Cancel or get more credit cards to build credit score??

[dgcoupe]

Hello I am new here, just finish college and had 1 credit card thought a credit union bank i hear people say to keep the first credit card for a long time n use it and pay it right away but i also heard that to get more credit card to built ur credit to buy a hous edown the road? I thought your credit score goes down when u apply for credit card?


also when you cancel a credit card doesn't your credit go down also or go up?? im confused!!

thank you

[kork13]

Do you like the credit card you have? Does it offer a good rewards program? Are the terms reasonable? Do you have a good credit limit on the card? If you can answer all of those questions 'Yes', you probably have no reason to get a new card. Don't get a new card if what you have meets your needs.

In terms of your credit score, if you have one credit card or 50, it doesn't matter. Credit cards (revolving credit) are one type (of 4-5 or so) of credit that goes into your credit mix. Having a good variety of credit types will help your credit. But getting more cards just to get them does nothing for you. The only potential benefit would be a higher total credit limit (and thus reducing your credit usage %). However, you can do the same thing by periodically requesting an increase in your credit limit to whatever meets your needs. So if you spend $1000/mo on your card, you probably want at least a $5000 credit limit, to keep your usage below 20% or so. If you get to spending above that 20%, request an increase in your credit limit.

All of this is predicated on the fact that you have to use credit cards responsibly, by paying them off in full at the end of every month. Above any other factor, consistent, timely payment of your credit card bills will have the biggest and best influence on your credit. Do that, and the rest will fall into place.

[dgcoupe]

wow thank you for the quick reply!!!

I actually want a CC that gives me rewards or cashback which this cc doesn't give you anything! But i def dont want to pay annual fee or any fees for it? or do i have to to get the benefits?
if so which would you recommend.

my credit score is like 780? i think


if i have a higher limit does my score go higher? or no?

[kork13]

Easy question first: yes, having a higher credit limit typically helps your score. A higher limit reduces the total credit utilization on your accounts. So if you spend $1000/mo on your credit card with a limit of only $2k, you have a 50% utilization ratio. Normally you want to use no more than 20% of your credit limit. So if you have a $5k limit, your utilization is now 20%. With a $10k limit, you're at 10%. Lower utilization ratios are better.

As with almost everything financial (and also my replies in your other threads), options abound. The credit card (and its associated reward program) that you choose to use depends alot on your lifestyle. Some people travel alot, so travel cards are good for them. Others find cards that offer gas rewards, grocery rewards, or other options to be better. Also consider redemption type -- some cards use monthly, quarterly, or annual cash back. Others give you points that you choose how to use them. Because of all the options out there, I won't really offer any specific recommendations. You just need to find one that works for you personally. With a credit score of 780-ish, you should be able to qualify for most any credit card out there. An easy website to find/compare credit cards is CreditCards.com. Also, ask your banks/credit unions what type of reward credit cards they offer. Because you have a standing relationship with them, you're more likely to get approved, a better rate, and a better credit limit. Often, your local credit unions will even offer better rewards programs.

[dgcoupe]

so since I dont get benefit from my first credit card i thought about getting the chase freedom with 50$ cash back 5% cashback for grocery etc.. what you guys think about that card? Also should i cancel my first card or let it sit in the dresser since i will barely or prob not use it at all when my chase comes in?

[snshijuptr]

You should apply for a card that matches your spending style. Billshrink.com will recommend rewards cards to you based on the information you give them. Make sure the rewards are not introductory, but will remain with you.

Don't cancel the other card or put it in a drawer. Use it once a month for a small purchase to keep it active and pay the bill off every month.

Replying to one of your first questions, applying for credit gives you a temporary ding to your credit report, but having credit gives a long term bonus. I believe that the credit inquiry (applying for credit) only stays on your report for 1 year. Also, the credit agencies are looking for you to have closer to 10% utilization now. It's a little bit crazy at the moment.

[JoshuaHeckathorn]

The Chase Freedom Cashback credit card sounds like a good option for you. We actually recommend it in our cashback section on Creditnet.com because it has no annual fee, you can currently get up to $100 cash back bonus, and up to 5% cash back in certain spending categories. (eg gas stations)

And I agree with the others - don't cancel that first card. Keep the old card active, pay off both of your credit card bills in full and on time each month, and keep your credit utilization under 10%. If you can do those things, your FICO scores will love you forever.

[dgcoupe]

I thought utilize atleast 30% of maximum limit??

[JoshuaHeckathorn]

I thought utilize atleast 30% of maximum limit??

No - you want to use under 10% of your available credit if at all possible. The FICO scoring model rewards you for using a small amount of your available credit responsibly.

[karenkc]

Just keep your oldest card. Then you don't have to monitor them for fraud or new fees. It's much simpler and it's enough to have a good credit score. If you have too much credit available it could actually hurt you if you apply for a mortgage. They look at it as potential debt.