Use new cards or no??

[Anonymous]

I have been lurking on this site for a while now, and I have learned so much about rebuilding my credit. Backstory: I was young and dumb and killed my credit. My husband and I jumped on the Dave Ramsey bandwagon and started paying off our debt. My husband still thinks we don't need to worry about our credit, but I want to get a good interest rate when we buy a house in a couple of years. (We bought a car last year and the interest rate is ridiculous...not doing that again).

So in January of this year, I was approved for a $1000 Cap1 QS card. I've been using it and paying it religiously. My (CK) score went from the mid-high 500s to low-mid 600s. Yesterday, I took a chance and applied for a DiscoverIt card and was approved for $6500 and an AMEX BCE and was approved for $500. Now I plan to garden for the rest of the year in hopes of raising my score. I really want the Southwest credit card since we like to travel a lot, but I am not applying for that until I know I will get approved.

So my question is: will it hurt/help my score if I don't use the Discover and Amex card and just continue using the Cap1 card? I don't have a need to use them as the Cap1 is doing ok for me. I may pay off the small balance it has of $350 and start using the Discover card instead since the first year you get double cash back, but then I would only use that one.

Any advice would be greatly appreciated.

[simplynoir]

Aside from reaching bonuses on the cards if it applies then it would be fine just using the one card while leaving the other two to age. To maximize FICO scoring need at least 3 cards on your profile with 2 posting zero balances and the third card reporting a <10% balance and not $0. So you already have a sound strategy in mind it sounds like.

Me, personally, I would at least put an occasional charge on those two cards like gas or restaurant charge and just PIF as soon as the charge posts just to show a little activity and keep using your primary driver. But again that's just me lol.

[MrsCHX]

I assume your Disco came with the 0% intro APR and double cash back for the first year? Also, you have 5% off whatever the current categories are. 

I use different cards for different things. Disco is currently carrying a balance from the 14 month 0% BT offer, but I'm doing some house stuff and have been taking advantage of the 5% for home improvement, plus the 5% for clubs (Sam's). Next quarter, restaurants are included. I normally use my Marvel for 3% on entertainment but will switch dining to Disco. Use AMEX BCE for 3% groceries and 2% gas (also Walmart for 2% gas at Sams). Cap One QS for all other recurring monthly spend at 1.5%

It sounds like a lot  but I want to maximize all benefits!

Not using it won't  hurt you as far as credit scoring, but I think if you get a card from a bank, you should use it sometimes. AMEX and DIsco don't seem to be as sensitive to usage (e.g., people with really large CapOne limits have seen them slashed for non-usage).

[pipeguy]

I rotate my "flavor of the month" card around a bit and use it especially right after I get it. Reason being that I want to beek my accounts active and I don't want the lender to reduce my credit limit because I don't use the card. As far as right away, you want to establish that you rec'd the card and offer the lender a bit of business. Those cards that offer 0% for 6-12-18 months, those I have one or two going on all the time - they are paying you to use their card. Just don't go crazy, its not free money its just free "interest". 

[HeavenOhio]

You'll want to use all of your cards enough to keep them from being closed for inactivity. One charge every six months or so ought to take care of that.

But as others have said, maybe you want to take advantage of the rewards your cards offer you.

[Anonymous]

Assuming you track your monthly spending and budget going back a year, you can see what categories of spend you have and can find out what rewards card or cards will maximize your cash back value.

Even if you don't spend a lot, you may be able to earn $100-$300 a year in totally free money. Or way more if your spending is higher.

[Anonymous]

Great comments by the others.  The only thing I will add is that you should without question do two things upon obtaining any new card in the mail:

(1) Activate it

(2) Use it for at least one purchase

You don't need to do #2 immediately but I would do it fairly soon.  Cards which are never used can be cancelled for inactivity far sooner than those which have been used at least once.

[HeavenOhio]

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@Anonymous wrote:
(1) Activate it

(2) Use it for at least one purchase

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The third thing I like to do is make a payment right away. That way, I know how the system works, and I'll know what to expect when I'm making a payment that matters.

[elim]

Use the card that makes/saves you the most coin on that particular purchase or payment (after bonus spends are met). Be sure they all get occasional use... PIF everything.

[HeavenOhio]

Yeah, the BCE would have a sign-up bonus. You want to take advantage of that. And the Discover card would have a bonus based on usage over the first year.

If I were in this spot, I'd:

1. Concentrate on getting the BCE bonus first.
2. Use Discover most of the time after that for the next year.
3. Keep Capital One active, then shift back to that card for non-category spending after the Discover card's first year is up.

A nuance  might invovle positioning the Capital One card for a credit limit increase. If that's the case, I'd forgo some of the Discover rewards in favor of putting $500 per month or so on Capital One. If Capital One grants an increase, you won't be eligible again for another six months. At that point, I'd go back to using Discover most of the time, then ramp up spending on Capital One again in the three months preceding the next time you'd be eligible for an increase.