Credit Cards
 

Ok, my credit score report said my score would improve by opening another credit card account or two. Currently I have three BofA cards (two Visas, one Mastercard), a GM Card, and a Home Depot card.

I'm debating between an AmEx and a Discover card. I know for sure I do NOT want a Capitol One.

I pay off all of my cards every month, so I'm not really worried about interest rates. I'm also not going to get a card with an annual fee.

Suggestions? Experiences?


There was a thread on this, but it was 7 years old, so not very helpful.

I'd figure out something you'd use a lot and get a rewards card that gives you points toward that. My Lowe's Visa was awesomeness when I re-did the bathroom because I used it to pay for everything, paid it off right away (because I had the cash) and got a ton of money in rewards, which were like using gift cards to buy the last minute things for the bathroom. Saved me about $80.00 total. Since you're getting ready to move away from family, an airlines rewards Visa could be an idea.

I'm a huge fan of American Express. I got my first card when I was in college (tiny limit) in part because my parents recommended it.

12 years later, I still have that card, but I also have a Charge Card (where you're required to pay in full each month). I have it set up for Rewards, where virtually everything you buy gives you rewards and, for things like mobile phones, you get double points. I use the rewards points towards my Delta SkyMiles.

The level of consumer protection is fantastic; also, I've been stranded in travel and been able to have AmEx travel services rebook my flights instead of staying on the phone with Delta.

Not all AmEx cards have an annual fee, but the one I mentioned (Green, Gold, or Platinum) do. My friends who have CostCo AmEx cards are also really happy with the rewards.

My classmate has a credit card that her family uses to pay tuition. Since they have the cash, they pay it off right away and use the points to get free plane tickets multiple times a year. She just got back into town yesterday--she flew home for the weekend just because the ticket was there and she could.

Seriously? During my time in banking, we advised against this.

The report that explained my score gave me low marks in length of credit history and number of credit accounts. I got excellent marks for diversity of credit, available credit and timely payments. :)

I have both a AmEx and Discover Card and from my experience AmEx is way better BUT it doesn't sound right that opening a new credit card will boost your FICO score. Once you get apply for a new card your credit score is actually going to take a 30-50 pt hit that will take anywhere from 3-9 months to recover from so if you are looking to improve your FICO score because you want to get a mortgage or new car DO NOT apply for any credit. The only thing I can think of is that they are suggesting that having more available credit will improve your score but if that is the case, you are better off calling your current cards and asking them to raise your credit limit

Opening a new account would not increase your length of credit history, though. Was this report through one of the Big 3/FICO/someone else (I'm being nosey lol)?

Quote:

Originally Posted by PiKA2001 (Post 2147927) I have both a AmEx and Discover Card and from my experience AmEx is way better BUT it doesn't sound right that opening a new credit card will boost your FICO score. Once you get apply for a new card your credit score is actually going to take a 30-50 pt hit that will take anywhere from 3-9 months to recover from so if you are looking to improve your FICO score because you want to get a mortgage or new car DO NOT apply for any credit. The only thing I can think of is that they are suggesting that having more available credit will improve your score but if that is the case, you are better off calling your current cards and asking them to raise your credit limit

This is what I've always been told as well.

I was just approved for a re-fi on my house and should close within a week or so (almost 2% lower than my current rate), and am not planning on buying a car or anything else any time soon. Being that I'm heading off to school, and I may not have much income to report for a school year, and having extra available credit would be awesome, now is probably the time to do this. If my credit score comes out better in 9 months when I'm just getting done with school, it will be a good thing.

CreditKarma, which is a subsidy of TransUnion.

I was working on number, not length.

Interesting. Times are a-changing.

I would mirror what PiKA said re: increasing existing credit rather than applying for new credit accounts. The debt-to-available credit ratio > total number of credit accounts

It will as long as you keep paying off the 5 cards you currently have every month. The biggest part of your credit score (and the part that seems to be holding your score down) is the length that you've had your accounts in good standing. The only way to improve that is to play the waiting game.

I think this is good advice.

That said, I love my American Express. It's been my "go to" card for many years and I love the rewards. My rewards definitely outweigh the annual fee, but I use it for almost everything I can and pay it off every month. I used reward points to pay for my plane ticket to the Gamma Phi Beta Convention next month. But, I don't think if it would be worth the hefty annual fee if you don't plan to use it and just want it in your wallet to boost your available credit.

I echo what most others said -- opening new accounts won't improve your credit score until you've had them a while. In fact, every authorized query into your credit history (which happens every time you apply for credit) will actually ding your score. But if you are looking to extend your line of credit before embarking on a year of school, Amex is the way to go. They have long had the most respected and most popular membership rewards program in the world. Plus, if you get a revolve (i.e. credit) card, you can usually get one that has no annual fee. Since you pay your cards off every month, you won't have the worry about paying interest. But if you hit a cash flow crunch during your year of higher education and limited income, you can still carry a balance if you need to. I have a Delta rewards card but my parents rave about their Costco rewards card (big cash back rewards) and I'm thinking of switching to that.

The reason to get new cards is to lower your total credit utilization. While the typical rule of thumb is no more than 33%, the optimal number is actually around 10%.

So, if you are using more than 10% of your limit on your other cards, it might help to get a new one.

That said, I have both an AmEx and Discover. They both have their different benefits, but I like the AmEx much better.

I have the Blue Cash AmEx. The 3% cash back on groceries and 2% on gas is really nice. I also like how each purchase I make with it is covered by a warranty from AmEx itself, so if I have a defective item and the merchant is being useless, I'm covered. It's also extremely fun to have a transparent credit card.

The Discover card has 5% cash back on various categories at various times, but they tend to be for certain luxuries that I generally tend not to indulge in. As a result, it builds real slowly. Whenever I had to call them, they're also noticeably less professional than AmEx.

Generally speaking:

AmEx: better cash back for essentials, extra protection, high APR
Discover: better cash back for luxuries, low APR