Should I apply for my first CC & drop my AAoA and add a new inquiry?

[diane11]

My scores are 655 trans, 652 equi, 633 exp. My only debt is two large student loans that are in good standing, but had late payments in late 2015 and early 2016. I have no credit cards, no car loans, no mortgages, and no collections. (I am an AU on two cards, which are in good standing.)  While I know the student loan lates are hurting me most, it looks like I am being penalized for bad mix of credit, having no credit cards/ revolcving debt, and essentially having very few monthly payments due. However, my biggest credit score assets are great AAoA (14 yrs), zero new inquiries, and the age ofmy newest account (11 years).

So, here is my question: Do I get a credit card? It seems that I need one to improve my payment history and credit mix, but then I’m going to drop my AAoA, have a new inquiry, etc. If I were to get a card, I would use less than 10% of CL and pay in full monthly.

My goal is score improvement (740+), a car loan in about six months, and a home loan in a year or so.

[Anonymous]

Dropping your average age of accounts(AAoA) is a necessary evil.  You do need your own credit.  I would try the prequal sites on Capital One or Discover to see if they have any recommendations for you.

[diane11]

I checked the pre-qual site and I had none for Chase or Discover. The Capital One site says I'm prequalified for the Savor and Amex says I'm prequalified for Amex Green. Credit Karma says my odds of approval are "very good" for Capital One Platinum, Capital One Quicksilver One, and Chase Sapphire Reserve. 

Suggestions amongst those? I would like a decent CL but mostly think I need high odds of approval, so I don't have an inquiry that results in a denial. I will pay in full monthly, so I don't care much about APR.

[Anonymous]

I don't believe Chase considers AU status when determining approvals so essentially you have nothing.  Chase would prefer to see at least a year of history before you're approved for anything.  Take those approvals from Credit Karma and throw them out the window.  They get paid when you apply so naturally they will recommend cards(and many of them).

Capital One would be a great start of your own.  Amex is great but the green card I couldn't really recommend it.  From what I have read, the underwriting standards of the Savor are more strict than say the Platinum card.  I'm a little surprised you were prequalified for that one.  Prequals are not guarantees by any means.  You could take your chances applying for the Savor or go with something else from them like the QS or Platinum.  Your choice but GL no matter what you decide.

[Anonymous]

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@diane11 wrote:

I checked the pre-qual site and I had none for Chase or Discover. The Capital One site says I'm prequalified for the Savor and Amex says I'm prequalified for Amex Green. Credit Karma says my odds of approval are "very good" for Capital One Platinum, Capital One Quicksilver One, and Chase Sapphire Reserve. 

Suggestions amongst those? I would like a decent CL but mostly think I need high odds of approval, so I don't have an inquiry that results in a denial. I will pay in full monthly, so I don't care much about APR.

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For score maximization, you will want 3 revolving cards.

Do not get a QuicksilverOne.  It has fees and is difficult to product change later.  If you can get a regular Quicksilver that is a good one, or just get the Platinum for now.  You can change over to Quicksilver with it later.  Discover is also pretty good to people with thinner profiles it seems.  Maybe a secured card from them if you can not get the regular one.  The secured can graduate to unsecured later.  I would not get a charge card (Amex Green) at this point.

[FireMedic1]

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@diane11 wrote:

I checked the pre-qual site and I had none for Chase or Discover. The Capital One site says I'm prequalified for the Savor and Amex says I'm prequalified for Amex Green. Credit Karma says my odds of approval are "very good" for Capital One Platinum, Capital One Quicksilver One, and Chase Sapphire Reserve. 

Suggestions amongst those? I would like a decent CL but mostly think I need high odds of approval, so I don't have an inquiry that results in a denial. I will pay in full monthly, so I don't care much about APR.

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You probably wont get approved for the Savor. If they showed you that card. Getting the Plat would be an easy catch. Decent CL's for a first card will be a tough one. Very few start out the gate with 5-10k SL. Got to start somewhere. Myself started 3 yrs ago with the Plat at 2k. 3 yrs later see below. Dont go app crazy. Spread out apps 4-6 months. GL!

[Thomas_Thumb]

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@diane11 wrote:

My scores are 655 trans, 652 equi, 633 exp. My only debt is two large student loans that are in good standing, but had late payments in late 2015 and early 2016. I have no credit cards. While I know the student loan lates are hurting me most, it looks like I am being penalized for bad mix of credit, having no credit cards/ revolcving debt, and essentially having very few monthly payments due.

So, here is my question: Do I get a credit card? It seems that I need one to improve my payment history and credit mix, but then I’m going to drop my AAoA, have a new inquiry, etc. If I were to get a card, I would use less than 10% of CL and pay in full monthly.

My goal is score improvement (740+), a car loan in about six months, and a home loan in a year or so.

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The lack of a credit card is costing you at least 50 points. I would suggest getting a secured credit card. Then, six months down the toad (after the score boost) get a couple unsecured "keeper cards". Possible a a Visa/Mastercard or American Express card through a credit union and a cobranded card from a major retailer such as a Target Visa red card.

[diane11]

From purely a score perspective, which is better: Capital one Platinum (unsecured) card or a secured card from someone else? If I can get approved for an unsecured Cap One platinum, is there any reason to do a secured card instead? TIA!

[Brian_Earl_Spilner]

They will affectayour score the same. It doesn't really matter as no matter which route you go, they will both be slow growers. The Platinum can be changed to a Quicksilver within a few months to get 1.5% cash back. Or, you could get a secured Discover, if you can't qualify for a normal one and change that after the first statement to a 5% IT card which can graduate to a normal card in as little as 7 months. 

[SouthJamaica]

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@diane11 wrote:

From purely a score perspective, which is better: Capital one Platinum (unsecured) card or a secured card from someone else? If I can get approved for an unsecured Cap One platinum, is there any reason to do a secured card instead? TIA!

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1. From a score perspective, they're the same.

2. As between the two, I would go with a Cap One Platinum; it's the starter card for many folks. But you might want to try for a Discover Card; they don't mind applicants with thin files, and it's a better card. Since you don't rely on credit cards, the fact that it's got a little less acceptance than Visa and Mastercard shouldn't be a problem for you.