Credit Newcomer Seeking Advice

[ITZ_Nate]

Hey myFICO Community,

This is my first post in the community, so I hope it's a good one. As a well-rounded individual, I'm seeking different points of view on my situation and seeking advice.

I'm a young individual looking to set myself up for a more prosperous future. Here's some brief history about me:

I've been actively building my credit for almost two years now, with my journey starting when my father added me as an AU on his oldest credit card. This early introduction gave me a head start in the world of credit. On my 18th birthday, my father advised me to apply for my very first cc, the Discover IT Student card, to gain a better understanding of credit, the importance of timely payments, and the benefits of paying in full.

You might question my decisions, but not even two weeks after getting that card, I applied for another one, the Chase Freedom Student. Approximately two weeks after that, I applied for yet another card, the Capital One Savor One Student. I do realize that credit is not a sprint but a marathon.

I became enthralled with watching credit-related content on YouTube and realized that having just one credit card wouldn't maximize my cashback potential. So, after holding onto those cards for about seven months, I added another one, the Citi Custom Cash card. I use it for gas or restaurants when Discover rotates its spending categories. I also took advantage of a welcome bonus offer, where I could get $200 back by spending $500.

As my first year credit journey milestone approached, I decided to product change my Chase Freedom Student to the original Chase Freedom. A month or so later, I convinced my grandmother to add me as an authorized user to her oldest credit card, which added more than 20 years of on-time payments.

Wanting to diversify my credit mix, I opened two secured Navy Federal Pledge loans and utilized the Share Secure technique. Since then, I've been gardening until recently. I had a bigger then usual expense and applied for another card: the chase freedom unlimited to take advantage of the welcome bonus offer, where I could get $200 back by spending $500. I understand this might seem like a lot for someone my age, but I planned everything as best as a young adult could.

Fast forward to today, I've taken a break from the credit YouTube world and have been managing all my cards responsibly, paying them off in full and on time.

Any advise other then SLOW MY ROLL?

[SouthJamaica]

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@ITZ_Nate wrote:

Hey myFICO Community,

This is my first post in the community, so I hope it's a good one. As a well-rounded individual, I'm seeking different points of view on my situation and seeking advice.

I'm a young individual looking to set myself up for a more prosperous future. Here's some brief history about me:

I've been actively building my credit for almost two years now, with my journey starting when my father added me as an AU on his oldest credit card. This early introduction gave me a head start in the world of credit. On my 18th birthday, my father advised me to apply for my very first cc, the Discover IT Student card, to gain a better understanding of credit, the importance of timely payments, and the benefits of paying in full.

You might question my decisions, but not even two weeks after getting that card, I applied for another one, the Chase Freedom Student. Approximately two weeks after that, I applied for yet another card, the Capital One Savor One Student. I do realize that credit is not a sprint but a marathon.

I became enthralled with watching credit-related content on YouTube and realized that having just one credit card wouldn't maximize my cashback potential. So, after holding onto those cards for about seven months, I added another one, the Citi Custom Cash card. I use it for gas or restaurants when Discover rotates its spending categories. I also took advantage of a welcome bonus offer, where I could get $200 back by spending $500.

As my first year credit journey milestone approached, I decided to product change my Chase Freedom Student to the original Chase Freedom. A month or so later, I convinced my grandmother to add me as an authorized user to her oldest credit card, which added more than 20 years of on-time payments.

Wanting to diversify my credit mix, I opened two secured Navy Federal Pledge loans and utilized the Share Secure technique. Since then, I've been gardening until recently. I had a bigger then usual expense and applied for another card: the chase freedom unlimited to take advantage of the welcome bonus offer, where I could get $200 back by spending $500. I understand this might seem like a lot for someone my age, but I planned everything as best as a young adult could.

Fast forward to today, I've taken a break from the credit YouTube world and have been managing all my cards responsibly, paying them off in full and on time.

Any advise other then SLOW MY ROLL?

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Yes. In addition to slowing down, stop watching YouTube videos on credit. They are usually bunk.

[mgood]

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@ITZ_Nate wrote:

Any advise other then SLOW MY ROLL?

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Keep up the good work.

The fast start, or thick start or something like that they call it, is a legit strategy. Getting multiple accounts as quick as possible, taking the hits for that, then kicking back in the garden and letting those accounts age is a good way to get where you want to be in a short amount of time. So you've done that. Sit on what you've got and let those inquiries age off your reports. Behave and hope those cards grow. You're on your way.

[Anonymalous]

You have more than a year's experience. How are you doing with payments and expenses? The biggest problem with young adults and credit is typically lack of restraint, poor judgment, and getting in over their heads. This isn't an accusation, nor is it a universal. Plenty of young adults do fine. But the schools do an extremely poor job teaching kids about credit and other aspects of personal finance, and while better intentioned, most families also do a very poor job. There's a hesitation to talk to kids about finances, and hands on experience is typically limited to a student bank account or something similar. It's a big jump from that to paying rent, utilities, and managing day-to-day expenses, and the transition is almost always a bit rocky.

Knowledge is only a small part of being good with money. The more important side is habits and reflexive aversions. It's important to have at least a general sense of your budget, but it's even more important to develop the psychological tools needed to resist the urge to spend just a little more. It's also important to develop a pro-active system to ensure you pay off every bill on time, instead of ad hocing it. This can involve notifications or paper, but it should have redundancy built in and become an almost unthinking routine in your lifestyle. And it should be robust enough that it doesn't fall apart the first time you have a major change or crisis, like moving or losing a job.

