Some Questions for Starting Out

For just about anything you want to get off your chest about credit cards.
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darkguy2
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Some Questions for Starting Out

Postby darkguy2 » Sat Jan 26, 2013 12:22 am

Well I have tried to look for a good starter FAQ on this forum but could not find one. So I guess I will ask some questions. If these have been asked before then I apologize.

  • What basic steps should be taken for someone who just got their fist CC to improve their credit?
  • I am planing on purchasing a Surface Pro when it comes out next month on the card and that will take up 66% of the credit. I have 0% for 6 months. How should I pay it off?
  • When is a good time period from getting your first card to asking for a CLI or looking to get a new card? 1 year or more?
Discover IT for Students - $3,200
Chase Freedom - $5,700
Costco TrueEarnings Amex - $5,700
Sallie Mae - $4,000
Chase Sapphire Preferred - $6,000
Citi Double Cash - $3,300

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Snowman
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Postby Snowman » Sat Jan 26, 2013 12:57 am

Darkguy2-

1.) Never use more then 30% of your given CL at any time. If you are going to let a balance report, make sure it is 10% or less It is ideal to creditors. To maximize your FICO scores, let one balance report with the others paid off and it will help your chances since creditors want to see you actually using their card, and then quickly pay it off. NEVER, EVER, BE LATE, or that late payment will haunt you for a few years and it won't look good when applying for any other form of credit, and it drops your scores quite a bit until it finally ages off. Don't go overboard and spend, spend, spend. Don't apply for cards that you have no chance of being approved for (like if you are a student, don't apply for the CSP or the BCE until 6-12 months have passed, and income plays a big factor, but as long as your report is clean and your utilizations and inquires are low, your chances of being approved for a certain card are better.). Keep your inquires to a minimum, because creditors will deny you because they think you are going desperate for credit and are less likely to pay them back because of all the accounts you can have. When you apply for cards, try to do them at the same time so your inquires will age off at the same time, and each inquiry is their for at least 2 years after that it is aged off your CR's, but your creditors can view them until they are aged off.
2.) I wont answer this one is because it solely depends on your situation and income.
3.) I personally waited about 6 months and viewed my FICO scores before apping and was instantly approved for all my cards except for the Chase Freedom (I'm trying again in June so hopefully I will get it the second time around.) Leave a small balance and let it report (under 10%) and you should be able to approved if everything looks okay on your reports. Some people wait a year, some wait 6 months. It just depends on how patient you are and your financial goals.

Good luck!
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Bank Of America: BankAmeriCard Cash Rewards-4/25/12-1,000$ (CLI Increase on 6/15/13)
Citi: Forward-10/27/12-3,000$ (SP CLI 2/8/14)
Discover: More. 10/27/12-2,000 (Auto CLI 5/31/14)
Amex: PRG.- 11/24/12 (Closed 12/13/13) Amex BCE.2k-12/7/13. Amex SPG-4k.-12/8/13
Chase: Freedom-2,400-5/1/13. Southwest Rapid Rewards Plus- 3,600- 6/15/13.
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Sevenfeet
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Postby Sevenfeet » Sat Jan 26, 2013 7:21 am

While I agree with Snowman that generally not using more than 30% of your credit limit is good policy, I don't consider it an absolute. Your credit score is a snapshot in time based on multiple factors. So let's say if you bought your tablet (a Surface Pro? Really?) and your ratio was 66%. Then after paying it down for 6 months and 0% interest it was down to 20%, the your score (to my understanding) would reflect the situation here and now, not six months ago.

That being said, the most important lesson by far is to keep your bills paid on time without fail. Just one 30 day payment delinquency takes 2 years to age off of serious consideration if you examine what's in your credit report. Having something like that drops your score like a stone. I've gone long periods of time with high, near limit ratios but still had scores over 720 because my report was clean of delinquencies and I have a long credit history that also works in my favor.

Also, paying interest is bad long term. I would try to pay down your tablet purchase within your six month window of 0% if at all possible.

