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New to Credit!

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Anonymous
Not applicable

New to Credit!

I’m just barley starting off my credit and would to establish it. I have two credit cards so far.
1. Discover IT Student - $1,500
2. Deserve Student - $300

My credit age is 2 months so far. Transunion is 708 and Equifax is 691. I wanted to see what are good building credit cards for new to credit, not secured cards. Also, which store cards are best for new credit? Example, I shop on Amazon and Target a lot.

Thanks in advance Smiley Happy
9 REPLIES 9
RonM21
Valued Contributor

Re: New to Credit!

Welcome!! Store cards are more a matter of your preference in my opinion. They don't really weigh any more or less than other cards. You want to try to have cards that will grow with you, not that all don't. But some are notorious for growing faster than others overall. I can say your scores aren't that bad, so you are starting in a decent spot compared to most!  I woould imagine the answers you will get on cards that grow will be more based on experience.  But once you get a list of lenders you are interested in, quick searches of these forums will give you the info you need to make your decisions.



Total CL: $321.7kUTL: 2%AAoA: 7.0yrsBaddies: 0Other: Lease, Loan, *No Mortgage, All Inq's from Jun '20 Car Shopping

BoA-55k | NFCU-45k | AMEX-42k | DISC-40.6k | PENFED-38.4k | LOWES-35k | ALLIANT-25k | CITI-15.7k | BARCLAYS-15k | CHASE-10k

Message 2 of 10
Anonymous
Not applicable

Re: New to Credit!

Sounds good! Thank you! As you mentioned, i’m starting off so I’m looking at lenders and looking at what will benefit me in the future and banks I can build relationships with.
Message 3 of 10
Anonymous
Not applicable

Re: New to Credit!

Hey!

 

Welcome to the forum! You can go both routes if you'd like to, I mean, get store cards and regular credit cards. Chase and Amex are like the two big guys here so you kinda want to start thinking about that.Chase's Freedom credit card is fairly easy to get approved for but I'd wait a couple of months before applying as you're new to credit. Chase has a 5/24 rule that says that if you were approved for more than 5 cards in 24 months (known also as 2 years, haha) you won't be able to get approved for any Chase card in 2 years.

Also some Amex's are fairly to get once your you have a minimum, I'd say, of 6 months with your accounts open.

 

Chase and Amex are the big ones here because of their points system and their transfer partners. Some cards are cashback (you get a flat-rate of redemption) and some cards (where the Amex and Chase strive) are in the points system, where each point has a different value towards redemptions which could give you more value or less depending on how you use those points. If you were to transfer your Amex pints (known as MR (membership rewards points)) to a partner airline, you can easily get over 2.5c per points when normally, with cashback cards, each "point" is only worth 1c and it's a flat rate. 

 

You want to start building a great relationship with Chase and Amex so, in the future, it will be easier for you to get approved for one of their big cards such as the Amex Platinum or Chase's Sapphire Reserve and so on. Of course there are other banks as well such as CitiBank, Bank of America and so on. Oh, also, if you could try to open a CC with a bank that you already have a relationship with such as a checkings or savings account, maybe.

 

Discover CCs are, sometimes, also easier to get approved for but they don't offer much besides a cool type of signup bonus. I have the Discover it Miles and I only use it for the free in-flight wifi credit. 

 

For store credit cards, if you shop a lot at Amazon their CC could be a pretty solid deal as you get 5% back on top of every purchase and also some financing options for big purchases! I have this card and I totally recommend it if you do a lot of business with Amazon, otherwise is not worth it. In general, store cards are only worth the hard pull if you shop a lot at these stores and shop so much that you'd rather get 5% cashback then getting some other form of miles/points on another card.

 

There are many other store CCs out there and it all depends on where you shop! Also, store CCs are easy to get approved for because they want you to be loyal to the brand and also spend money at their store so if they can offer you a line of credit with some "rewards" you will probably come back and shop with them again so they make it easier for you to get one of their store credit cards. Be careful, some stores such as Macy's and Amazon offer 2 types of cards: A store card (only to use at Macy's or Amazon) and a regular co-branded CC that can be used anywhere. You don't wanna apply for those, at least not yet because they are harder to get approved for and you don't want to waste a hard pull right now.

 

I hope I was helpful and sorry for the long message, haha! I realized I added WAY more info than what you had asked for but anyways, haha! Good luck and welcome to the forum!

Message 4 of 10
Anonymous
Not applicable

Re: New to Credit!

thilimaa - thank you so much for the advise! My personal goal is to definitely try to obtain a Chase credit card, to me that’s the goal as of now. My annual income is about $55-$60k a year and I’m hoping that once I obtain a FICO score (because my credit is still that new, haha) and if my credit remains the same about 5-6 months from now I’m hoping I can obtain one. I just don’t want to waste a hard pull. Would 5-6 months from now be a decent time frame before applying for a chase card? I was looking either towards the Chase Freedom or Disney CC. Thanks Smiley Happy
Message 5 of 10
Anonymous
Not applicable

Re: New to Credit!


