credit advice for my young sister who's 20!

preci0uz · ‎04-02-2009

My sister is trying to get rid of her credit cards that have low credit lines and annual fees. However, before I'm helping her obtain NEW cards.

Below is her information...

FICO SCORES BOUGHT TODAY : TU 723 & EQ 699

Name of Creditor/ Credit Line/ Date opened

Walmart $350.00 10/2008

Macys Store Card $1000.00 7/2007

Bloomingdales $1000 9/2007

KAY Jewelers $2000 12/2008

BOFA (Athorized User) $1500 3/2008

CAP1 $500.00 4/2008

1st Financial Bk $150.00 7/2007 (just closed it)

Newly applied today

Discover Student Card approved but we don't know the amount

Chase Freedom $1700 (instantly approved)

BOFA $1000 (denied because of young credit but reconned)

Denied

CITI because she didn't have enough credit referenes and were recently new accounts.

She doesn't have any collections or any late payments. Only negative is young credit history.

She doesn't care for the INQ dings or FICO affect right now because of the inquiry hits. She just wants to stablish relationships with good banks and get nice CLI.

I need your advice.. is this plenty of credit lines? should she apply for more or not? If she should apply, what creditors do you recommend she apply?

FYI. She will be applying for the NFCU as well.

THANK YOU!

Message Edited by preci0uz on 04-02-2009 11:44 AM

Anonymous · ‎04-02-2009

I'm not no expert but i would tell her to stop apping and let the cards she has age then ask for cli on them instead of opening somemany new accounts. Does she hve any reasons for wanting so many cc's and such a young age? If she keeps apping she will probably start being denied for to many inquiries and her score will start to tank because of it.

preci0uz · ‎04-02-2009

She did ask for CLI but those are starters card and they wouldn't give her CLI even though she uses them and pays the full balance before the statements ends.

Right now one of the things hurting her score is low credit limit and not enough credit cards. So that's why she's applying for new credit cards that have higher CL and will eventually give CLI from time to time.

She wants to have good credit by the time she's 25 or so, so when she buys a house she get a good deal.

As far as her FICO score tanking, she doesn't really mind because eventually she will gain the points back within a couple of months and since she doesn't intend to take any mortgages or car loans is irrelevant to mind loosing a few points for a few inquiries.

Hope that answers the questions

Also, can someone confirm. If she closes a credit card, it will stay in her credit report for 10 years and continue to age regardless correct?

P.S. forgot to mention my sister's utility is 5% and her income is in the 60's.

Thanks for all the help everyone!

@Anonymous wrote:
I'm not no expert but i would tell her to stop apping and let the cards she has age then ask for cli on them instead of opening somemany new accounts. Does she hve any reasons for wanting so many cc's and such a young age? If she keeps apping she will probably start being denied for to many inquiries and her score will start to tank because of it.

Message Edited by preci0uz on 04-02-2009 12:00 PM

YoungEntrepeneur · ‎04-02-2009

Keep the cards that don't have any annual fees because credit history is far more important the credit limits. A credit line can be slashed or increased at any given time but history will always be there. As long as the banks see that you have made payments on-time for the past two years or so, they will trust you and give you a higher credit line regardless of what your credit lines are. I wouldn't expect to see too many, if any, CLI's at this time because ALL lenders are tightening up. Just tell her to focus on keeping the cards active, keeping her utilization low, and making her payments on-time and she will be fine.

Anonymous · ‎04-03-2009

I would recommend your sister to stop applying for credit because with all the new inquiries it will hurt her scores, if it hasn't already. She has some good cards that would be more willing to work with cli in the future if she needs it. For example, Discover, and Chase bank. Good luck!

haulingthescoreup · ‎04-04-2009

Tell her to stop and do nothing for a minimum of six months, preferably a year, other than continue to be timely in her payments. It's very easy to screw up due dates when you get a bunch of new cards at once. Besides, she needs to let them cool off a bit.

Make sure she understands that she must never ever mess up the Macy's and Bloomie's cards, as they are her oldest and will be worth keeping through the years.

She can start paring off the fee cards. Tell her to pay in full 6 weeks before the fee is due, let the $0 balance post, print out the statement or save the mailed statement showing $0, cancel, and ask them to send a confirmation that the account was closed with a $0 balance. And save these records.

And really, unless she lives at Walmart or something, I'd tell her to cancel it, too. It appears to be nothing more than an ongoing headache for most who post here.

I hope you've arm-wrestled her into registering for the forums and doing some reading here herself.

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007

CreditAble · ‎04-04-2009

@preci0uz wrote:

Right now one of the things hurting her score is low credit limit and not enough credit cards. So that's why she's applying for new credit cards that have higher CL and will eventually give CLI from time to time.

As far as her FICO score tanking, she doesn't really mind because eventually she will gain the points back within a couple of months and since she doesn't intend to take any mortgages or car loans is irrelevant to mind loosing a few points for a few inquiries.

