Harveyspecter

Earlier this year I got my first credit card (Capital One) which has a $500 limit and I think a 24% APR. That limit is due to be extended to $750 next month but today I had a letter from "Credit One" saying I was pre approved for a credit card up to $1500 but still has a 24% APR.

I'm happy with my Capital One card, and I'm not one to rack things up on Credit, but purely in terms of improving my credit score is it worth getting this card? The only real advantage it has right now is the higher credit limit. We are looking to buy a car soon so that will help build up my credit history so I am thinking I don't need this card.

Advice would be appreciated, thanks.

Guindalf

Pre-approval actually means nothing!

I started getting pre-approval mail not too long after I arrived in the US. I let a lot of them go by before deciding that it would help build a credit history. I applied to Capital One for a 'pre-approved' credit card.

Sure enough, just as I suspected, I was turned down!

Th way I built up credit was to order from a store like Badcock that offered six months same-as-cash and reported it to the credit bureaux. I never bought more than we could afford (humble beginnings - which are STILL very humble!) - $399 for a recliner, that sort of thing - and my score today is 817.

Not bad for someone who was always behind and in debt in the UK!

Pulaski

Yeah, I wouldn't bother, it won't help much and more likely will harm - you can easily have too many credit cards. As Guindalf said, adding some sort of installment loan would be more useful.

civilservant

Avoid Credit One like the plague. High interest rate, hidden fees, can't speak to anyone that speaks English and is understandable.... not good.

Anian

It means one thing - that they have your name and address. So look forward to getting more junk mail from them even if they have turned you down before.

I was also turned down for my "pre-approved" credit card when I first arrived.

tonrob

I currently have 28 (main accounts, so not including being an additional user on Mrs tonrob's cards etc.). My credit score is high, and I've never carried a balance, but that said if I applied for a new mortgage tomorrow I'm not sure what the bank would make of it.

Teckelspass

But I bet Pulaski doesn't have to worry about 5/24....😜

Guindalf

Keep an eye on those accounts. Many have started charging you for not using them and people have found that, with interest on the fees, they unknowingly owe several hundreds of dollars because they didn't keep a check on the 'dormant' accounts.

ch2016

You have 28 credit cards?!?

civilservant

I wouldn't consider that that unusual. I myself have 11 all with $6k+ limits and 1-2% utilization..

petitefrancaise

My son has just started getting unsolicited credit card offers.... just off to college of course. Get 'em young.

mikelincs

The best way to build up a good credit rating is to use your card and pay it off every month.

Teckelspass

Personally, 28 is a bit much for me just in terms of managing them all, but there are lots of people in the points and miles community that have that many, and most of those people are incredibly responsible with high credit scores (well over 800). You lose a few credit score points for each credit card application, but gain points long term with lower utilization rate etc.

I currently have 8 credit cards; each one is used for a specific spending category to optimize points and miles. Many of those are no annual fee ones, but some have large annual fees. Nevertheless, with my travel habits and spending patterns, those cards more than pay for themselves. Some cards I hardly put any spend on, but the associate benefits are worth it (eg you get two free hotel nights annually for an annual fee under $100). But every person has to carefully do the math for themselves for every card, and it is absolutely key to never carry a balance from month to month. I never pay interest charges because that can often defeat the value of the points or miles you are getting.

All that said, if you are just starting out in building credit, many of these lucrative cards are not available to you anyway. I would stick with one or maybe 2 cards for a year or two, pay balance in full each month, keep credit utilization low (5-10%), and soon you will be eligible for much better cards. When you start expanding to better options, keep at least your oldest no annual fee card open to preserve the average age of your accounts, which factors into the credit score.

carcajou

28, wow. I think I have 6.

When I leave nobody misses me as much as the banks. Junk mail and unsolicited credit card offers outnumber all other mail 5:1 (at least) when I return.

They will quite frequently raise your limit without you requesting it. I had one that started with a $2,000 limit and ended up at $20,000 without one single request from me. That was before the Great Financial Crisis - they then arbitrarily closed the card in 2009 despite no delinquencies on my part (that happened to a lot of people then). Though every card I had, the limit was raised, through no request of my own (though Bank of America was the only one to arbitrarily cancel a card).

You have to be careful with these things - in the eyes of the bank, low income with good payment history can be worse than low income with sketchy credit history, because they can give you a low-limit credit card (say $300-$500) but then milk you through things like late fees, exceptionally high interest rates, and so on. Then they've made more money off you through that, so if you default on your $400 bill, they've still made a profit off of you. Whereas if you are paying off each month they don't make anything.

Pulaski

You can opt out of unsolicited credit offers. The scheme is voluntary, but gets rid of most offers within a year or so, and the rest eventually. I was getting an average of one credit card offer a day! and just got sick of the relentless tidal wave of offers.