@Anonymous wrote:
thilimaa - thank you so much for the advise! My personal goal is to definitely try to obtain a Chase credit card, to me that’s the goal as of now. My annual income is about $55-$60k a year and I’m hoping that once I obtain a FICO score (because my credit is still that new, haha) and if my credit remains the same about 5-6 months from now I’m hoping I can obtain one. I just don’t want to waste a hard pull. Would 5-6 months from now be a decent time frame before applying for a chase card? I was looking either towards the Chase Freedom or Disney CC. Thanks Smiley Happy

Chase would prefer to see a year of history.

Message 6 of 10
Anonymous
Not applicable

Re: New to Credit!

Definitely wait until your oldest account hit one year before trying Chase. I would wait 4 more months until FICO score generates (ignore VS3.0 scores like Credit Karma and the likes) then hit various prequal sites before making next move.
Message 7 of 10
Anonymous
Not applicable

Re: New to Credit!


@Anonymous wrote:
thilimaa - thank you so much for the advise! My personal goal is to definitely try to obtain a Chase credit card, to me that’s the goal as of now. My annual income is about $55-$60k a year and I’m hoping that once I obtain a FICO score (because my credit is still that new, haha) and if my credit remains the same about 5-6 months from now I’m hoping I can obtain one. I just don’t want to waste a hard pull. Would 5-6 months from now be a decent time frame before applying for a chase card? I was looking either towards the Chase Freedom or Disney CC. Thanks Smiley Happy

Hey,

 

Like other members said before, I would wait a year but, if you don't feel like waiting 1 year you could apply after 6 months but keep it in mind that you chances of getting approved decreases when comparing to 1 year (at least).

Between those 2 cards I'd go with the Freedom or even Freedom Unlimited as those are Chase's core cards and, if in the future, you decide to add a Chase Sapphire Preffered or Reserve to your portfolio, you can transfer points from between cards. You can't do that from the Chase's Disney card (as far as I'm aware of) so, for the long run, the Freedom and Freedom unlimited are going to be better.

Check some Amexs as well, you may want to build a relationship with them to start off right (at least from my pov).

 

I don't think that I have to say this but here it goes: Don't mess up! You're new to credit, try not to miss a single payment, keep your utilization ratio low even if that includes using more debit than credit cards. Let the banks report some usage on your card statement so they report utilizaiton but not a lot. Under 20% is recommended. With your income, you should be able to get some awesome cards within 1 year, my income is around yours and you can see all my cards down below (signature). I honestly don't get huge credit lines but I actually don't need them as with my income, I'd never be able to put 20k on CC, haha! I'm always trying to increase my credit lines, of course, to reduce my utilization ratio but that's pretty much it. Still get approved for awesome cards just not huge credit lines, at least not yet haha!

Message 8 of 10
HeavenOhio
Senior Contributor

Re: New to Credit!

Welcome, @Anonymous. Smiley Happy

 

I'd suggest building with major cards rather than store cards. Once you see how your major cards shake out rewards-wise, you might want to grab a store card that fits in and fills a gap. Kohl's and Target are popular cards for people who shop at those stores a lot. But these cards tend to come with ridiculously low limits when people grab them early on.

 

I'm a big fan of building with one card every six months with an approximate timetable of grabbing a card at month 1, month 7, month 13, month 19, and month 25. That keeps new accounts and inquiries in check, and it should prevent denials for too many new accounts. Grabbing two cards right away is OK too. Moving forward, pace yourself so card 5 comes around month 25.

 

Additionally, that pace keeps you under 5/24 at all times. 5/24 is Chase's rule where if one has added five or more cards in the past 24 months, he or she is likely to be denied. 5/24 would also be a good pace to accommodate other banks that are sensitive to new accounts.

 

One mistake that people frequently make is to grab many marginal cards early on. Note that the addition of each card involves some scoring dings, particularly for the inquiry and resetting one's AoYA (age of youngest account) to zero.

 

What happens, however, is that the mere presence of one's first two cards will likely result in net scoring gains, i.e. the scoring dings are wiped out by improving one's credit mix. But starting with card #3 or 4, those gains no longer occur, and you'll feel the dings.

 

Many apply for their first couple of cards, see the scoring gain, spree on four or five more cards, and wonder why their scores have tumbled. You don't need a lot of cards to build credit. What you need is a solid payment history over time. That can be accomplished with a small number of cards.

 

In your case, I'd look for a decent Visa or Mastercard around month 9. That'll offset the fact that Discover isn't quite as widely accepted in the US and isn't accepted much at all outside of the country. Then around month 15, grab a Chase card. As noted above, Chase likes to see one's oldest card reach a year in age. Once that happens, your approval odds increase from lousy to excellent, provided you don't have too many recently acquired cards.

Message 9 of 10
Anonymous
Not applicable

Re: New to Credit!

There's lots of good advice here.

 

Personally, I would say to wait a couple of months, and use the cards you have naturally. Then, go back through the statements and see where most of your spending was. If it turns out it was 50% at Target, then go that route. If it was groceries, look for a card with good rewards there. Whatever it turns out to be, after a couple of months of normal use you should have a pretty good idea where the bulk of your spending is, and can use that info to help choose which card's rewards will benefit you the most.

Message 10 of 10
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