Advice for Twentysomething Establishing Credit

For just about anything you want to get off your chest about credit cards.
12 posts
User avatar
Vattené
Centurion Member
Centurion Member
 
Posts: 1157
Joined: Sun Jan 26, 2014 3:55 am
Location: US

Advice for Twentysomething Establishing Credit

Postby Vattené » Sun Jan 26, 2014 5:53 am

Hello all,

I'm new to the Credit Card Forum community, but I have been lurking in the forums for a little while and love the site so far! I was hoping to solicit some advice from people that probably know more than me.

I am 23 and a recent college graduate. I have managed to remain debt-free: at 16 I paid cash for the only car I've ever owned by working two jobs and was fortunate enough to get a full-ride scholarship. I am very averse to credit, but want a stellar credit score for when I buy a house or a car that isn't a hunk-o-junk.

I have been trying to build a good credit score for the past 4-5 years by taking out a bunch of store credit cards and maintaining a perfect payment history, never carrying a balance. My FICO is 739. I've slowly discovered the joy of earning rewards with credit cards. I have a Banana Republic Visa card that has essentially replaced my debit card. It basically offers 1% rewards that can be spent in Banana Republic's umbrella of brands. I got a Walmart credit card to get $.05 off of gas. However, like a drug addict, these rewards are no longer enough to satiate me. I NEED MORE! Instead of cash back in clothing stores, I want straight-up credits to my statements. As has been pointed out on this site, with gas hovering around $4.00/gallon the Walmart card offers the equivalent of ~1.25% back, and there are other cards out there that offer more.

It is also very important to me to continue building my credit score. I think my average age of account, according to CK, is like 2.2 years. Do you think it would hurt me too much to open a new card? Here are my top picks:
  • Discover it (The 5% categories may not apply too much to me - I think it's a rip-off that Walmart doesn't count as a supermarket - but there is the $150 introductory bonus. I like the free FICO scores, but I'm currently getting this through my Walmart card.)
  • Blue Cash Everyday from American Express (for 2% in gas)
  • Barclaycard Rewards by MasterCard (for 2% in gas & utilities)
  • Capital One Quicksilver by Visa (for 1.5% back on everything)
I would love to hear anyone's feedback, including other cards to consider or other tips in general. Is there a carrier that people prefer? Should I consider a combination (say, opening the Blue Cash Everyday until reaching the bonus, then reserve it for gas and applying for the Discover it)?

Is there a way to see, before applying, what merchants qualify for particular categories? I found my go-to gas station, Murphy's, qualifies for gas purchases with American Express but haven't found details like this in any other fine print. I suspect Walmart pretty much doesn't qualify for grocery purchases with all of the carriers.

Lastly, I am curious if it is a good idea to request credit limit increases with my existing accouts. Will the improved utilization outweigh the negative impact on additional credit inquiries?

Please offer any advice you may have and pardon my long-windedness. Thank you!
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now


MemberSince99
Centurion Member
Centurion Member
 
Posts: 4913
Joined: Sun May 20, 2012 4:35 pm
Location: WI

Postby MemberSince99 » Sun Jan 26, 2014 7:26 pm

Will it hurt you? Yes, it will give you an inquiry and lower your average age of account to get a new card IN THE SHORT TERM. In the long term with responsible use, it will help you rather than hurt.
That's a general rule, however it's not ironclad - I've gotten cards and had my score go UP as a result. So there is no way for us to sit here and tell you what exactly will happen, but if you treat your credit right your credit will be better in the long run that much you can be sure of.


As far as the cards you mentioned they are all fine. Capital One does 3 hard pulls and has the worst customer service on the planet. If you app for Barclay's don't open anything else for a while after you do it as they may not like that. Also consider Chase Freedom which is like Discover, but either one would be fine.


If you are going to apply for those cards I'd do it in this order:
1. Blue Cash Everyday as Amex can be inquiry sensitive. They pull EX
2. Discover pulls EQ
3. Barclay they pull TU
4. Cap One pulls all three but one inquiry on each bureau shouldn't kill you with them


Each lender has their own criteria for what each purchase from stores qualifies as, you should consult their information.


Also consider the Sallie Mae card by Barclay's since gas is one you mention a lot a couple of times.


Yeah Walmart may not qualify for grocery, neither does Target although they can have grocery sections.

As far as CLIs on your current cards I know Walmart is GE backed and I believe so is BR. In that case you should get auto increases with good use and PIF behavior. You can always look online to request a CLI too I believe but I'm not sure if requesting from those cards is a hard pull or not. Being GE my guess is no, but I'd rather see you spend those on better cards at this point.

chas0039
Platinum Member
Platinum Member
 
Posts: 82
Joined: Sat Dec 28, 2013 5:56 pm
Location: Excelsior

Postby chas0039 » Sun Jan 26, 2014 7:59 pm

I second MemberSince99's suggestions, and, BTW, thanks for the insight on who pulls from what bureau. That explains why I was approved for all three, with very high limits, in the last three weeks. They never saw each other.

