Should I apply for a Credit Card to increase my Credit Score?

[shibabigk]

Hello everyone,

I just found this place and am very excitd to be able to learn and share!
I know this question might sound a little weird, but lt me explain.
I moved to the US from Germany two and a half years ago (married an Amercan man). Obviously that means that I had no credit history at all.
With DH as a co-signer I got a Credit Card two years ago, I've been using it a lot, but keeping my balance low, I think I owe about $60 right now. A few months ago we purchased a used car, I applied for the loan and got denied, then we applied together and got the loan. That sums up my entire credit report right there. One Credit Card, one Car Loan. According to Free Credit Report, my good stuff is no missed payments and owing little money on my card, the bad stuff is that all my accounts are less than three year old.
So, the question is wether getting a second card will be beneficial to me, and if I'll even be able to get one. I understand that initially an inquiry is a negative factor, but we are not planning on making any major purchases (house, car) within the next few years.
Of course this is knowing that I will not max out the card and only make minimum payments :-)
I don't 'need' another credit card, the one I have is just fine, but coming from a place where credit cards are consideed un-safe and many stores won't even accept them as a payment method, it seems that it is the only way to build a decent history.

I'd truly appreciate any input.

Thanks!

[disneysteve]

I don't know that having 2 cards is particularly better than having one.

Keep in mind that you DO NOT need to carry a balance in order to build credit. Paying the bill in full each and every month works just as well and avoids paying interest. Also, keep your charges below 20% of the credit limit, so if your limit is $5,000, for example, don't ever charge more than $1,000.

The one thing that only time will help is the age of your account.

Interesting that credit cards aren't widely accepted in Germany. I had never heard that.

[shibabigk]

I used to work at a drug store, nationwide company, did not accept credit cards. Worked at a bar, dance studio, docors office and more, no one took credit cards. They are considered very unafe by most average folk. The business world probably sees it differently. The only member in my immedeate family that has one is my father, it is only used for purchases made online. We also so not use checks, ever. Obviously there will be people who do (no absolutes, right?), but everything is debit and cash, mostly cash.
Funny how different things can be.

[ActYourWage]

No, you shouldn't apply for a Credit Card to increase your credit score. Credit Scores are "I love debt scores". Save, be frugal, earn extra cash, etc.

[Seeker]

Originally Posted by ActYourWage

No, you shouldn't apply for a Credit Card to increase your credit score. Credit Scores are "I love debt scores". Save, be frugal, earn extra cash, etc.

Nothing further from the truth. Credit Scores are not "debt scores" -- in no way shape or form. Those in debt, do not have "excellent" credit scores.

There's nothing wrong with using credit cards... there's a lot of benefits to using them responsibly.

And it's the same for cash, used responsibly.

If everyone treats their CC the same as cash, then it's no different. That's the key.

I don't want to carry cash, and I don't. "Love" of a debt score has nothing to do with anything. Safety is... and carrying cash can be an issue.

[disneysteve]

Originally Posted by ActYourWage

No, you shouldn't apply for a Credit Card to increase your credit score. Credit Scores are "I love debt scores". Save, be frugal, earn extra cash, etc.

As much as Dave Ramsey might believe that, it simply isn't true. Having a good credit score matters for a lot of reasons besides just getting a good rate on a loan. Even so, unless you are planning to pay cash for a house, you'll want a good score. Your credit score also comes into play when getting insurance, when getting some jobs, when renting an apartment, etc.

To further answer your original question, you should NOT open a new card. It will NOT increase your score. In fact, it will lower your score because it will shorten the average age of your accounts. You will also get dinged for the new inquiry and new account.

Keep the card you have. Pay it in full and on time every month. And be patient. Over time, as the age of the account increases, your score will increase along with it.

[maat55]

I would not use credit for the purpose of raising your score. What you need is time under your belt. When you have learned to pay your credit card in full each month, you can later have your limit raised.

Being wise with your money and paying your bills on time will raise your score. I could have a higher score than I do, but I use credit to my liking and ability and do not use it for any other purpose.

Your combined credit with your wife should get you what you need and will improve with time.

[Alex_Adviser]

The answer very much depends on you and how disiplined you can be about the use of your card. Credit cards can be good things that you can use to your advantage, but only if you know the golden rules and stick to them.

Above all, you need to avoid paying credit card interest, and the best way to do that is to pay it off IN FULL every month without fail. As soon as you miss that once, you have the beginning of a problem that can grow into something unmanageable.

[boosami]

If you carry no balance or a low balance on your current credit card, getting a second one will not have a significant long-term impact on your credit score. Immediately, it will drop your score a few points but it will recover within a few months. It will not go up any higher, though, than if you stuck with the single card.

[shibabigk]

Thanks guys!
My credit card is always paid in full each months, the only reason why I use it is to build a credit history.
I thought a second card, threfore a higher credit limit, but the same amount of debt (since that card would also be paid off in full each month) would increase the score (after the initial knock off for opening a new account) since my debt% would be even lower with a higher combined credit limit.
suppose simply waiting will work, too. I just want to make sure that I do everything I can to build a solid foundation for the house, car or whatever it it down the road.

I appreciate all the input!

[wincrasher]

Good advice above.

I love credit cards, have lots of 'em. Have a great credit score and after my last "learning" experience, no balances. I've got 40k points on my AMEX card that I'm dying to spend. All earned paying NO interest.

Time is what you need.

I'd also suggest that you put in a request for a higher limit on your existing card. That may benefit you more than getting a 2nd card.