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Credit Card Question

post #1 of 41
1/5/11 at 5:11am
Thread Starter 
I am just starting to build credit with my first credit card and have two questions.

  1. I know that I am only suppose to use about %20 or less of my credit limit, however to build the MOST credit, should I be making A) total payments B) minimum payments or C) Most of the bill leaving a little bit behind?

  2. Secondly, what is a good amount of cards to have? I currently have a capital one, am thinking about getting a discover for the %5 cashback and a good mileage reward card as soon I see one pop up and build credit for it.

Thanks!
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post #2 of 41
1/5/11 at 5:28am
Quote:
Originally Posted by af1snaikboi View Post
I am just starting to build credit with my first credit card and have two questions.

  1. I know that I am only suppose to use about %20 or less of my credit limit, however to build the MOST credit, should I be making A) total payments B) minimum payments or C) Most of the bill leaving a little bit behind?

  2. Secondly, what is a good amount of cards to have? I currently have a capital one, am thinking about getting a discover for the %5 cashback and a good mileage reward card as soon I see one pop up and build credit for it.

Thanks!

pay off everything every month is what i understand. dunno about optimal number of credit cards, but i think if you can't do the 6500 a year for the blue cash amex, the fidelity amex is also a good choice (imo underrated). but i think your plan is pretty good. 5% rotating cashback is a pretty good deal.

this is a good travel card

http://www.plasticiq.com/blog/discov...t-card-review/

good luck with everything
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post #3 of 41
1/5/11 at 1:21pm
Quote:
Originally Posted by af1snaikboi View Post
I am just starting to build credit with my first credit card and have two questions.

  1. I know that I am only suppose to use about %20 or less of my credit limit, however to build the MOST credit, should I be making A) total payments B) minimum payments or C) Most of the bill leaving a little bit behind?

  2. Secondly, what is a good amount of cards to have? I currently have a capital one, am thinking about getting a discover for the %5 cashback and a good mileage reward card as soon I see one pop up and build credit for it.

Thanks!

pay off in full every month. you dont want any credit card debt.

chase freedom is like the discover card too. rotating 5% categories
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post #4 of 41
1/5/11 at 1:28pm
I agree with paying it off in full every month. There's no use in you getting charged interest if you can afford to pay it off. I also don't subscribe to the theory of trying to use roughly 20% (or any specific percentage) of your limit every month (if you were my wife with one of her cards with a massive limit you would have to buy a small car each month or something). Use what you are comfortable using each month as long as you can pay it off. It's my understanding that the #1 greatest factor in improving your credit score is time and a clean payment history and that it's much more important than how much you use every cycle.
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post #5 of 41
1/5/11 at 1:33pm
check out creditkarma.com

You can get updated credit reports and they have suggestions by category on what you can do to improve.

What is even more interesting is that they have a tool that lets you test ideas for the future. It takes your current credit information and lets you calculate the effect of future events. Lets say you miss a payment or want to take out a loan or open a second credit card--it will estimate the effect on your score.

One that was pretty jarring to me (I didn't have much credit history at the time) was how far my credit score would drop if I canceled my oldest credit card. I wanted to switch to a card with rewards since the card I got my freshman year didn't do anything BUT after looking at this site, it made much more sense to keep my card open and just get a second card (I still use the old card where AMEX is not accepted).

Because the age of the oldest credit line is a big factor in your score, I would suggest keeping around something that isn't ever going to have an annual fee (mine doesn't as long as you use it once a year) so that even if you stop using it very much, you won't take a credit hit.
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post #6 of 41
1/5/11 at 2:36pm
It's not just the number of cards, but your total mix of credit, of which cards are one aspect.

As far as cards, Capital One sucks in general. Check out Penfed's cash back rewards visa (www.penfed.org), which is a pretty damn good card. Consider a revolving (charge) account like a classic Amex (though this may be tough with a limited credit history) and perhaps a retail store card.
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post #7 of 41
1/5/11 at 2:56pm
Visit myfico.com and other website like it ... read what they have to say.

I pay off all credit card debt monthly ... and my score is quite decent.
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post #8 of 41
1/5/11 at 3:29pm
Definitely pay in full every month. No sense being charged interest if you can avoid it. BUt if you have to float a balance keep it under 10 to 20% or your credit limit. There are a lot of factors that go into your FICO score, but 35% of it is your utilization so carrying over that 20% will result in negative impact to your score.
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post #9 of 41
1/6/11 at 6:16am
Thread Starter 
So considering that capital one sucks, would it hurt to cancel it so soon? I've only had it for a month. My father can co-sign the AMEX so I'm fairly sure I would qualify for that until I can qualify for another. Also: When I first started looking for cards I applied to 3-4 an got denied before I got the capital one because of lack of credit.Is my score hurt significantly for the moment?
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post #10 of 41
1/6/11 at 10:36am
Quote:
Originally Posted by af1snaikboi View Post
So considering that capital one sucks, would it hurt to cancel it so soon? I've only had it for a month.

If there is no annual fee, I would not cancel it. I would just use it sparingly. If there is an annual fee, you can sometimes call up once it's due and ask them to remove it for the year - it never hurts to ask and as long as you have a good payment history, they will probably be more willing to remove it.
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post #11 of 41
1/6/11 at 11:37am
Quote:
Originally Posted by af1snaikboi View Post
So considering that capital one sucks, would it hurt to cancel it so soon? I've only had it for a month.

My father can co-sign the AMEX so I'm fairly sure I would qualify for that until I can qualify for another.

Also:
When I first started looking for cards I applied to 3-4 an got denied before I got the capital one because of lack of credit.Is my score hurt significantly for the moment?

If you have just applied to 3-4 then don't apply for anything else. Too many inquiries in a short time period. If the Cap1 doesn't have an annual fee, then there is no reason to close it, just don't carry a balance.
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post #12 of 41
1/6/11 at 11:45am
Quote:
Originally Posted by JohnGalt View Post
If you have just applied to 3-4 then don't apply for anything else. Too many inquiries in a short time period. If the Cap1 doesn't have an annual fee, then there is no reason to close it, just don't carry a balance.

Take it slow...you have time

You don't need your dad to sign for a card, just use the one you've got until you have better credit.
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post #13 of 41
1/6/11 at 11:53am
good luck getting the discover 5% back as one of your first cards...it's almost impossible to get unless you have a long, well established credit history

i think discover is the most strict about approving people for new accounts.
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post #14 of 41
1/6/11 at 1:56pm
On the subject of CC's, I have a couple of older CC's that I don't ever look at (I haven't even signed the new card after it expired). Should I just cancel?
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post #15 of 41
1/6/11 at 2:08pm
Quote:
Originally Posted by deadly7 View Post
On the subject of CC's, I have a couple of older CC's that I don't ever look at (I haven't even signed the new card after it expired). Should I just cancel?

unless a card has an annual fee there is no reason to cancel it.
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