Got My First Card: Tips on Where to Go from Here

[Goosey]

Name of Card:
Issuer:
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Remarks: I just got approved for my first student card from BoA. I'm an international student that just got his SSN so I had huge problems getting anyone to approve me. Anyhow, a few questions:

1) Should I get another card, possibly WAMU's secured card to help me build my credit?

2) I heard I should charge less than 35% of the credit card limit for optimal credit building. Is this true? Or should I go with an even lower amount than that? Charging my cable and utilities put me close to that limit.

3) Is it a good idea to open up a store card such as Banana Republic's sometime soon?

I charge quite a bit a month on my debit card. Having cash to pay for everything isn't the issue, but rather I don't want to damage my credit by charging too much on a card.

[LustfortheMoment]

Congratulations!!!!!!!!! I'd focus upon building your credit record with this card rather than seeking more at this time. Store cards are given out like water and don't really enhance your credit record.

1st rule..........PAY IN FULL EACH MONTH.

2nd rule........DON'T FORGET 1st rule

If your credit limit is low at this time, you can always submit several payments per month to restore it in full. For example, when several hundred in purchases shows up in your on-line account, you can pay off the balance before waiting for your statement. Some cards only allow you to submit a payment every 5 days. In that way, you can charge much more on the card than your limit would otherwise allow.

[Alaskan Assassin]

Also build A Years history with boa and ask for a CLIncrease and asked to be upgraded if you want, BOA is a really good bank you might be able to ask in a few months for an increase I wouldnt waste to much money on secured cards.

Congrats on a awsome start

[Alaskan Assassin]

I dont think one store card will hurt pick one that you shop at the most

[Goosey]

Thanks guys! I'm pretty excited about getting my first card. It's been a trying process.

My card limit is $2500. Is there an "optimum" amount I should charge on my card each month or not exceed a certain amount? As mentioned, my monthly TV/phone/utilities bill is relatively substantial. If I charge food and everything on this card, I can easily approach $1500-2000 a month. I most likely won't max out the card given my usual expenses, but I'm guessing coming close to my CL is not a good idea?

Also, does anyone know how long it would take for BoA to approve me for another one of their cards?

I'm thinking it would be a good idea to have another credit line open and build my credit from there sooner rather than later?

[Alaskan Assassin]

theirs a good chance you can get a 2nd card from them soon I applyed for 2 at the same time and got them

Dont go over 50% the lower the better the more cards the better

[Alaskan Assassin]

oh and i just asked 5 mins ago for a CLI and got it instant 3k more, not too bad

[protokurios]

Some people will say stay under 60%, 50%, or even 30%, but the latter is more for people who want the highest credit score so they'll look good to future lenders. If you've had trouble already in getting this first credit card, future applications for other cards may be rejected, and you'll just hurt your credit score because of the inquiries. I think the best plan is to stick with the BoA card and follow Lust's advice for "stretching" your credit limit. You've got the cash, so making multiple payments per month before the statement cuts would be easy. You can max out your credit card all you want as long as you pay some or all of it down before you get your billing statement, because your credit report only has the statement amount. Just be vigilant and don't go over your CL.

[Goosey]

Since I have pretty much no credit since I just started, will another rejection really do me that much harm? I am hoping to add a card with better rewards than the BoA card. Is it a bad idea for me to try getting the CITI Dividend card at this point? Any ideas on my chances of getting one?

[Alaskan Assassin]

you have a better chance at getting anouther BOA card then a Citi card

[mantras]

Congrats on your BOA card. I'd look into one store card to a place you enjoy the most and help build on your new credit history. Then just focus on paying them on time and ask for credit increases every 6 months or so on them.
In a year you'll probably be ready for another regular card or more.

And like Lust said you can always pay down your card as you go to keep utilization low. BOA is a great way to start as they are mostly good in service, credit increases and conversions.

[diesel]

Try for BOA BUT most importantly!! Take care of this card pay on time every single month no matter what , if they have an auto draft for the min due, set that up, always protect and take care of this card.

[Lance90]

I've found over time that my credit score benefits the most from having utilization of under 10%. It's not a huge difference, but it helps a bit.

If you're new to credit cards and want to build a good score, my advice is only to charge sums that you are biblically certain that you can pay in full at the end of the month.

Believe it or not, if you pay in full every month before the statement date, it can slightly (only slightly) reduce your score. This is because your bank will report a zero balance every month, and to the credit scoring agencies it will look like you are not using your card. (This is from two Experian reports I have received.)

My advice: don't go hog wild charging stuff unless you have an emergency cash supply, and pay in full after you have received your statement.

