My situation (post college)

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capekid
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My situation (post college)

Postby capekid » Tue Dec 09, 2014 11:51 am

Hi,

Firstly, I joined today so hopefully I am posting in the correct location. I would like to talk about my situation and see what advice I can get from my peers here.

I am going to be 23 in 3 months. I graduate from college with my BS next week. I do not have any student loans but I do have a $11,000 loan for a car which began December 2014. I have the money to pay off the loan because I purchased a car after having an accident and receiving $15,000 from the person who hit me's insurance. I figured I might as a well start a loan or the first time. I won't go further into that, you get the idea.

When I was 18 I opened a Chase College savings account with my mother. I have a basic Chase Sapphire with this account and I have over $25,000 in savings. My income is between $50,000 and $65,000 a year (based on a performance bonus system).

The only card I have in my name and is on my own is the Amex Green card. I pay the full amount the day I get the bill, and usually pay into the next month.

I know I can take advantage of my college account for a few more years but I would like to get started on my credit history ASAP. I made the mistake of applying for a Sapphire Preferred in November and was rejected within 5 days. I had an 805 score on my report.

My plan was to do the following. Switch to one of the regular savings accounts and breakaway from my parents. Apply for a Chase Freedom and hopefully talk my way into the Sapphire Preferred.

With my job I travel a lot around the NY area. I have a few taxi and car service rides a day, Amtrak trips, even LIRR/MTA tickets ($295 monthly pass).

Because I am an only child, it was recommended by a few different people to stay on my parents' banking account or at least have one with them in the future.

So now I will hop down from the fantasies and see what great advice is out there.

Thanks,


popamode72
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Postby popamode72 » Tue Dec 09, 2014 3:36 pm

Did you try seeing if you're prequalified for anything on various websites?

Discover It might be a good revolving credit line for you start out with. They tend to really like new fresh and thin files like yours and tend to be really generous in that respect. Since you already have a relationship with Chase, I'd also try to recon that Sapphire Preferred app.
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Postby thekey » Wed Dec 10, 2014 10:59 am

Welcome to the board.

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Vattené
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Postby Vattené » Wed Dec 10, 2014 4:40 pm

Welcome! I am just a year older myself. I collected a few cards while in college to start building up a credit history, which got my credit score in the mid-700s by the time I graduated. It's nothing groundbreaking, but that will get you pretty much any card you want, and it even got me the lowest rate when I recently got my first car loan.

Do you see any major credit needs in your near future? If you aren't planning on taking out a mortgage within a couple of years, then you have much more freedom to build your credit profile. If this is the case, you can pretty much go for any account you want to (within reason) and start letting them age. Any inquiries you take in applying for credit will fall off your file after two years.



capekid wrote:I am going to be 23 in 3 months. I graduate from college with my BS next week. I do not have any student loans but I do have a $11,000 loan for a car which began December 2014. I have the money to pay off the loan because I purchased a car after having an accident and receiving $15,000 from the person who hit me's insurance. I figured I might as a well start a loan or the first time. I won't go further into that, you get the idea.

You have plenty of money to pay for it, so I recommend you consider paying off the loan in full. It's possible this isn't in your best interest - your money could be earning more in savings/investments, for example, or you could have a 0% APR on the loan - but that is an evaluation you will have to make yourself based on your priorities. Personally, I would want to get rid of the loan just to save myself from paying all the interest.

Credit card accounts will establish a credit history just fine. Technically, different types of debt are better for your FICO score than nothing but credit cards, but priorities come up again. I think saving those real dollars in interest is worth more than a FICO boost just from having a different type of loan on your history (I couldn't even tell you how much of a boost it would give you).



capekid wrote:When I was 18 I opened a Chase College savings account with my mother. I have a basic Chase Sapphire with this account and I have over $25,000 in savings. My income is between $50,000 and $65,000 a year (based on a performance bonus system).

The only card I have in my name and is on my own is the Amex Green card. I pay the full amount the day I get the bill, and usually pay into the next month.

I assume you mean the non-annual-fee credit card version of the Chase Sapphire Preferred (CSP)? If so, do you mean you are an authorized user on this account, with your mother as the primary? Perhaps you could PC this into the CSP down the road if it still interests you.

You say the Green card is the only account in your name, so the best thing you can do for your credit profile is get at least one more credit card account - so you are on the right track. For credit purposes, which card you go for doesn't really matter. Any way you go, you will establish a trade line and start building a history. The question just becomes finding a card that is best suited for you AND one for which you have good odds of approval.



capekid wrote:I know I can take advantage of my college account for a few more years but I would like to get started on my credit history ASAP. I made the mistake of applying for a Sapphire Preferred in November and was rejected within 5 days. I had an 805 score on my report.

Do you know if this was a FICO score? I am skeptical that a score of 805 for someone with such a thin history is a true FICO; I suspect it is a different model, in which case the number is basically meaningless.



capekid wrote:My plan was to do the following. Switch to one of the regular savings accounts and breakaway from my parents. Apply for a Chase Freedom and hopefully talk my way into the Sapphire Preferred.

The Freedom is a good option and your odds of approval would be much higher. Hopefully your relationship with Chase will help you get approved. Even if you just get something like $500, it can grow and more options will open up as your credit warrants them.



capekid wrote:Because I am an only child, it was recommended by a few different people to stay on my parents' banking account or at least have one with them in the future.

I have never hear this before. I am also an only child. Why do people recommend this?

