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If you are here reading this forum/thread, you probably have heard, seen or know someone who has been leveraging credit card points for free or very low cost travel and want to get involved. While it may be very tempting to jump right in and apply for a bunch of credit cards, it is advisable to read through the forums before doing so.

For those who have no credit history, building your credit score is strongly recommended and may even be needed before applying for any credit cards.

Step 1 - Try and get added as an Authorized User (AU) on an established credit card. This card should be kept in good standing and preferably have a low credit utilization ratio.
Some have had success with Amex to get your card backdated to the primary cardholders "member since" date. Having this done will increase your credit history to that of  the account holders first Amex card.
UPDATE Amex no longer backdates any cards. Any authorized user card will show up on the AUs report as a new account, opened on the date that the AU was added. Amex is now one of the worse choices to get added as an AU to, for credit building purposes.
Chase, Citi, Bank of America and others are more likely to show the full history of the primary cardholder on the authorized user's report than Amex is.

Additional Option - In conjunction with being added as an AU, you can  sign up for a secure credit card.
A secured credit card works almost like a debit card (you need to lay out your credit limit), but this functions as a regular credit card and will help build your credit score.

Step 2 - Once you are setup as an AU, it is best to wait a few months before applying for your first card.

Your first card should be a store credit card, which are easier to get approved for, especially with very limited credit history.
Some of the store cards people apply for are Old Navy, Gap, Banana Republic, Kohl's, Macy's, Target etc. While these cards will not give you major signup bonuses to travel with, they do give you access to exclusive promotions and other perks when purchasing from the store.

Additional Options - The CapitalOne Journey card seems to be easier to get approved for, though understand they will pull your credit from all three agencies, while most banks only pull from one.

Discover has a student card you can apply for here. This can also be an easier option to getting approved for your first card. Their regular IT card (not student) seems to be pretty easy to get approved for with little to no credit history as well.

Step 3 - Pay your bill before your statement closes (cut off date), but leave a minimal amount remaining to be paid after your statement closes. This will help ensure that you have both a low CC utilization while establishing a good credit payment history. (This applies to new spending from this month.  Anything already 'due' should be paid in full.)

Step 4 - After using your first card for a few months, you will be ready to apply for the cards you will have read and heard so much about. Remember that getting accepted for a credit card is a combination of many factors like credit history and your credit score, but it is also dependent on the income that you claim* you make.  Income is not part of your credit report or score.

Step 5 - This is a brief synopsis of what to do when applying for credit cards. There are additional factors one should understand before applying for credit cards. DDF is a great resource and there are many people willing to answer your questions (which you should ask, albeit after attempting a search) 

*If you are under 21, you are legally only allowed to report personal income. Personal income, however, can include allowances and scholarships.
If you are over 21, you can claim any income which you have reasonable access to in order to pay back the bill, which includes the income of others in the household (spouse/parent), or anyone supporting you. Additionally, while most banks will not have you verify your income, it does happen and you should be prepared to show them. This is particularly prevalent with American Express, and is known as a Financial Review (FR).
« Last edited by S209 on September 09, 2018, 01:45:26 AM »

Author Topic: Credit Card For Beginners  (Read 568436 times)

Offline george

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Re: Credit Card For Beginners
« Reply #1260 on: October 08, 2013, 12:16:27 AM »
How bad is a high utilization score (a couple of months in a row)?
That's like asking, "how bad is dandruff?"
It is a (temporary) negative which will lower your score until you get rid of the high balances, after which your score will rise back up to previous levels.

Offline DovtheBear

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Re: Credit Card For Beginners
« Reply #1261 on: October 08, 2013, 12:17:26 AM »
That's like asking, "how bad is dandruff?"
It is a (temporary) negative which will lower your score until you get rid of the high balances, after which your score will rise back up to previous levels.
Huh?
"להסתובב זה לא אומר להיות חופשי"

Offline george

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Re: Credit Card For Beginners
« Reply #1262 on: October 08, 2013, 12:19:41 AM »
Huh?
Did I misunderstand you're question?
Are you asking how bad it is to have high utilization ratio for a couple of months?

Offline DovtheBear

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Re: Credit Card For Beginners
« Reply #1263 on: October 08, 2013, 12:38:53 AM »
Did I misunderstand you're question?
Are you asking how bad it is to have high utilization ratio for a couple of months?
I'm not sure myself. :)
If I let the statement close with a high balance, and then pay it in full without incurring interest: How much and how long of an affect does it have on my score?
"להסתובב זה לא אומר להיות חופשי"

Offline ayman

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Re: Credit Card For Beginners
« Reply #1264 on: October 08, 2013, 01:15:58 AM »
think that some1 mentioned 30% of your credit score is your credit utilization, so keep it low before the statement closes.
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Offline george

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Re: Credit Card For Beginners
« Reply #1265 on: October 08, 2013, 08:20:01 AM »
I'm not sure myself. :)
If I let the statement close with a high balance, and then pay it in full without incurring interest: How much and how long of an affect does it have on my score?
How much and how long does dandruff affect you?
It depends how much dandruff and how long you wait until you start using head and shoulders!
IOW, the high balances will lower your score by a certain amount depending on what percent of your CL you are using, and your score will stay low for as long as you keep those high balances. As soon as you get your utilization back to a low ratio, your score will go back up.