[Goosey]

This whole credit business just doesn't make much sense to me. Use under 10% of CL for better credit score? Paying early can lower credit score? I'm guessing I should probably just charge groceries on it then since that will pretty much ensure my utilization won't ever get too high.

[Alaskan Assassin]

Goosey:::

I agree with you!

[gotalkmoney]

Congrats on getting approved.

The first thing you should worry about is self-discipline. Always remember to pay your balance off in full and don't go over your head. If you follow these steps, your credit score will be fine

Good luck!!

[NightStar]

You don't want to carry a balance over 30% of the utilization. If you carry too high of a balance a creditor may do an account review and decide to increase your interest rate if you carry too high of a balance.

[PoorImpluseControl]

I have a few different opinions.

The way to use credit cards without getting into trouble is to never charge more than you can reasonably expect to pay off, in full, in any given month. Utilization doesn't really matter that much unless you're planning a significant credit event (mortgage) in the short run.

Rule one: If you use 60%, or even 85% of your limit and consistently pay on time and in full every month, you'll establish a wonderful credit record.

Rule two: If you don't have the cash, you shouldn't make the purchase. If you do have the cash, use the card and put the cash in the bank. Now you're earning interest on money you've already spent!

Don't go off and buy that 65 inch hi-definition tv with all the latest whistles & bells just because you have the room on the card. Now you start to pay only a portion of your statement balance and you're into renting money. See rule two.

What Ira said and has been said before in this thread. Pay in full each month. If you can't pay it all, don't buy it. Never pay late, that will trash your credit score for at least a year and lower it some for years after.

The percent utilization doesn't matter except when you are ready to apply for more credit: another card, car loan, home loan, etc. Each month the card issuer reports the balance you have on the statment closing date to the three credit bureaus. So if you want a higher score just pay down the card just before the closing date.

1) Should I get another card, possibly WAMU's secured card to help me build my credit?

2) I heard I should charge less than 35% of the credit card limit for optimal credit building. Is this true? Or should I go with an even lower amount than that? Charging my cable and utilities put me close to that limit.

3) Is it a good idea to open up a store card such as Banana Republic's sometime soon?

1) No, secured cards look bad on a credit report.
2) No, its not true. Just use as you see fit, your credit will "build" by simply aging (having older open credit accounts).
3) A store card might help a little, but its probably not enough to bother with.

[PoorImpluseControl]

Believe it or not, if you pay in full every month before the statement date, it can slightly (only slightly) reduce your score. This is because your bank will report a zero balance every month, and to the credit scoring agencies it will look like you are not using your card. (This is from two Experian reports I have received.)

Probably not, CRAs only have the last reported balance, not a history of balances reported, so your FICO score cannot be based on a histroy of usage only the current snap shot.

This http://www.fatwallet.com/forums/message ... did=634740 will tell you everything you need to know about keeping a high FICO score.

[Lance90]

I guess reports and comments can vary. On my last couple of credit reports (over a year old), the fact that I "wasn't" using one of my cards was stated as a reason why my credit score (over 780) was slightly reduced - because I had been paying in full prior to the statement date, and it looked like my card was never being used.

The CRA admitted that using the card a little bit would only show a small increase in my score, but that was the main reason my score wasn't higher.

[Goosey]

Hi guys. Let me get this straight. If I pay on-time and in full every month... on a $2500CL card... will I get a better score charging say $1500 a month on the card or $300? Or would it make no difference whatsoever?

[PoorImpluseControl]

Hi guys. Let me get this straight. If I pay on-time and in full every month... on a $2500CL card... will I get a better score charging say $1500 a month on the card or $300? Or would it make no difference whatsoever?

The ammount you charge does not matter...but I think you've have a hard time charing $1500 on a $300 card.

[protokurios]

Hi guys. Let me get this straight. If I pay on-time and in full every month... on a $2500CL card... will I get a better score charging say $1500 a month on the card or $300? Or would it make no difference whatsoever?

The ammount you charge does not matter...but I think you've have a hard time charing $1500 on a $300 card.

Except he has a $2500 card.

[Polonius]

Yes, the SCORE will decrease if you charge $1500 on a $2500 card; the SCORE will increase if that drops to $300 on a $2500 card. The score depends on the "snapshot" of your credit when the score is made, and the balances on your accounts at the statement date (or whenever reported) are what's at issue in this question. Your overall utilization of all your credit factors in, and your utilization of each individual card factors in.

Even if you pay in full each month, your credit score will take a hit if you appear to be maxed out at statement time.

But if you're able to pay in full and you need a higher credit score because you're applying for new credit, all you have to do is pay off all or most of your credit card debt and wait for those lower utilization figures to report before you apply for that new credit. You can even pay off the balances BEFORE the statement is cut. Some banks report balances weekly now, by the way, or whenever there's a large percentage of your available credit used on a card...