Anyway, as I say you are on the right track. Establishing a history early on will pay off down the road. Have you ever gotten your free reports from annualcreditreport.com? Knowing what is on them is important. I would like to second the recommendation to consider Discover. They were my first prime card, but I did have a few years of history before applying. You should also just see if Amex offers any revolvers that look appealing to you (if they do, the fact that you're already a card member may improve your odds with them). Good luck!
-Vattené
FICO-8: EX - 827 (5/17) | TU - 824 (5/17)
My Cards: Barclay Arrival+ | Discover it | Amex ED
AU:: Discover Miles | BofA BBR | Barclay Commence (SD'd)

capekid
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Postby capekid » Wed Dec 10, 2014 8:57 pm

Thanks for the very specific and thoughtful advice, especially Vattené. My credit score was an 804 from Experian. From what I understand the best route now is.

-Separate my Savings/Checking from my mother
-Apply for the Chase Freedom
-Keep my Amex Green (is it worth upgrading to Gold, would it actually benefit me at all?)
-When I go to the back to separate my bank account I had planned to talk about the Sapphire Preferred, does being at the bank itself help at all?

ingramjuan
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Postby ingramjuan » Wed Dec 10, 2014 9:05 pm

I would have to say, what ever you decide to do now to build your credit will be better than doing nothing at all. I made the mistake of starting to apply for credit in my late 30's. I paid cash for everything due to my salary coming out of college. (Good & Bad Mistake) Surprise with a 805 credit score you were turned down??
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Capital One Platinum (2001) |Capital One QuickSilver World (2002) | Amex Gold Delta (2013) | Best Buy Visa (2013) |Discover It (2015) | Amex Platinum (2015)

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darkguy2
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Postby darkguy2 » Wed Dec 10, 2014 9:24 pm

I would try to go for the student Discover IT card while you are still technically a student. The first quarter for the IT includes ground transportation and you may be one of the few people that could actually take advantage of that and get 5% cash back.
Discover IT - $5,700
Chase Freedom - $5,700
Costco Citi - $13,000
Sallie Mae - $4,000
Chase Sapphire Preferred - $6,000
Chase Sapphire Reserve - $19,500
Citi Double Cash - $6,500
Amex BCE - $13,000

FICOs: Discover (777), SallieMae (764), Amex (767), Citi (772)
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Vattené
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Postby Vattené » Thu Dec 11, 2014 3:33 pm

You're welcome, and I think you've got a good game plan. Specifically...
capekid wrote:-Separate my Savings/Checking from my mother

I wouldn't say separating your checking account would be good for your credit per se, but it might be a good idea for other financial reasons. Getting a bank account in your name has absolutely no impact on your credit file, but getting one with Chase will establish your banking relationship with them on your own and may help you in getting a credit card from them. Bottom line: don't expect it to help your credit, but it could still be the best course of action.


capekid wrote:-Apply for the Chase Freedom

If the Freedom is what you want, it is a good card to go for. The requirements aren't as strict as the CSP. You have a thin profile, but assuming it's clean I would suspect your chances are good with the Freedom. If you were to get denied, however, you may have to try for an account with no rewards. At this point you may only be able to get a secured credit card or, as I prefer, a store account (which has similarly loose credit standards but requires no money to be tied up).


capekid wrote:-Keep my Amex Green (is it worth upgrading to Gold, would it actually benefit me at all?)

I would recommend keeping the Green. At your stage, you need to hold on to every account you have. (You don't mention when you got it, but if you feel it is totally worthless to you then you can always cancel before you next annual fee comes up.) All Amex charge cards have the same underwriting requirements, so the only way a Gold would benefit you is if you determine the perks outweigh the costs; otherwise, you're just throwing money away on a higher annual fee.


capekid wrote:-When I go to the back to separate my bank account I had planned to talk about the Sapphire Preferred, does being at the bank itself help at all?

It could help, but it is hard to say. I don't have any experience with this and I'm not a Chase customer, so perhaps others can be more helpful here. I think you should go for the Freedom first and let it build up some history before going for a CSP (it is their top-tier consumer card, after all). Your points on the Freedom can be added to a CSP down the road and used just like the CSP rewards. I think you should go to a brick and mortar bank if it's easy enough for you to because it could help if you are on the fence approval-wise. Being in a banker's office could let you state your case (similar to calling the recon line for online applications). Like having a bank account with them before applying, it might help you if you are on the fence, but don't expect it to turn a hard "no" into a yes just because that's the route you took.

The thing that best helps your credit score is time, so being proactive about it now is definitely the way to go!
-Vattené
FICO-8: EX - 827 (5/17) | TU - 824 (5/17)
My Cards: Barclay Arrival+ | Discover it | Amex ED
AU:: Discover Miles | BofA BBR | Barclay Commence (SD'd)

capekid
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Postby capekid » Wed Feb 04, 2015 9:18 pm

Just an update.

In early January I got the Freedom Card. I went to the bank, switched my checking account to a regular one, off of the college checking. They said they were surprised I got rejected for the CSP. They said that I should call up the reconsideration line in March (a month before I take a trip out of the country). I would tell them I need an Intl card and I'll already have some action from the Freedom Card. I already am getting my $100 check from the sign up bonus!

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Vattené
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Postby Vattené » Thu Feb 12, 2015 4:36 pm

Great news, glad you were able to get your foot in the door. If you decide the CSP is a good fit for you, it can be a good complement to the Freedom as they both accrue UR.
-Vattené
FICO-8: EX - 827 (5/17) | TU - 824 (5/17)
My Cards: Barclay Arrival+ | Discover it | Amex ED
AU:: Discover Miles | BofA BBR | Barclay Commence (SD'd)



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