Offline @Yehuda

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Re: Credit Card For Beginners
« Reply #1266 on: October 08, 2013, 09:45:21 AM »
From my research, yes it's 30% of the score, and it's best to pay it off before the statement closes (although Dan once made it seem that paying it off like right away is even better, I guess so there's no chance of it showing up in a report. Or perhaps he said that just so you don't forget to pay it off). You do want to keep a little bit still on the bill for the statement so it shows that you're using your card. I also picked up that once you pay it off, you're utilization goes back down - that it's a month to month assessment.

Online Barryg

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Re: Credit Card For Beginners
« Reply #1267 on: October 08, 2013, 10:18:06 AM »
I'm not sure myself. :)
If I let the statement close with a high balance, and then pay it in full without incurring interest: How much and how long of an affect does it have on my score?
If you don't plan on applying for anything for a few months, it will not affect the future score in a negative way. Your utilization will be judged from % at the time you apply (which means the most recent time each of your accounts reported to credit bureaus). Now, each of the big 3 use different scoring models and it is somewhat of a secret exactly how they each calculate score. IMHO it would improve your score in the long run, since you showed ability to borrow $ and pay back.
If you want somewhat of a clue as to how much it affects your score, get a FAKO (credit karma, or Citi ID monitor) and check before and after.
To know how long it affects your score, see when your high balance isn't reported anymore on credit karma, citi, or free report on annualcreditreport.com... (usually day after cycle closes, or 3-4 days after payment is due)

Offline Dan

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Re: Credit Card For Beginners
« Reply #1268 on: October 08, 2013, 01:35:15 PM »
From my research, yes it's 30% of the score, and it's best to pay it off before the statement closes (although Dan once made it seem that paying it off like right away is even better, I guess so there's no chance of it showing up in a report. Or perhaps he said that just so you don't forget to pay it off). You do want to keep a little bit still on the bill for the statement so it shows that you're using your card. I also picked up that once you pay it off, you're utilization goes back down - that it's a month to month assessment.
Some banks report in middle of the statement.
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline @Yehuda

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Re: Credit Card For Beginners
« Reply #1269 on: October 08, 2013, 01:42:42 PM »
Some banks report in middle of the statement.

Sheesh, do you search "Dan" to find when ppl mention your name in a comment? :-)

Offline jaywhy

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Re: Credit Card For Beginners
« Reply #1270 on: October 08, 2013, 03:52:52 PM »
Some banks report in middle of the statement.
Which ones?
Sheesh, do you search "Dan" to find when ppl mention your name in a comment? :-)
Just don't address a question to him ;)

Offline shimino1

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Re: Credit Card For Beginners
« Reply #1271 on: October 14, 2013, 05:40:49 AM »
Just got a first credit card from wells fargo with 1000$ limit. Before that i was an Au on my dads cc for 8 months and when they pulld my expirien score it was 779. Im planing on using 10$ a month untill i build credit history and go for a major card.
How long do i have to wait for amax, chase?
I prefer a card with no forex fees for use in israel.
Tia

Offline Dave321

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Re: Credit Card For Beginners
« Reply #1272 on: October 14, 2013, 11:03:06 AM »
I have a crapitol one, which was my first card that i got. I currently have $750 worth of credit on it. I also have amex starwood card with 4k credit.
Should I keep my capitol one card open bec it was my first card? Even if i only put 200 on the card a month, it is using up my credit , which prob lowers my score.

Any advice?

Thanks

Offline @Yehuda

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Re: Credit Card For Beginners
« Reply #1273 on: October 14, 2013, 11:12:15 AM »
I have a crapitol one, which was my first card that i got. I currently have $750 worth of credit on it. I also have amex starwood card with 4k credit.
Should I keep my capitol one card open bec it was my first card? Even if i only put 200 on the card a month, it is using up my credit , which prob lowers my score.

Any advice?

Thanks

You always want to hold onto your first card, as that's part of the credit score calculation - 1) The lengths of your oldest card. 2) The average age of all your cards (so your first card helps lower that average).

I believe your credit utilization ratio is based on all your combined credit, not each card specifically, CMIIW. So then spending $200/mo on it shouldn't affect you at all. But either way, why use it so much? Use it a few times a year (or even less probably) and they'll keep the card open.

Offline Dave321

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Re: Credit Card For Beginners
« Reply #1274 on: October 14, 2013, 11:13:58 AM »
You always want to hold onto your first card, as that's part of the credit score calculation - 1) The lengths of your oldest card. 2) The average age of all your cards (so your first card helps lower that average).

I believe your credit utilization ratio is based on all your combined credit, not each card specifically, CMIIW. So then spending $200/mo on it shouldn't affect you at all. But either way, why use it so much? Use it a few times a year (or even less probably) and they'll keep the card open.

Got it. Thanks

I was under the impression that you need to spend on a card every month for credit building.
CMIIW Please!