Credit Cards

AlphaFrog · #1 05-23-2012, 11:17 PM

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.

PiKA2001 · #2 05-23-2012, 11:31 PM

Quote:

Originally Posted by AlphaFrog

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.

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.

OPhiAGinger · #3 05-23-2012, 11:56 PM

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.

excelblue · #4 05-24-2012, 01:49 AM

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

AlphaFrog · #5 05-24-2012, 10:34 AM

I decided to try for an AmEx, and they couldn't instantly approve and are mailing a decision. I've had that go both ways as far as getting approved. The last two (a year ago) both got approved. Annnnd, due to my lack of patience, I went ahead and applied for a Discover as well. I got instant approval for a fairly decent amount. Whether I come out ahead on my credit score in the end, I've now got some windfall financially for NYC.

Ironic confession time: My oldest card was a tiny limit card with an annual fee. I called the bank to see, since I've had this card since 2008 and neeeever been late on a payment including the other two cards I've had with this same bank, if they would waive the fee or convert it to a different type of card. They said they couldn't without losing the credit history. So it got put out of my mind, and I forgot to make the payment on the fee (I don't use this card much anymore).

I called the bank (again) to see if they would waive the late fee and not report to the credit bureau since I've neeeever been late on a payment, and I was only 1 day late, and he told me that it was all good - my type of card doesn't charge a late fee on a balance under $100, and doesn't report unless you're 30 days past due.

aggieAXO · #6 05-25-2012, 08:23 PM

I opened 2 credit cards iin the past 2 years (one in mid 2010 and one last year). It has taken 2 years to recover from the hit on my credit from the first card I opened and likely will take another year to recover from the second card. So I would say it takes about 2 years to recover. I will not do that again!