Will adding two more credit cards actually make a difference?

[Anonymous]

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@Anonymous@BrutalBodyShots I'm a member of a regional bank. But honestly, I don't think I want to be with them long term, so I didn't want to get a credit card from them.

I've been looking at other credit cards for sometime. The two I've narrowed it down to are the Amex Blue Cash Everyday and the Chase Freedom card.

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I might suggest slightly rethinking this.  I'm probably not telling you anything you don't already know, but the BCE card is basically a 3%/2% grocery/gas card and the CF a 5% rotating category card.  Both are 1% back on "everything else" [non-category] purchases.  Getting the 1% back on one essentially makes the 1% back on the other pointless.  I think you'd be best served to consider a 2% "everything else" card.  Think of all the things you spend your money on that doesn't fall into the grocery/gas/possible 5% category... cell phone bill, auto insurance bill, cable bill, any monthly memberships like a gym, Netflix, etc, random cup of coffee or sub for lunch, clothing purchases, repair/maintenance bills, Walmart/Target type store purchases or most anything you buy online and so on.  If you add all those things up, you may find that you spend more on "everything else" than you do on groceries for example.  A 2% everything else card would make the 2% on gas irrelevant on the BCE, rendering it just a 3% grocery card.  I think you'd find that getting an additional 1% (2% instead of 1%) on everything else would likely benefit you more than the additional 1% (3% instead of 2%) on just groceries.  Also, the CF usually does groceries one quarter, rendering the BCE a comfy place in the SD for 3 months out of the year anyway.  Just something to consider before you pull the trigger on additional cards if that's what you plan on doing.

[uga03]

Not really...your scores look pretty good & it’s really more about credit availability. If you aren’t able to have your current bank increase your credit limit then an additional card could help but one card or three cards makes no difference. Increasing your total credit limit with an installment loan would give you the most impact but with your scores being what they are I wouldn’t take on the additional debt initially just for the sake of a few points as it could lower your score initially due to the additional debt.

[Anonymous]

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@uga03 wrote:
Not really...your scores look pretty good & it’s really more about credit availability. If you aren’t able to have your current bank increase your credit limit then an additional card could help but one card or three cards makes no difference. Increasing your total credit limit with an installment loan would give you the most impact but with your scores being what they are I wouldn’t take on the additional debt initially just for the sake of a few points as it could lower your score initially due to the additional debt.

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Hi UGA.  It's important to remember that our OP has exactly one account on his report.  No closed accounts, and no other open accounts.

Having exactly one account places him in a specialized scorecard for "thin" profiles and this scorecard has a ceiling on how high it can go.  So there are real scoring implications for having exactly one account.

Our OP's real need is guidance on whether he should stay as is (exactly one account) or whether he needs to add more.  The simplest way to add more accounts that can stay with you forever, as Jamie explained, is to add credit cards.

So the practical answer is that, yes he should add more cards now as a medium to long term strategy (even if we confine ourselves solely to his score and his ability to look attractive to lenders and other potential creditors).  Other contributors have given still other practical reasons for him to add more cards.

PS.  You mention that he could increase his total credit limit with an installment loan.  This is untrue.  Only revolving accounts will increase his total credit limit (a phrase used for revolving accounts).  Loans and revolving accounts are considered separately by FICO.

[uga03]

Hey CreditGuy.
The single account is a good point but as you can probably tell I’m not a big fan of the adding credit cards just for score purposes lol. I do see what you’re saying though due to there only being a single account.

Correct me if I’m wrong but if the OP has a single account with scores in the mid to high 700’s then adding an account that amounts to total credit being 100% revolving then the impact will be essentially limited to the total credit and availability ratio. (I misspoke previously & said credit limit earlier while meaning total credit, thanks for the correction). The same thing is accomplished by having a credit limit increase on the current credit card, there’s just no reason to open a new credit card account soley for the sake of score in this situation.

Personally, I wouldn’t do anything. I’d purchase when I needed too & continue to pay my bills on time.

[Anonymous]

The sole impact won't be just the two things you mention.  The OP will be helped a lot in the medium to long term by having more accounts.  (That's the thin scorecard issue I mentioned.)  Adding a few more no annual fee credit cards is the simplest way to do that.  They can be kept open for decades with almost no effort (e.g. buying a gallon of milk once every six months).

[uga03]

Makes sense...thanks for the info!

[Anonymous]

Not to hijack an interesting thread and I apologize if this has been mentioned, but my understanding is employers can only see the report, not the scores.  When I interviewed people, we never considered one's credit report, but I think is HR was looking for major derogs, rather than thin files.   When I got my first job, I was only an AU on my parent's cards, and it was never an issue.

[jamie123]

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@Anonymous wrote:

Not to hijack an interesting thread and I apologize if this has been mentioned, but my understanding is employers can only see the report, not the scores.  When I interviewed people, we never considered one's credit report, but I think is HR was looking for major derogs, rather than thin files.   When I got my first job, I was only an AU on my parent's cards, and it was never an issue.

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The OP isn't so much worried about his future employer checking his credit. He wants to buy a car 1 year from now. If he picks up a couple of credit cards now, he will have a much thicker and better credit profile for his auto loan. People that have thin credit reports can have a hard time getting a loan for their first car.

[Anonymous]

FWIW, my second ever account was an auto loan.  I don't recall the interest rate, but I know I had no trouble at all getting approved for the loan, having only tried one place for it.

[Anonymous]

@BrutalBodyShots I honestly didn't even know there were 2% cash back cards like that.That does make more sense. Especially after looking at the Citi Double Cash Back card. My only other thing with the AMex I guess is that they could potentially give me a lot higher credit limit. I don't necessarily need it right now, but it would be nice later on and in the long run. What do you think?

@CreditGuyinDixie Thanks for your advice! I do appreciate it. Do you think my credit score would go down though with an inquiry for that period between getting the car loan and the start of the SSL Technique?

Thanks everyone else for your help, thoughts, and advice!