New Here! Help me get on the right track

[Anonymous]

Hey everyone. Not sure if this is the appropriate place to put this but I didn’t see anything in the etiquette about it...feel free to move if need be.

Been lurking through stuff for a few weeks, finally decided to create an account! Background on me:
- I’m 21
- Accounting & Info Systems undergrad student
- I have low income due to being a student (~7000/yr) just from my summer internships
- I have about $30,000 in student loans in my name with 3 semesters to go (1 of which is already in the student loans, so not too much more in student loans)
- I have a strong credit base thanks to my dad having me as an AU on 1 amex (10yr history) 1 visa (1.8yr) and 1 Citi BestBuy Rewards (2.5yr)
- I still have my first credit card I got when I was 18 - a local CU MasterCard with a $500 CL. That is 2.7yrs old
- I have 0 derog
- 100% on time payments
- 20% aggregate util (dad’s cards carry a balance right now)
- Just applied a few days ago for Discover It Chrome Student and surprisingly got approved with a $1000 CL
- My AAoA is 2.6 years due to every semester requiring a new student loan record
- My FICO as of 1/4/19 was 702. It has been higher previously, but an emergency expense had my CU Mastercard at 97% util which I think hurt it. It’s at 6% now.

So what I’m looking for is advice on how to do everything right this early on in my credit life to set myself up for success in the future. I’m trying to understand all of this statement cut date vs due date and utilization jargon but having a hard time. I understand the importance of paying in full but then I’m also not supposed to have 0% util on all revolving accounts right? So how do I PIF so I don’t end up with finance charges but also show a balance in the account?

I plan to use my new Discover card almost exclusively, paying in full from checking every month, in order to take advantage of the double cash back for the first year offer - especially as I buy my books for spring semester soon. My CU card gets no benefits except that it is only 7.99% APR, so I won’t be using that unless I absolutely HAVE to carry a balance for some reason.

So after reading all that, does anyone have an idea of something I should do differently or how I can avoid finance charges while also carrying a small balance to maximize my creidt score? I don’t plan on applying for any more CC until I graduate in 2020 because I really don’t have the income to support it IMO. Is this a good move?

Thanks in advance for all your help!

[Brian_Earl_Spilner]

Just pay your bills on time. That's all you need to do. All the tricks you see here for maximizing score are really not needed mo, unless you're planning an application for credit. I get that there are benefits to keeping your credit in the best shape possible, but micromanaging is not for me anymore.  And build up a savings and investment portfolio. My savings wasn't enough after an emergency trip to the hospital and now I'm rebuilding in my late 30s. All those years of great credit didn't do squat for me when I couldn't pay the bills.

That's my advice. Good luck with your credit journey.

[Anonymous]

You are already doing excellently!

Just PiF after you get statment, don't worry too much. People doing AZEO usually pay all but one card in full before statement cut. You still spend on the card, lenders still get swipe fee, you just don't have a balance on the statement.

For the long term, consider diversify the lenders.

If you want to max reward soon, consider get into Chase system earlier since they have that 5/24 rule. Try not to app too many cards in short period of time. Get 1 or 2 per year would be alright, think carefully before applying, only app for those that makes good sense.

[HeavenOhio]

Welcome, @Anonymous.

Congratulations on your new card. As you've recognized, Discover is a great card to use during its first year.

As the posts above state, you don't need to pay interest if you wish to cut a positive statement balance. All you need to do is pay the statement balance by the due date, which is about 21 to 25 days after the statement cuts. Any new charges made during the month won't become "due" until another statement hits.

If you'd like or if you see the need, you can pay down your new charges before they hit your report. Doing that can potentially avoid situations like having 97% utilization reporting. Most cards (like Discover) report the statement balance on or soon after the statement date. Others report on a different day of the month. US Bank is an example; they report the last day of the month. If you haven't done so already, you'll want to confirm when your CU card reports.

As far as reports and scoring go, my only suggestion would be to try to have your Discover card report utilization of 28.9% or less. From the standpoint of your report, it's a good look. From a scoring standpoint, there's a big difference between 28.9% and maxed. If you miss that mark occasionally, don't worry about it. As you know, your score will rebound easily.

In your case, I'd look at things from a budget standpoint. I'd pay as frequently as necessary in order to keep a reasonable amount of your limit available for new charges. And I'd keep 28.9% in the back of my mind when the statement is about to cut.

AZEO (all zero except one) has been mentioned. That's when you report a small positive balance on one card with the rest reporting zero. Implementing it is a good skill to understand. But you don't need to deploy it right now. Plus, it's a chore when AU cards are involved.

Once your balance updates, your score will be safely in the 700s. That's generally plenty for a credit card application.