New Credit Card

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somebodyNew
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New Credit Card

Postby somebodyNew » Wed May 25, 2016 8:30 pm

Hi all,

I just applied for my first credit card with Discover and was approved. Discover has the option of being able to view your FICO score anytime. When I got the card in the mail, I saw that my credit score is 746. However, this is my first credit card. How is my score so high already? I'm not complaining, just curious! :confused:


takeshi
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Re: New Credit Card

Postby takeshi » Thu May 26, 2016 8:54 am

No idea. Any score is generated based on the information in the report used as a data source. We'd have to have access to your TU report to tell you why. Here's a reference on how FICO typically weights factors.
http://www.myfico.com/crediteducation/w ... score.aspx

We can guess that you must have had some credit accounts on your TU report to have a score but beyond that we would need a better idea of what's on your reports to provide feedback.

Keep in mind that it's never just about score though. If you only have one card you may have a thin profile and your score may be volatile. Also keep in mind that you don't have just one score. There are many scoring models used by creditors. FICO itself doesn't have just one model. For most models you have a score with each of the 3 major CRA's. If you're not regularly reviewing your credit reports then definitely do so. At the very least make use of the Annual Credit Report site each year.

Elijahmex
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Re: New Credit Card

Postby Elijahmex » Thu May 26, 2016 9:34 am

Beware that with just one card things have a greater impact on your score. I always kept a very low balance so I saw huge leaps forward with excellent payment and low utilization. However one month my utilization was higher than usual and my score dropped significantly. I mean almost 30point and back up 38 points when I reduced it so treat that card right!
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To My Credit
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Re: New Credit Card

Postby To My Credit » Thu May 26, 2016 9:51 am

Elijahmex wrote:Beware that with just one card things have a greater impact on your score. I always kept a very low balance so I saw huge leaps forward with excellent payment and low utilization. However one month my utilization was higher than usual and my score dropped significantly. I mean almost 30point and back up 38 points when I reduced it so treat that card right!
Out of curiosity, do you still have just the one card? Which one?
Current cards: BankAmericard CR, BankAmericard BBR, Citi Double Cash, Chase Freedom, AmEx BCE, Discover It
Wishlist: US Bank Cash+

Elijahmex
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Re: New Credit Card

Postby Elijahmex » Thu May 26, 2016 11:59 am

To My Credit wrote:
Elijahmex wrote:Beware that with just one card things have a greater impact on your score. I always kept a very low balance so I saw huge leaps forward with excellent payment and low utilization. However one month my utilization was higher than usual and my score dropped significantly. I mean almost 30point and back up 38 points when I reduced it so treat that card right!
Out of curiosity, do you still have just the one card? Which one?


It was a CapOne QuickSilverOne. 1.5% CashBack on all purchases. After 12 months I started opening new accounts. 4 since February. They should be in my signature.

If it's too small to see I added Discover, AMEX Platinum, BoA CashRewards and most recently Chase Sapphire Preferred. In that order.
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somebodyNew
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Re: New Credit Card

Postby somebodyNew » Thu May 26, 2016 12:29 pm

takeshi wrote: If you're not regularly reviewing your credit reports then definitely do so. At the very least make use of the Annual Credit Report site each year.



Reviewing my credit reports won't hurt my credit score, correct? Sorry, I'm new at this. I just don't want to mess up anything!

somebodyNew
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Re: New Credit Card

Postby somebodyNew » Thu May 26, 2016 12:31 pm

Elijahmex wrote:Beware that with just one card things have a greater impact on your score. I always kept a very low balance so I saw huge leaps forward with excellent payment and low utilization. However one month my utilization was higher than usual and my score dropped significantly. I mean almost 30point and back up 38 points when I reduced it so treat that card right!



So, would it be better to pay off my balance each month if this is my first card instead of keeping a low balance?

Elijahmex
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Re: New Credit Card

Postby Elijahmex » Thu May 26, 2016 1:32 pm

somebodyNew wrote:
Elijahmex wrote:Beware that with just one card things have a greater impact on your score. I always kept a very low balance so I saw huge leaps forward with excellent payment and low utilization. However one month my utilization was higher than usual and my score dropped significantly. I mean almost 30point and back up 38 points when I reduced it so treat that card right!



So, would it be better to pay off my balance each month if this is my first card instead of keeping a low balance?