Her scores are low because her credit credit file is not that old. Her scores are also low because the average age is not very good because she has acquired so many tradelines in that short period of time. Not having any bank cards is a minor reason compared to the others.

If sis simply stopped apping until she was 25, she would probably have a score that would entitle her to the best mortgage rates. Furthermore, a verifiable income of 60K would count a lot for mortgage approval.

Here is what I would suggest to my sister. Do not app for anything for one year. In that year, decide exactly what one or two "grown up" cards that she would want to have. Those cards should be picked based upon careful consideration of terms, customer service reputation, potential credit limit possibilities, prestige, etc. etc.

Those card choices should not be made because the lender will approve her with lousy credit scores. That is what she is doing now. The cards she most likely will end up using most of her adult life probably will require much better credit history than she has now.

The problem with your sister's perception, that she doesn't need good credit scores until she is 25, is that she never knows when an foreseen need for good credit scores pops up.

What if she trips across a fantastic deal on a dream house when she is only 22? What if she has to change jobs that requires a background check and credit pull? What if the best rate on car insurance is not available to her. The what ifs are endless.

The best thing a sister can do is save money, lots of money. While saving money she can decide which one or two credit cards will be best to help manage her money in the future.

I think Bank of America, Chase, Citi, and some popular credit unions like PenFed will be good options. Perhaps others reading this thread will suggest their favorite credit cards to add to sister's list of candidates.

You do not mention your sister's actual credit scores. I wouldn't app for anything until the scores are over 700 and there are no inquiries or new accounts opened in the last year. Adding one well researched prime bank card per year for two or three years will provide her great credit flexibility and maximize her FICO score by the time she is 25 years old.

The good news is that, having so many tradelines already is that one tradeline added next year would not lower the average account age very much. She should first allow her current accounts to age (without apping) in order to obtain a substantially higher average age.

No matter what your sister does she certainly has a great start for her age. Most 20 year olds aren't making $60,000 per year and have the number of tradelines your sister has. Almost no 20 year old knows anything about credit gardening. If she can now learn restraint and patience at her young age, she can truly be a credit superstar 5 or 10 years down the road.

Message Edited by CreditAble on 04-04-2009 12:18 PM

preci0uz · ‎04-04-2009

Thanks for the advice. I thin with BOFA, Chase and Discover should be sufficient then!

@Anonymous wrote:
I would recommend your sister to stop applying for credit because with all the new inquiries it will hurt her scores, if it hasn't already. She has some good cards that would be more willing to work with cli in the future if she needs it. For example, Discover, and Chase bank. Good luck!

Message Edited by preci0uz on 04-04-2009 04:06 PM

preci0uz · ‎04-04-2009

@YoungEntrepeneur wrote:
Keep the cards that don't have any annual fees because credit history is far more important the credit limits. A credit line can be slashed or increased at any given time but history will always be there. As long as the banks see that you have made payments on-time for the past two years or so, they will trust you and give you a higher credit line regardless of what your credit lines are. I wouldn't expect to see too many, if any, CLI's at this time because ALL lenders are tightening up. Just tell her to focus on keeping the cards active, keeping her utilization low, and making her payments on-time and she will be fine.

Good point about CLD! She did cancel the 1st financial card and Orchard because of the fees. The only card left with an AF is CAP1, but it's only $29.00.

She's been keeping her UTL low. I've scared the bejesus out of her about maxing out cards LOL.

preci0uz · ‎04-04-2009

@haulingthescoreup wrote:
Tell her to stop and do nothing for a minimum of six months, preferably a year, other than continue to be timely in her payments. It's very easy to screw up due dates when you get a bunch of new cards at once. Besides, she needs to let them cool off a bit.

Make sure she understands that she must never ever mess up the Macy's and Bloomie's cards, as they are her oldest and will be worth keeping through the years.

She can start paring off the fee cards. Tell her to pay in full 6 weeks before the fee is due, let the $0 balance post, print out the statement or save the mailed statement showing $0, cancel, and ask them to send a confirmation that the account was closed with a $0 balance. And save these records.

And really, unless she lives at Walmart or something, I'd tell her to cancel it, too. It appears to be nothing more than an ongoing headache for most who post here.

I hope you've arm-wrestled her into registering for the forums and doing some reading here herself.

haulingthescoreup,

Thanks for all the wonderful advice!! Yes, I'm constantly telling her she needs to join myfico. Maybe I'll make an account for her and just email her the info since she's lazy about the internet! ha ha!

Good point about Walmart. She doesn't even live near a Walmart but does shop there regularly.

It's true about having too many cards, I just paid Chase in FULL twice this month myself! Don't know what I was thinking, except wanting to pay it off ha ha!

Her new cards with Chase and BOFA are rewards, so that's why she applied. I advised that she should be using those cards instead of Walmart for purchases because she will be earning rewards. I'm not sure if Walmart gives rewards.