The wisdom around here is that credit limit increases can only be asked for in 6 month intervals. So after your introductory period is over and hopefully you've paid down your tablet (a Surface Pro...REALLY???), you can ask for an increase then.
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Chase Freedom Visa ($25K)
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MemberSince99
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Postby MemberSince99 » Sat Jan 26, 2013 8:23 am

Hummmm if you can NEVER use more than 30% of your credit line at one time, on a Cap One 300 dollar starter card, you might be able to fill your tank, if you're lucky.

I say, use it, just make sure you pay it down before it reports if you want the best score. But don't be afraid to use it so long as you're living within your means.

I'm honestly not a fan of carrying a balance even at 0% you could lose your job, have unexpected bills, etc. It's asking for trouble. Maybe you get lucky and nothing happens, but they bank (literally) on you NOT paying it within that time and then you get hit with penalty interest from day one on it. That can be a lot of money. They are gambling that something you won't pay it off first, while you are gambling that you will. I don't like to gamble period.

FutureBillionaire
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Postby FutureBillionaire » Sat Jan 26, 2013 10:25 am

If you want to get new credit and get credit limit increases, I would keep utilization low. You want to show that you use credit, but not that you need it. I would wait 6 months in many cases for new credit if you are just starting out. Another way to improve your credit is to take out a secured loan and pay for it at least for 6 months. I did this at a credit union and it helped boost my credit score and my relationship with the bank. This allowed me to get more credit from them quicker than I would have otherwise.
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Fartanywherecard
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Postby Fartanywherecard » Sat Jan 26, 2013 11:13 am

I read part of a CreditKarma article that said credit bureaus don't take the utilization rate as seriously when you have low credit lines. Seems sensible, as I imagine it's much riskier to be using $8k of a 10k credit line than $400 of a $500 line.

darkguy2
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Postby darkguy2 » Sat Jan 26, 2013 11:16 am

Also, paying interest is bad long term. I would try to pay down your tablet purchase within your six month window of 0% if at all possible.

The wisdom around here is that credit limit increases can only be asked for in 6 month intervals. So after your introductory period is over and hopefully you've paid down your tablet (a Surface Pro...REALLY???), you can ask for an increase then.


Paying it off is not a problem. I already have all the cash needed to pay for it but I want to use the purchase to get the 1% back.

As for why I am getting the Pro. Rest assured I have reasons for this choice. I am a third year engineering student and will be working for an engineering firm as a CO-OP and will need a ultraportable PC and not some watered down RT version or iOS. I currently have a 9 lb desktop replacement laptop and that is not very practical in classes or carrying around. I need the PC to have some power to it as I will be doing Java development on it along with MATLAB and other applications that benefit from the capabilities of the Pro. I am paying for the portability.

Never use more then 30% of your given CL at any time. If you are going to let a balance report, make sure it is 10% or less It is ideal to creditors. To maximize your FICO scores, let one balance report with the others paid off and it will help your chances since creditors want to see you actually using their card, and then quickly pay it off.


Sorry for not understanding but the time that my balance is reported and the time it is due is not the same? So I can pay all but 10% off each month and then let it report and after it does pay the rest off before it is due?
Discover IT for Students - $3,200
Chase Freedom - $5,700
Costco TrueEarnings Amex - $5,700
Sallie Mae - $4,000
Chase Sapphire Preferred - $6,000
Citi Double Cash - $3,300

FICOs: Discover (735), SallieMae (735), EX (752)
FAKOs: CK- TU (762), EQ (750)


Robrus1
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Postby Robrus1 » Sat Jan 26, 2013 11:25 am

darkguy2 wrote:Paying it off is not a problem. I already have all the cash needed to pay for it but I want to use the purchase to get the 1% back.

As for why I am getting the Pro. Rest assured I have reasons for this choice. I am a third year engineering student and will be working for an engineering firm as a CO-OP and will need a ultraportable PC and not some watered down RT version or iOS. I currently have a 9 lb desktop replacement laptop and that is not very practical in classes or carrying around. I need the PC to have some power to it as I will be doing Java development on it along with MATLAB and other applications that benefit from the capabilities of the Pro. I am paying for the portability.



