When to apply for a CC?

[Anonymous]

Okay so I have been working hard to pay off old debt and get our credit cleaned up for the past 2 years in order to get an auto loan. We finally got our new to us car on Monday, and my hubby's credit (he is the one with a good job so most things go through his name) was 703. Our goal is to buy a house in the next year or so (forclosure on credit due to be removed in 2019). So I want to build his credit as much as we possiblly can until we are ready to buy. Hubby has no revolving credit except one credit card that he is an AU on, and now the auto loan but it probably isn't even reporting yet.

I was thinking about applying him for a good credit card, to help build credit from here on out. When is the best time to apply? Hurry and apply before the auto hits? Or wait a few months to show good payments on the auto and then apply for a card? Also what would be a good card to apply for? I would like one that gives money, points, incentives etc. I was thinking about applying for Chase Freedom, but I don't know (and kind of doubt) he would even quailfy for a "good" card. Any advice?! 

[Anonymous]

No new credit or inquiries for 6 months before mortgage app.

FICO will be boosted with 3 credit cards and 1 installment loan reporting open.  The car loan counts as the installment loan so your hubby wants 3 credit cards ASAP.

FICO is maximized with 4-5 credit cards, but the 4th and 5th cards will hurt FICO for 0-6 months as they age.  I would apply for 3 credit cards that offer rewards you will actually use.

[Anonymous]

Get bank cards rather than store cards. 

Get them sooner than later so that the AAoA has had time to recover before the mortgage application. Ideally apply for them a full year before the mortgage application, so that the inquiries age off your report before the mortgage underwriter pulls your file.

I'd even say aim for ZERO credit applications in the entire year leading up to the mortgage applications, so there are zero inquiries on your file, and your newest account is a year old.

[Anonymous]

---

@Anonymous wrote:

I'd even say aim for ZERO credit applications in the entire year leading up to the mortgage applications, so there are zero inquiries on your file, and your newest account is a year old.

---

In a situation with someone who has NO revolving credit reporting, I disagree.  I'd even say apping within 90 days is OK since those inquiries will be questioned and you can honestly say "I applied for credit cards because I wanted the significant sign-up bonuses, but as you can see I am reporting only $5 utilization on one card"

If you have zero credit cards reporting, your score could be 20-50 points lower than it should be with a good credit mix, which can make the difference of more than a few thousand dollars in interest over the life of that loan.

No underwriter is going to beat you up over a few inquiries.  If you plan your apps properly, you could even get 1 inquiry on each credit bureau which is totally insigificant 6 months out from a mortgage.  The FICO boost is very significant.

[JustBPatient]

3 cards and YOU should be looking into doing what you can to improve your credit along the way.  With 2 members in the household with good credit opens all kinds of opportunities down the road.  Good luck,.

[Anonymous]

---

@Anonymous wrote:

---

@Anonymous wrote:

I'd even say aim for ZERO credit applications in the entire year leading up to the mortgage applications, so there are zero inquiries on your file, and your newest account is a year old.

---

In a situation with someone who has NO revolving credit reporting, I disagree.  I'd even say apping within 90 days is OK since those inquiries will be questioned and you can honestly say "I applied for credit cards because I wanted the significant sign-up bonuses, but as you can see I am reporting only $5 utilization on one card"

You're right but the OP's not going to be buying the house until 2019, I assume, since that's when the bad stuff drops off. If that's true there's still time now to apply for a couple of cards and have them all drop off the report before the app. So my advice to the OP would be to try and get those cards now, and ideally a year before the mortgage. I'd also recommend the OP apply for 2-3 cards, if they can do it a full year before the mortgage.

But I agree with you, if that's not possible, 6 months lead time or even maybe 3, to get 1 card is probably better than not having any card.

[Anonymous]

Thanks so much for the advice everyone! So would it be crazy to just go ahead and apply for the Chase Freedom, or will we likely get denied and should I start smaller?

I'm working on my credit as well  

[Anonymous]

In my signature is a link to pre-qualification pages. Chase is in there. Try that first.

[Anonymous]

You should absolutely be growing your credit too. We bought a house last year, and my credit was a good 50pts higher than my husband's, which only helped us get our good rates. His credit barely qualified for the mortgage program. I'm unemployed.

[MrsCHX]

Just echoing others...if you're not buying until 2019; the time is now. You will have some great payment history by then, the inquiries wil have aged off, and the AAoA will have recovered. 

Do your research on any cards you're considering first. The auto loan will not impact your CC approvals. The account will have an affect on your AAoA possibly but I wouldn't worry about that too much.