User avatar
otter
Centurion Member
Centurion Member
 
Posts: 639
Joined: Sat Aug 24, 2013 8:45 pm
Location: Grand Forks, ND

Postby otter » Sun Jan 26, 2014 8:12 pm

chas0039 wrote:I second MemberSince99's suggestions, and, BTW, thanks for the insight on who pulls from what bureau. That explains why I was approved for all three, with very high limits, in the last three weeks. They never saw each other.


Those were good suggestions by Member. The apply for three cards which pull from different bureau's serves me well... I recently got Chase Freedom(EX), Barclay Sallie Mae(TU) and Wells Fargo(EQ).

As Member mentioned, Cap One pulls from all three which to me doesn't make sense unless the app is borderline. Cap One accounts also have a tendency to not appear right on the CR (showing high balance but not credit limit).
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450

User avatar
Vattené
Centurion Member
Centurion Member
 
Posts: 1157
Joined: Sun Jan 26, 2014 3:55 am
Location: US

Postby Vattené » Mon Jan 27, 2014 1:12 am

Thanks so much for the replies, Member, chas0039, and otter! I can't expect you to be able to read the tea leaves and forecast exactly how everything will go, of course, but the responses were very helpful. Is there even a perfectly rational process to the system? Or does it involve some black magic, voodoo dolls, and the laying on of hands as applications come in? I mean, I get the general principles, but the more granular you get the more ridiculous it seems.

MemberSince99 wrote:As far as CLIs on your current cards I know Walmart is GE backed and I believe so is BR.

BR is also GE backed, just FYI.

Anyway, I take it I should just go ahead and apply for the card with terms I like best, knowing I can ride out any temporary turbulence in my credit score.
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

takeshi
Centurion Member
Centurion Member
 
Posts: 1733
Joined: Wed Jun 05, 2013 3:12 pm
Location: US

Postby takeshi » Mon Jan 27, 2014 8:26 am

Vattené wrote:I think my average age of account, according to CK, is like 2.2 years.

CK provides AAoOA, not AAoA. If you have closed accounts your AAoA may be longer.

Vattené wrote:Is there a way to see, before applying, what merchants qualify for particular categories?

IIRC AmEx has the info on their site but you have to dig a bit into the terms. You should be able to find merchant category codes (MCC) with some Googling.

Vattené wrote:I would love to hear anyone's feedback, including other cards to consider or other tips in general.

It would help to know what your major spend categories are as well as all other need/wants/preferences that would help to narrow down the options. In general, you probably want to look into the maximum rewards for your major spend but there are other factors that some take into consideration (creditor, AF, benefits, redemption terms on rewards, preference for cash back or point/miles, etc).

Vattené wrote:Is there a carrier that people prefer?

There isn't just one creditor that everyone prefers. A given person may prefer more than one creditor. I'd suggest focusing on specific cards versus selecting based on creditor. A given creditor can offer a number of products that may or may not be relevant to you.

Vattené wrote:It is also very important to me to continue building my credit score. I think my average age of account, according to CK, is like 2.2 years. Do you think it would hurt me too much to open a new card?

It's nearly impossible to say for certain. As indicated above, the hard pull and reduced AAoA (unless you open a backdated AmEx card) are hits that come with a new tradeline. However, decreased utilization due to more available credit can be beneficial. One's credit plays a large part in this. Established, thick credit profiles will generally handle new tradelines better than new and thin credit profiles.

User avatar
Vattené
Centurion Member
Centurion Member
 
Posts: 1157
Joined: Sun Jan 26, 2014 3:55 am
Location: US

Postby Vattené » Thu Jan 30, 2014 4:14 pm

Thanks everyone for your advice! I realize no one can read the tea leaves to see what the effects on credit will be exactly, but the information was quite helpful. :D

takeshi wrote:CK provides AAoOA, not AAoA. If you have closed accounts your AAoA may be longer.

Thanks for making this distinction, takeshi. I didn't know that before. Credit Karma even recommends not closing old accounts because it will reduce the age of your credit (this must just be advice for your score according to THEIR model, but still...it won't really benefit their users at all).


takeshi wrote:IIRC AmEx has the info on their site but you have to dig a bit into the terms. You should be able to find merchant category codes (MCC) with some Googling.
.
I will try this, thanks again! That is where I found that Walmart doesn't count as a supermarket. There is language excluding "supercenters" and "big box stores."


takeshi wrote:It would help to know what your major spend categories are as well as all other need/wants/preferences that would help to narrow down the options. In general, you probably want to look into the maximum rewards for your major spend but there are other factors that some take into consideration (creditor, AF, benefits, redemption terms on rewards, preference for cash back or point/miles, etc).