Sorry for not understanding but the time that my balance is reported and the time it is due is not the same? So I can pay all but 10% off each month and then let it report and after it does pay the rest off before it is due?


Say your statement comes out on the 14th or 15th of each month. Pay your balance a couple days before the date your statement will be printed. This way, the snapshot of your balance on the 15th when the statment is generated will be low, and that balance is what will be reported to the credit bureaus. It will show you don't owe much money, if any, and are using credit responsibly. The balance is reported when the statement is generated, so pay it a 2 or 3 business days before it will come out.
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Credit Union 10K
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Sevenfeet
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Postby Sevenfeet » Sat Jan 26, 2013 1:30 pm

darkguy2 wrote:Paying it off is not a problem. I already have all the cash needed to pay for it but I want to use the purchase to get the 1% back.


In that case, enjoy your tablet. :)

darkguy2 wrote:As for why I am getting the Pro. Rest assured I have reasons for this choice. I am a third year engineering student and will be working for an engineering firm as a CO-OP and will need a ultraportable PC and not some watered down RT version or iOS. I currently have a 9 lb desktop replacement laptop and that is not very practical in classes or carrying around. I need the PC to have some power to it as I will be doing Java development on it along with MATLAB and other applications that benefit from the capabilities of the Pro. I am paying for the portability.


I'm just messing with you. :) My house is mostly Apple stuff (Macs, iPads, etc) but I still use Windows for work. I will warn you that my wife did get a Windows 8 laptop for work and it was so frustrating that it's going to be downgraded back to Win7. That being said, I think Win8 will make a lot more sense in tablet form than just a stock pseudo-ultrabook. I am a little concerned that a first-gen Surface Pro isn't going to cut it concerning power and performance. Intel Core technology doesn't have a good reputation in this form factor for battery life. And specs I saw months ago had the first Surface Pros with a screen resolution that is blown away by just about everything at half the price (or less). I'm hoping Microsoft fixes this soon (if not by launch). I know you need a proper PC, but I'm wondering if you'd be better served with something in the Ultrabook/MacBook Air class.

And speaking my wife, she completed an engineering-based PhD last spring, so I am quite familiar of having to get MatLab up and running on a laptop, in this case, my wife's MacBook Pro.

Lastly, with all due respect to the others on this forum (since I'm new), I think a little too much energy is spent trying to game the system. Now a lot of people like the game and that's fine. But most of us just don't have the time or energy to worry about whether we've paid off the balance before a date before the credit agencies get reporting. As long as you are paying on time and do it consistently forever, your credit will continue to do well.
Cards:

American Express Platinum (NPSL)

Penfed Platinum Reward Visa ($28K)

Chase Freedom Visa ($25K)

Fidelity American Express ($20K)

American Express Blue Cash Preferred ($20K)

Bank of America Cash Rewards MasterCard ($20K)

Citi Thank You Preferred Visa ($9.5K)

Chase Sapphire Preferred ($7.5K)

US Bank Cash + Visa Signature ($7K)

Discover IT ($4K)

Robrus1
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Postby Robrus1 » Sat Jan 26, 2013 1:56 pm

Sevenfeet wrote:Lastly, with all due respect to the others on this forum (since I'm new), I think a little too much energy is spent trying to game the system. Now a lot of people like the game and that's fine. But most of us just don't have the time or energy to worry about whether we've paid off the balance before a date before the credit agencies get reporting. As long as you are paying on time and do it consistently forever, your credit will continue to do well.


He was asking for tips on how to IMPROVE his score since he is NEW to credit. These tips will help his score go up quicker than having high utilization. This isn't something people with high credit lines and excellent credit need to worry about as much, true. He isn't there yet, so he should find the time and energy it takes (which isn't much) to pay the balance off before the statement reports if he wants to boost his scores as quickly as possible. I don't think offering a few tips on how to raise a credit score translates to, "too much energy trying to game the system."
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Credit Union 10K
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