You're at the stage where you're building habits that will last you a lifetime. It's not as sexy as rewards, sign-up bonuses, or aspirational travel. But it's quite a bit more important.

Youtube posters can be highly deceptive. If know you know any gamblers IRL, you might have noticed how they're always bragging about how they beat the house by $200 last weekend, or how they're up $500. Listening to stories like that makes casinos sound like a great place to make some extra cash, but we know that's simply not true. While it's possible to be lucky in the short run, over the long run all gamblers will lose to the house. But the times when they're up or winning are memorable, while the times when they lose are forgotten or glossed over, so what they present to other people is highly deceptive.

The credit card influencers, particularly those into points and miles (the majority) sound very similar. They're always bragging about high value redemptions, or how it's easy to offset the annual fees, but there's never any sobering analyses of how many years they paid the annual fee and never redeemed all those credits, or how they had to drive 1/2 hour out of their way to get a "free" cheeseburger they're counting as a pure net bonus. While it is possible to get positive value from credit cards, the benefits tend to be marginal, are often overshadowed by opportunity costs (e.g. your time has value, and that's almost never counted), and all it takes is one slip and you've lost any potential gains.

The influencers also have very distorted incentives, because they often make most of their money from referrals and sponsorships rather views. The terms of those contracts may place explicit restrictions on what they can say, but even more importantly they encourage the influencers to push certain products on their viewers. They may think they're giving honest assessments, but it's similar to lobbying in politics. When there's money involved, it distorts behavior.

[ITZ_Nate]

@SouthJamaica Thanks for the reply. I've definitely decided to put an slow my credit YouTube habit. Every now and then, I get the urge to check out what's new in the world of credit and watch a few videos here and there, but I'm determined to stop. Furthermore, I'll be focusing on gardening for a while, and I don't plan on adding any new lines of credit to my profile anytime soon. I'm considering opening another Navy Federal Pledge (secured) loan to improve my payment history & credit mix, but I'm still on the fence about that decision.

[ITZ_Nate]

@mgood Thanks for the kind words, bud!

Definitely will be focusing on gardening for a while, as I was telling @SouthJamaica . I don't plan on adding any new lines of credit to my profile anytime soon. However, I may consider opening another Navy Federal Pledge (secured) loan. Other than that, three of my inquiries will fall off in the next three or so months, and my credit profile will look really good then. I'll keep you and the rest of the forum updated on my credit journey in the coming years. I'm apart of a couple other credit forums but they don't have the history like the myFico community!

[CYBERSAM]

You don’t need any of the secure loans, you are way pass that advise at this stage of your credit journey!

The AU CC is not going to be much factor as use to be. Most algorithms only calculate if you actually use your AU CC.

IMHO just let your credit age and don’t app for anything else. See if you can get SP CLIs to help your utilization.

Prepare your credit for next real loan that you are about to get, such as car loan or even a property.

What are your FICO scores? That normally tells you if there is room for more apps or you should garden. Also you want to avoid being labeled as Credit Seeker.

[Anonymalous]

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@ITZ_Nate wrote:

I'm considering opening another Navy Federal Pledge (secured) loan to improve my payment history & credit mix, but I'm still on the fence about that decision.

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You already have a couple SSLs, so adding a new one won't add anything to your credit mix. SSLs are really intended for people with no installment loans at all, though they can also provide a much smaller boost to people who have a closed installment loan, but no open ones. You also have more than enough tradelines to build your payment history.

You've got a strong foundation. There isn't much you can do to further build your profile except to let it age and watch things like payments and utilization.

[SouthJamaica]

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@ITZ_Nate wrote:

@SouthJamaica Thanks for the reply. I've definitely decided to put an slow my credit YouTube habit. Every now and then, I get the urge to check out what's new in the world of credit and watch a few videos here and there, but I'm determined to stop. Furthermore, I'll be focusing on gardening for a while, and I don't plan on adding any new lines of credit to my profile anytime soon. I'm considering opening another Navy Federal Pledge (secured) loan to improve my payment history & credit mix, but I'm still on the fence about that decision.

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Don't. One is all you need. Adding others gives you nothing except another new account taking your scores down.

[ITZ_Nate]

Thanks for your reply!

So one of those two secure loans has been paid off and was closed yesterday. At the time of opening the loan I didn't have much capital, so the one that recently closed was only an 18-month term. My other one I had a lot more capital and was able to get a way longer term of 62 months. So I still have one on my profile. Correct me if I'm wrong, but you're saying I'm way past the secure loan phase? I've heard I should only have at least one revolving loan on my profile at any given time for credit mix?

I definitely agree wholeheartedly that I need to 'let your credit age and don’t apply for anything else. See if you can get CLIs to help your utilization.' I'm still a college student, and with only having a part-time gig, my income doesn't increase too much, but that hasn't stopped me from asking and getting increases. My utilization on my personal cards is in the 3% of my total revolving limits of 7900. When I bring in the AU's it sits around 10% of my total revolving limits of 103,050.

Don't know all my FICO scores right now, but I'd say they range from high 750's to low 770's.