Building credit profile is another CC needed and should it be kept at a zero balance?

[2IMPROVE]

I am helping my daughter build her credit she is a college student. Her new Discover card was reporting 0 but she used it and the $166 balance caused a 77 point increase!  I told her to pay it back to zero to prevent any interest.  Is this could advice?  Also, does she need to apply for another card? 

Discover- $2000 limit

Auto Loan- Pay as agreed

Scores: Equifax- 725 TU- 763 Exp- 777(Wish these were my scores) mine 652/666/691

Thanks for your advice!

[Anonymous]

Paying in full is always sound advice! And to answer your other question about getting another card, that depends. Can she handle revolving another account without feeling overwhelmed? You need to consider her income and spending habits. If you believe she has healthy spending habits and handles her money and debt very well, tell her to consider another card! For a more optimized fico score, you need at least 3 cards, but she does not have to into rush things. Do keep in mind, though, that fico can penalize her if she has no balance reporting, so I suggest having her report a very small balance of, say, $1.

I personally think it's great that you are helping your daughter build good credit!

[SOGGIE]

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@2IMPROVE wrote:

I am helping my daughter build her credit she is a college student. Her new Discover card was reporting 0 but she used it and the $166 balance caused a 77 point increase!  I told her to pay it back to zero to prevent any interest.  Is this could advice?  Also, does she need to apply for another card? 

Discover- $2000 limit

Auto Loan- Pay as agreed

Scores: Equifax- 725 TU- 763 Exp- 777(Wish these were my scores) mine 652/666/691

Thanks for your advice!

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Congrats to her. Another card option is: https://www.capitalone.com/credit-cards/journey-student/

[Anonymous]

Sorry, OP: I just realized that she has an auto loan reporting, so have her pay her Discover account in full to avoid interest.

[Anonymous]

That's a great card! And I like your signature.

[Anonymous]

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@AnonymousDo keep in mind, though, that fico can penalize her if she has no balance reporting, so I suggest having her report a very small balance of, say, $1.

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The scoring penalty part here is correct, but advising a $1 balance on a Discover card is not good advice.  Discover will forgive a $1 or $2 balance and report $0.  Some have reported this happening up to a balance of $2.99.  My advice would be a $3+ balance to be certain that something non-zero reports with Discover.  To keep reported utilization in the optimal range, the OP should keep the reported balance in the $3-$175 range on that $2000 limit card.

To address the original question, no there isn't a "need" for an additional card or cards here.  I always give the example of how I had a 790-800 score for roughly a decade during the time I went 15 years with just a single CC.  I will say that a few years ago once I found this forum and started doing some research that I wish I had added a couple of more cards earlier on, but with respect to scoring it definitely isn't necessary and my profile/score results are a perfect example of that.

[Anonymous]

Thanks for politely pointing that out! I was under the impression that $1 was lowest one could go so as not to get penalized.

[Anonymous]

If $1 reports, it's a non-zero balance and one will not be penalized.  The thing is, different lenders handle small balances different ways.  Some round them down to $0, depending on the amount.  I started a thread on this a while back, which unfortunately didn't gain much traction, but there are some data points in there that you may find insightful:

https://ficoforums.myfico.com/t5/Credit-Cards/Master-List-of-Lowest-Balances-CCCs-will-report/td-p/5...

[2IMPROVE]

Thank you