High score, thin file - how to proceed

[Anonymous]

My son and daughter are just starting out with building solid credit, and each have FICO scores in the early 700s.  NFCU graciously started my kids out with CashReward cards - my daughter was granted a $3000 cl and her brother was granted a $1500.  At six months, my son signed on to find an auto CLI to $3500. while my daughter is only four months in and hoping to get an equally generous CLI in November.  

I have advised both kids to app next for the NFCU Amex, as they have demonstrated great responsibility with credit out the gate.  So my question is, how soon can my kids apply for products outside of NFCU, given that they are only twent and have brand new thin files?  I am almost of the mindset that they should keep building with NFCU, but am curious to hear the opinions of so many of he savvy members on this forum!  

Thanks in advance for any guidance!

[UpperNwGuy]

I think you have already answered your own question.  Let them each get a CLI on the NFCU cashRewards, then let them apply for the NFCU More Rewards.  Wait another 6 months and let them attempt a major bank such as Amex, Chase, or Citi.

[Anonymous]

Thanks for the input UpperNwGuy.  Thanks to NFCU and very generous starting limits my kids should be pretty well established by their 21st birthdays.  I was just uncertain as to when they should try for a major bank card - a year out seems like a good idea.

[Anonymous]

Disco seems to like thin files... they've been more generous than any other lender I deal with (See my siggy). I would recommend them if the second NFCU card isn't of significant use to their spending habits.

[coldfusion]

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@Anonymous wrote:

Disco seems to like thin files... they've been more generous than any other lender I deal with (See my siggy). I would recommend them if the second NFCU card isn't of significant use to their spending habits.

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This.

Since they're new to the game they'll be better off in getting established by starting off with credit across a few different providers instead of focusing on just NFCU.

I'd suggest a strategy something along the lines of:

If offered a CLI as the result of an AR from NFCU it's OK to accept, but don't apply and take an HP.  They should PIF monthly if they can, but if they can't at least minimize reported utilzation.

After 6 months with the NFCU card apply for a Discover IT.  If denied, recon as even if denied they may give guidance on next steps and suggest when to reapply. If successful, keep track of the timeline so they know when to apply for a SP CLI.

After another 6 months apply for a Chase Freedom/Freedom Unlimited or an AMEX BCE, a year's positive credit history should be enough to get themselves in with either of them, or even both   If they get a BCE, request a SP 3X CLI after 61 days.

I would avoid a Capital One card at this point because of the 3 HPs each application triggers,  and if denied Capital One does not recon.

If they pace themselves and make good choices about what to apply for and when to apply for it, they'll be in great shape in a couple of years.

[jamie123]

You've received some great advice from the other posters already but I'd thought that I would add my 2 cents anyway.

Make sure that they have 6 months of paid and reported statements before applying for any new credit.

It can be very difficult to get a top tier lender to give you a credit card without having 1 year of experience in managing multiple credit cards. Some are easier than others and I wholeheartedly agree that Discover would be an excellent choice for the second credit card. Discover seems to like people with thin files but otherwise clean credit.

If they are able to get a Discover card I would then highly recommend that they apply for an Amazon Store Card. It is a pretty easy card to get and is really the only store credit card that I would recommend. You save 5% off most purchases with Amazon (Read the fine print.) and who doesn't buy from Amazon nowadays?

This would give them 3 CCs and would help them from getting nicked points in the following credit scoring calculations:

• You get nicked points if 50% or more of your cards report a balance.
• You get nicked points if all your cards report a balance of $0. (In my case I lose 18 points if all my CCs report $0 versus having one card report a balance of $3. Yes, $3 reporting earns me 18 points!)

This is why it is mentioned many times in this forum that you need a minimum of 3 credit cards to get the highest scores.

Once all these cards are a year old they should be golden and then can apply for credit cards from the so called prime banks which are:

AMEX

Bank of America

Chase

CitiBank

Discover

Wells Fargo (Stay Away from these guys IMHO)

They should try and have 5 to 8 credit cards when they are done building their credit foundation. Having well aged credit cards with a long history of on time payments is really the only way to build top credit scores that are stable for when you do need to use your credit for mortgages and auto loans.

Good luck!

[CantSmashThis]

Hi there!

I just wanted to give my input of how I went with my credit so far with having a thin file itself. First, I applied for a Wells Fargo card recently as I have had a banking relationship with them for 8 years now. I started with a basic WF card with 1%, they have me a SL of $1k. After 6 months, when I finally generated a score, I applied for the Amex BCE, and they seem quite generous for people with thin files, and I got approved instantly with a SL of $1k. I waited for the 61 days and tripled my CL to $3k. A month after that, I went with another WF card since they had a nice bonus of $200 for spending $1k. I got insta-approved with a SL of 1.5k, and they also gave me an auto CLI on my older card to $1.6k.

Now I've finally hit the 1 year mark about 2 1/2 weeks ago. Waited for all my statements to close (so that I can bring down utilization since I was on vacation last month and paid all that off). Applied for the Chase FU and got insta-approved for SL of 4.5k (I kept checking their prequalifeid page but nothing came up and I just decided why not just apply). So I'm happy I finally have a foot in the door with Chase (my end goal is the CSR card).

I think the Amex BCE card is a good choice because of the 3x CLI you can get it in 61 days, then 6 months afterwards (they also had a nice restaurant deal of 10% back in 6 months up to $2k, I spent a lot on food at the time). I think after 8 months of getting my WF card, I've gotten offers for the Citi DoubleCash card, and starting from last month, I've been receiving offers for the Amex Premier Gold Charge Card. My score right now according to Chase is 748.

Hoping all the luck for your children!

[Anonymous]

The major banks will take people with high credit scores and thin files. 

If someone has six months of credit history, though, I wouldn't count on any of them will approving that person. I would say someone needs at least two years of credit history to get a card at a major bank that has a relatively solid APR. 

[HeavenOhio]

The second NFCU card seems like a reasonable route right now.

After that, I'd take it slow. They'd have two keeper cards, and they'd be at a point where they can afford to be choosy. But a lot of the good cards from the good banks require an older file. While they wait it out, they'd have plenty of charging power to cover their needs.

I agree with the advice above to bypass Capital One for now. Down the road, if a Capital One product fits their needs, they can apply at that point. The no-FTF Quicksilver or Dining Card might be appealing, for instance. Also, given the way Capital One seems to work, your kids would be better positioned for a good starting limit and decent CLIs if they waited.

[Anonymous]

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@Anonymous wrote:

The major banks will take people with high credit scores and thin files. 

If someone has six months of credit history, though, I wouldn't count on any of them will approving that person. I would say someone needs at least two years of credit history to get a card at a major bank that has a relatively solid APR. 

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Relatively solid APR?

You don't need 2 years of credit history to be approved at a major bank. Far from it. 6 months or less will do it. I got my Freedom with very little history.