How will this influence my score?

[JBjunior]

I have relatively no credit and just started concentrating on building it.  I don't do credit at all, which is why I am building now.  My car is paid off and I am military so housing and utilities are supplied for.  Knowing I will want to buy a house in the future I decided it may be a good time to do something.  06 months ago I received a Wells Fargo secured card that I currently have a limit of $300 on and use very little and pay the balance off after the statement hits every month.  The only other thing, which is only on my Equifax report, is an installment loan for a car paid off about 4 years ago.  In an effort to further build credit I applied for an unsecured credit card this past week and was given a $12,000 limit at a very reasonable APR.  With it being reported on all three credit reports now my FICO scores for Equifax is 715 and for Transunion is 737.  I am not sure what they were before because I had only gotten the FAKO scores but they weren't the best simply because I had no or limited credit.

My first question is I called, based on the new FICO scores, to have my secured card "graduated" to an unsecured card.  I was told they weren't doing that at this time and after reading this forum they have been doing it off and on for the past two years or so.  With it being my "oldest" account does it being 06 months older really give me any benefit?  I understand if it is closed I will take a hit but it kind of angers me that they advertise "graduation" but then don't offer it when I need it.  With that said, I won't cut off my nose to spite my face.  Honestly I think I would have no problem getting another high limit card (with limited inquiry issues due to just this week getting the other one) and wouldn't have to worry about tying up my own money increasing the limit but going for the third card may make other issues.  

I am hesitant to do anything that will impact my score negatively because I will be moving in the next few months and will be looking to purchase a home.  Having the highest FICO at that time is my current goal.  With such a short time between now and when I plan on purchasing a home is it better to do nothing and just leave everything the way it is?  I don't know length of time, type of credit, and credit limits will affect my score in this situation.  Thank you for any help.

[RobertEG]

FICO likes to see at least two major bank cards.  It really does not matter much at this point whether the card is secured or unsecured.  What matters in FICO scoring is its % util.

There would be only one reason to close that card, and that would be if they are charging you an annual fee.

If you close the card, you wont loose its age in your AAoA calculation.  Both open and closed cards count in your AAoA calculation.

I would probably leae it alone.

[Anonymous]

Hi JBjunior - welcome to the forums!

FICO scores are based on their Reason Codes.

FICO reason code #3 "Too few bank revolving accounts" means FICO is looking at whether or not you have a bank or national credit card revolving account.  You only need one to satisfy this reason code.  Your Wells Fargo secured card meets the criteria and so it is helping you significantly.  Your new card may also meet this criteria depending on who issues the card.

Because you don't have many accounts on your Credit Report, I would advise keeping both cards open.  You seem to have what is called a "thin" file - so keeping both cards open will probably be helpful to you.  On the other hand, you don't need to go out and app for a boatload of stuff - that'll hurt you. 

FICO also watches how many accounts have balances.  So, when you have two CC's, the best way to tweak your FICO score upward is generally to keep one card reporting a zero balance; and the other card reporting a less than 9% balance.  Of course, you'll always want to PIF those cards and not incur toxic CC debt - you're just watching what balance is being reported to the CR's.  PIF both cards and avoid paying interest always - as you have been doing.  If a home is in your future, now is not the time to run up debt (is there ever a time?)

Generally speaking, the advice is to keep the number of new accounts low and to avoid additional inquiries right before apping for a mortgage.  But you're a builder, and you can possibly add a new account without much, if any, damage.  Watch your AAofA as well as how "fat" or "thin" your file is and balance the two out.  If it were me, I would probably wait at least six months between apps.  You're earmarking your next app as your mortgage, so you can sit back and relax and let things age a little.

BTW, who is your new card with?

And what are the reason codes on your myFICO score reports?  Look at the scales, and see what the codes are on the "What's hurting your FICO score" side of the scale.  That is often the best indicator of which actions will help your score the most.  BTW, your scores are currently similar to mine and we got a super rate on our mortgage - so scorewise you should be doing fine at mortgage time.  I think the next major cutoff on mortgage rates might be around the 760 mark - check your FICO reports and see where the mortgage rates are for your current FICO's. 

Congrats on your good work building credit and on your goal to buy a home!

[JBjunior]

Thank you very much for all of the information.  The new card is with USAA.  With the new advice I think I will keep no balance on the WF card and allow the USAA card to report a small balance and then pay it off.  I refuse to have credit card debt and if I had cash for a house I wouldn't need credit at all.