[PoorImpluseControl]

Hi guys. Let me get this straight. If I pay on-time and in full every month... on a $2500CL card... will I get a better score charging say $1500 a month on the card or $300? Or would it make no difference whatsoever?

The ammount you charge does not matter...but I think you've have a hard time charing $1500 on a $300 card.

Except he has a $2500 card.

Doh. That's what I get for answering questions without my glasses on.

[PoorImpluseControl]

Some banks report balances weekly now, by the way, or whenever there's a large percentage of your available credit used on a card...

Who's reporting weekly?

[Goosey]

Sorry if I'm reshashing since I'm new to this and still very confused. So if I'm not applying for new credit, is it a good up to have high utilization while paying in full and on time every month? Will this sort of "prove" that I can pay in full a substantial amount of money (relative to my CL) on time every month? Will this help me raise my CL since logically speaking, I would have proven myself capable of paying off the amount I charge on the card?

[Polonius]

Who's reporting weekly?

Whenever I use a Cap1 purchase check, it seems to appear within a few days on my credit reports, regardless of the statement closing date. Since I usually write one for about 90% of my credit limit, I can't tell whether it's the high usage or a more frequent reporting schedule for Cap1 that is behind it.

Can anyone confirm?

I assume if Cap1 is doing that, some other banks are also. I could be wrong about that!

[Ri]

Your credit score is not as complex as you are describing it there. It is a simple formula that a computer runs which derives your credit score. The computer does not take into consideration things like, "Well this chap is certainly keeping his head above water paying in full every month this huge balance, let us give him a couple bonus points for that" the computer does not even know this. You are looking into it way too much.

[Verne]

I agree with Ira that the score will take care of itself. Don't be late, keep your utilization within reason, and check your credit report (not score)periodically.

Unless you need a loan or mortgage, the score is nothing to obsess about. But the credit report is another matter. Make sure it is free of errors and check periodically to prevent ID theft.

There are a few quick fixes for the score (by that, I mean 2-3 months) but otherwise, watching your scores on a daily basis won't make the paint dry any faster, the lawn greener, or your scores higher.

When I checked my scores daily, I saw my FICO score drop from about 710 to 680 after I lowered my debt from $33,000 to $25,000 - a year long process. The score is complicated and we slip in and out of different scoring models. Your overall credit picture may improve but you're suddenly at the bottom of a new scoring model. In spite of all your efforts your score may drop. Don't worry about it. It will right itself over the long run.

What Ira says.

Verne

[PlasticRewards]

Goosey,

Everyone has their opinions on what your credit utilization should be. I say - forget about it! Right now you are focused on building a credit history; a major component of your score. If you plan on paying off your card every month, then go ahead and charge all you want on it. In the future when you will be applying for new credit is when you should be concerned about your credit utilization, probably 2 to 3 months beforehand. This will give the credit bureaus more than ample time to update the lower balance on your credit card.

Another critical thing is to have 2 or 3 credit accounts, probably one credit card and one installment loan would be perfect. Take advantage of your relationship with Bank of America to see if they will lend you money for a computer or other small purchase you need. Don't borrow too much because your monthly payments could affect your debt-to-income ratio in the future. Also, try to have these accounts for at least 24 months; criteria many mortgage lenders use.

Forget about the hassle of worrying about your credit card utilization until the time is necessary and utilize credit that can help you establish credit in several ways.

[MJCJ]

Whatever you do, do not pay late

[alohaoleon]

Whatever you do, do not pay late

That's the best advice possible...also, try to never pay less than 2X min pay

[harley55]

Remember, credit cards are not toys. Never spend more on them than you have cash to pay them off now. Only use them if you can PIF every month. Be just as frugal with your card as you would be with your last dollar. Start slow, set a small allowance for the first month and PIF. Slowly increase to your comfort level. I also suggest that you keep an emergency fund.

[finvix]

here are some simple rules to follow:
1. initially pay the complete balance or full amount for 2-3 months.
2. don't be over enthusiastic in paying your bills before you receive them, like checking the amount and paying before the bill reaches you. this doesn't harm but never helps you.
3. after 2-3 months pay a little more than minimum amount this will help you in good credit ranking
4. always pay before the last due date
5. use the card more often

this will help you in getting good credit ranking
vix

[John D]

Capital One would be a good card to get next.

[ghanshyam]

Hi,
I am Ghanshyam,
_______________
I want to tell you about your student card that you needn't to worry about it because if you lost your card ,the card administration will give you his copy or card but for it you must tell its reason.
thank you.
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