I did the global card transfer and and my credit score has gone up to 693 on both Equifax and TransUnion after less than 4 months. Now I'm getting mail asking to apply for Capital One credit cards (Pre-Qualfied apparently...).

I don't need another credit card nor do I particularly want one. I only have the AMEX to build my credit score and I don't generally like having lines of credit as a rule but it is the way of the world so I need to comply if I want to continue to build my score.

My question is, what step would you recommend next? Really I want to get into a position where I can get car finance and finally a mortgage should I ever need one. Is getting another credit card wise? Should I go for a mobile phone contract instead of the pay monthly deal that I'm on now (which doesn't affect my credit at all)? I doubt the 'Pre-Qualified' mailers I'm getting really mean much anyway and I could still be refused which would hit my credit score badly.

Any ideas or advice are (as ever) greatly appreciated.

Thanks for reading!
Michael

There is a limit as to how many credit cards are a good idea, but having another one will boost your score because your utilization percentage will be reduced assuming the same balance, because the amount of available credit is greater. That said applying for any credit product, i.e. having your credit record accessed by a lender, reduces your score for two years. .... In short, you could argue either way, so I would say "don't get another credit card just because you can".

So your credit score is reduced even if you're approved? What a ridiculous system! How are people meant to build good credit if they are punished for being approved :/

Applying for a credit card will put a hard inquiry on your credit score, so yes each time you apply for something and your credit is checked, it will drop.
But as Mr P says 1 or 2 cards work well because your usage/utilization brings the credit back up. Use it, pay it off and your credit rises. Buy something like a bed on interest free credit, pay it off quickly and your credit rises. Oh the crazy world of credit.
Yanks are obsessive about their credit scores.

Not much, a handful of points, maybe.

The system makes sense, but balancing "experience with using credit", with "not having too much debt" is the tricky bit, but IMO you shouldn't stress too much about it - use your credit cautiously and your credit score will likely settle in the 750-800 range. In practice you could also load up on debt, and I mean several credit cards with 80-100% utilization, still have a score in the 700-750 range so long as you have always made your payments every month.

To clarify, your credit score doesn't go down because you're approved... it'll go down because a company is doing a credit check on you. Equifax, for example, will see that as a desire on your part to get as much credit as you can in as short a period of time as possible - and they'll wonder why. Their default position is that you are desperate for credit... whether that's actually true or not.

So, as Pulaski implied, it's okay to have more credit cards - just don't apply for them in short succession.

Ian

I usually apply for 2-4 on the same day, as it often means that inquiries get combined into one, and then do this 3-4 times a year. I think the most I've been approved for on the same day is 6. I've scaled back slightly over the last 12-18 months as many credit card deals have had restrictions applied for those who have enjoyed them before. I keep a close eye on my score and report, probably close about as many accounts as I open each year and maintain a core of long-standing accounts to maintain average age of credit.

Indeed.

If you have $10,000,000 in the bank and so you don't use credit because you don't need to .... your score goes down.

If you don't repeatedly run up debt and pay it off on schedule .... your score goes down.

If you shop around for loans and there are multiple enquiries as to your creditworthiness .... your score goes down (usually).

Your credit score bears no relation to your ability to pay.

Welcome to America.

It is, however a measure of your willingness to pay and your history of having done so.

The credit score doesn't need to measure your ability to pay because lenders can see your loan commitments on your credit report and will ask for evidence of your income, so calculating your ability to pay is fairly easy. People seem to forget that lenders typically don't lend based on a credit score alone, at least not for large loans such as mortgages and car loans, but the credit score is a useful tool along side other things that lenders check and evaluate.

Agree with Pulaski about the way lenders use the credit score. When we applied for a mortgage 6 months after arriving in the USA, the guy told us that the optimum number of credit lines is 4. We had 2 at that point ( a lease car and a credit card with about a $2k limit), they were using our non-USA financial records to assess us for the mortgage anyway but he said that they are looking at our payment history as well as % of usage to assess us.

It might be worth getting another line of credit just to bump your credit score over 700 in a few months. If you do want a mortgage/car loan those few extra points can make a big difference to the interest rate you'll be offered.
Sign up for creditkarma - they have useful tools that tell you how to improve your credit score and seem to feature credit cards that are applicable to your profile.

To the OP - I've been here 7 months and am at about 750 - the biggest boost I saw was when I ticked over the 6 month mark on my first credit card. I'm assuming your credit ages are bracketed into 0-6, 6-12 months etc, as I saw a good 20-30 point increase in one day, and I managed to get a second CC right after that 6 month bump. And PF's recommendation on CreditKarma is very valid; it's not going to help you understand the whys and wherefores, but it will certainly help you keep an eye on things directionally.

Ross

One reason why I would apply for a different credit card is simply because Amex is not accepted in all places. I like a visa for traveling, personally.

I saw a bump up in my credit score recently when a credit card I had reached 2 years old. Credit karma kept telling me that the age of my oldest account was too recent so it makes sense to get something as quick as you can.

Nobody has mentioned that credit scores can also affect your insurance premiums.

You will get dinged for having a hard hit on your credit report, but you will also get an score increase by having more credit available. So it balances out in real terms, probably more so in favor of increasing your score.

Aha, I detect a fellow points and miles collector 😜. Test question - what is the 5/24 rule?