I don't really have the opportunity to travel, so my preference would be simple cash back. My biggest spending categories would be gas and groceries, but I buy groceries at Aldi (which doesn't accept credit cards) and Walmart (which doesn't qualify as a supermarket). There is the occasional department store purchase and restaurant (but I try to minimize eating out). Therefore, I think most of my spending would fall back on 1% back for everything else. This is why the Cap One Quicksilver card appealed to me, but I've read on here that their customer service is horrible.


takeshi wrote:There isn't just one creditor that everyone prefers. A given person may prefer more than one creditor. I'd suggest focusing on specific cards versus selecting based on creditor. A given creditor can offer a number of products that may or may not be relevant to you.

I asked about creditors mainly because American Express allegedly has such superior customer service. I don't know how true this is vs. the product of a successful marketing campaign and customer loyalty. I don't think this would be a big factor, but I've never had to go through the headache of disputing anything. It may be more important than I realize now.


I don't need CLIs for any practical purpose, but figured it would be worth it if it likely improved my score. It sounds like it would be better to not request anything though. Thanks again for the feedback from everyone. I appreciate it!
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

User avatar
Vattené
Centurion Member
Centurion Member
 
Posts: 1157
Joined: Sun Jan 26, 2014 3:55 am
Location: US

Postby Vattené » Sun Feb 02, 2014 7:13 am

Thanks everyone for your responses! I realize you can't predict exactly what will happen, but the information is helpful.

takeshi wrote:CK provides AAoOA, not AAoA. If you have closed accounts your AAoA may be longer.
Thanks for making this distinction, takeshi! I did not know that. CK even recommends not closing old, inactive accounts because doing so "will reduce the age of your credit and could harm your credit health." I guess this is true according to their model, but it still isn't harming the credit of their users in any way that matters.


takeshi wrote:It would help to know what your major spend categories are as well as all other need/wants/preferences that would help to narrow down the options. In general, you probably want to look into the maximum rewards for your major spend but there are other factors that some take into consideration (creditor, AF, benefits, redemption terms on rewards, preference for cash back or point/miles, etc).
I don't really get the opportunity to travel, so my preference is just cash back. My spending is mostly gas and groceries, but I do all of my grocery shopping at Aldi (which doesn't accept credit cards) and Walmart (which isn't considered a supermarket). There is the occasional department store or restaurant purchase, but I try to minimize eating out. This is why the Quicksilver card appealed to me - I would just get 1.5% back on everything. I also liked the BCE and Barclaycard Rewards for gas. The Discover it card had the biggest signup bonus I've seen ($150 after $750 in purchases within 3 months). It's probably not the best as far as rewards, but that $150 really sweetens the pot! I have considered applying for it and using it until I get the bonus, then applying for another card for everyday use.


takeshi wrote:There isn't just one creditor that everyone prefers. A given person may prefer more than one creditor. I'd suggest focusing on specific cards versus selecting based on creditor. A given creditor can offer a number of products that may or may not be relevant to you.
I was mainly asking about creditors because American Express is made out to be so superior. I would like to gauge if this is true or just the product of a very successful marketing campaign and customer loyalty. (The backdating may also turn out to be a great perk in the future.)


Thanks again for all of your replies :D
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

samhradh
Centurion Member
Centurion Member
 
Posts: 388
Joined: Thu Nov 21, 2013 1:13 pm
Location: United States

Postby samhradh » Sun Feb 02, 2014 8:05 am

I would go for a flat % back if your grocery shopping isn't done at grocery stores. Discover and AmEx have the least acceptance. It's better to start with a Visa or MC.
Citi Forward ($10.1K), AmEx Blue Cash Everyday ($30K), Chase Freedom ($12.4K), Discover it ($5.5K), Barclaycard Arrival ($12.5K), L.L. Bean Visa ($5K). FICO 806 (TU), 812 (EQ), 806 (EX).

User avatar
Vattené
Centurion Member
Centurion Member
 
Posts: 1157
Joined: Sun Jan 26, 2014 3:55 am
Location: US

Postby Vattené » Sun Feb 02, 2014 8:22 am

Thanks for the advice, samhradh. I hadn't thought about that too much. I've gotten those prescreened targeted junk mail for both the Discover it and AmEx BCE. Still pretty new to the credit card game (credit card solicitations are usually directly fed to the shredder), but I suppose this isn't necessarily a pre-approval and they can still turn you down after you apply?
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now



Return to “General Credit Card Talk”

Who is online

Users browsing this forum: No registered users and 0 guests