plan giving it use only when needed, which will be every couple of months and paying it in full when the statement cuts. That leaves the two Capital One cards and the Disover it. I have been dying to get in with Discover, so when they offered the secured card, I jumped straight in and made a $200 deposit (not realizing it was permanent and I couldn't increase it later). I plan on using that card as my main card and using it very close to the $200 limit and then paying it down to 9% BEFORE the statement closes, so it will report below 10% to the credit bureaus. Then I will use my two Capital One Journey cards on all other purchases (not exceeding the 30% utilization rule) and paying them in full when the statement is cut. 

This way I will get use out of all of my store cards and hopefully extend the credit lines on them in the future AND show use on my Discover card (so hopefully in a year when it's time to graduate, they won't have an issue graduating me and will extend my credit limit). Same for Capital One, except I am hoping I'll get a larger credit limit increase or the possibility of upgrading to another Capital One card.

Does this sound like a good plan (as long as no card reports above 30% utilization when it reports to the bureaus, meaning make sure they are paid down to 30% or less BEFORE they report?) I'm really wanting to build an excellent credit history. Any tips? Thank you guys and thanks myFICO for all the help so far!

[coldnmn]

This link may help.

http://ficoforums.myfico.com/t5/Credit-Cards/Veni-Vidi-Vinci-Visa-or-How-to-Master-Your-MasterCard/m...

[Anonymous]

Just to go ahead and make this clear since I'm not sure if I made it clear in the post: on all of the cards I do plan to pay them off in full every month, so I will NEVER roll any balance over to the next month.

[elim]

I would'nt stress the "perfect utilization" just yet but instead use the cards (pay after statement cuts) and report perfect UTIL (pay before statement cuts) every few months. I think that shows responsible use without paying interest and primes for CLI's. This worked well for me.

Being a student you may not have the funds to do what you want so be careful and don't get in debt by shopping just to use your cards.

Your next goals might be to get CLI's on your current cards and app for your prime 5k siggy cards in 6 months or so. I would NOT app for anything AT ALL for 6 months and watch your scores climb (after they crash some when all those cards report).

I try to NEVER pay interest, especially on starter and store cards like those that are probably very high. (you can use credit cards as another stream of income so why give away your $$$ instead)

[kdong1996]

Yes，what you are planning is good, but I wouldn't stress your utilization that much on an individual card on a month to month basis. Rather I would rotate the utilization throughout your cards. For example one month report a high balance on the Macy's and then next month let it report 0 to less than 10% with another card reporting a balance. This way you'd be showing that you can handle your limits and utilization of all cards. I got denied once by Chase for increasing balance (LOL) even though I was basically pushing 3x the limit and paying it to around 70% each month and then paying the full balance a day after the statement (Still got it after recon though). After 6 months or so you'd be primed to apply for some great cards and after 1 year, you'd be able to get excellent cards as long as your income supports it. Good luck!

[boosnark]

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@Anonymous wrote:

Just to go ahead and make this clear since I'm not sure if I made it clear in the post: on all of the cards I do plan to pay them off in full every month, so I will NEVER roll any balance over to the next month.

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This. You're on the right track and I like your plan. Payment history constitutes about 30% of your FICO. My own rule is to aim for 10% or under for utilization but as along as you are keeping up with payments and showing balances that are being paid off consistently then you should be fine over the long term.

[takeshi74]

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@Anonymous wrote:

Does this sound like a good plan (as long as no card reports above 30% utilization when it reports to the bureaus, meaning make sure they are paid down to 30% or less BEFORE they report?) I'm really wanting to build an excellent credit history.

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30% max is the general recommendation so, yes.  That said, short term high utilization isn't an issue.  It's prolonged high utilization that can lead to AA.