What I did was send 2 payments every month. Never used more than 25% of available credit. By due date I would pay in full and by the time my statement closed my reported utilization was between 4 and 9% which was great for my scores.

Now that I have more credit cards I still use the same system. All my due dates are pretty much the same for all my cards. I pay them off and whats reported is still between 4 and 9% which is a great system for scores!
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Kevin86475391
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Re: New Credit Card

Postby Kevin86475391 » Thu May 26, 2016 8:28 pm

Hi and welcome to the forum!

somebodyNew wrote:Hi all,

I just applied for my first credit card with Discover and was approved. Discover has the option of being able to view your FICO score anytime. When I got the card in the mail, I saw that my credit score is 746. However, this is my first credit card. How is my score so high already? I'm not complaining, just curious! :confused:


Congrats on your new Discover card. It is indeed impossible to know for sure without seeing what's on your report, but as others indicated with such a thin file your one card in good standing has much greater impact.

It's also possible you had something else on your report. Have you ever had an installment loan such as a car loan, student loan, mortgage, or personal loan? Positive history on installment loans can certainly have a strong positive effect on your credit score.

Finally, are you an AU (authorized user) on anyone else's account? About a year ago I added my partner as an AU on most of my accounts. He's never had a credit card or installment loan, but after adding him as an AU his FICO 8 credit scores shot up to the 770s/780s because he's benefiting from my long account history, low utilization, high scores (my FICO 8s are 800+), and good payment history. However, it's important to note that some lenders don't consider AU data and it generally carries less sway than accounts the person is a primary cardholder on.

somebodyNew wrote:Reviewing my credit reports won't hurt my credit score, correct? Sorry, I'm new at this. I just don't want to mess up anything!


Nope, reviewing your credit reports will not negatively affect your score in any way. You can pull your own reports as often as you like.

somebodyNew wrote:So, would it be better to pay off my balance each month if this is my first card instead of keeping a low balance?


For optimal credit scoring you'll want to have a utilization of between 1-9% report. However, it's important to note that you never need to pay any interest charges to do this. Always make it a priority to pay your full statement balance before the due date. Any new charges can be floated till the following month without interest charges being assessed and it is on these new charges that you'll want to let about 1-9% report.

So for example if your previous statement balance was $180, make sure to pay that $180 in full by the statement due date. Then if you also make charges totaling say $95 during the statement cycle, then be sure to pay enough on that new $95 to get your utilization down to 1-9% of your total credit limit by the reporting date (the reporting date is generally a day or so after the payment due date, but you can check with Discover to find out for sure when yours is).

However, you may not want to monitor utilization so closely. I definitely do advise keeping is low and paying your statement balance in full every month to avoid interest charges, but the important thing to note about utilization is that it has no 'memory.' If your utilization is 60% one month you'll take a hit to your credit score, but if you then get it down to 5% the following month, it'll be no different for your score than if it had never been at 60%, just as though it had always been at 5% or less. So unless you have a new app planned, utilization on a monthly basis for scoring reasons doesn't necessarily have to be a huge concern.

That said, you'll also want to be aware of how your behavior looks to creditors. If you go from a lower utilization in May to almost maxed out in June that can set off red flags for your creditors and they could potentially lower your credit limits or close your accounts. It is generally advisable to keep utilization low not only for credit scoring purposes but also to avoid spooking lenders.

Personally speaking my utilization is always low because I make it a habit to PIF weekly - I'd only need to PIF monthly to avoid interest charges, but I simply prefer to handle it on a weekly basis. That's just what works best for me. So my utilization is always low/lowish, but I never worry about what reports with a given creditor on a given month because 1) it's almost certainly within the 1-9% range anyway and 2) even if it isn't, it probably will be next month and that's fine for my score. I'd only watch it closely and 'engineer it' if I were planning an important app in the following month.

somebodyNew
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Re: New Credit Card

Postby somebodyNew » Fri May 27, 2016 12:02 pm

Kevin86475391 wrote:Hi and welcome to the forum!



Thank you so much for all the information! I haven't had any loans, mortgages, or anything like that, which made me so curious about my high-ish score. I think I might be an AU on someone's account, but not really sure on that either. I'll probably pull a credit report soon.

Thanks again! Your information was really helpful. :)



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