NT Financial Experts: Do I need another Credit Card?

[hybridsoldier23]

I'm looking into possibly getting another credit card but wanted to know the pros/cons on how this will affect my credit. I'm planning on purchasing a home in the next few years so I want to know what will be the best move to secure a better rate when the time comes.

Background info:

-I have only one credit card through Capital One (4k limt) that I've had since I was 18
-I have 0 credit debt. I pay cash for everything. I own my car, student loans are paid off, I pay off my credit card to a 0 balance every month, I rent my apartment.
-Credit score is in the mid 700's from all 3 credit bureaus
-I have an upper middle class income

I know closing your longest line of credit is considered bad so I don't plan on closing my Capital One card. What I did plan on doing was getting a new card with a higher credit limit and moving my monthly spending to that card. I've heard mixed things on if having a higher credit limit is a good or bad thing. The one thing I do know is that I'm probably getting dinged when my credit is run because technically my credit utilization is probably coming back high since I put all my purchases on my one card each month that doesn't have a high limit.

Thoughts?

 

[hybridsoldier23]

Anybody?

 

[asianplayer]

From my understanding, the more credit available to you is better for your credit score, so I would get another credit card if not two. There's a lot of good offers out there, so you can be selective.

 

[still itachi]

go for it.

The ding will hurt you for 6 months, but the extra card will help what is know as your Credit Utilization Ratio....which is:

Total Credit Balances / Total Credit Available.

So lets say you have an average daily balance of $400...With your one card with the $4000 limit, your utilitzation ratio is 10%.  But if you get another card with 10k limit, that same average daily balance would bee 400/14000 or 2.85%.

So it will help you a little bit.

If you a go for a new card get a cash rewards card...nothing beats making money while your even spending money.  Also, try to find one that has a bonus.  A lot of them will give you $100 if you spend $3000 in first 3 months or something similar.

I T A C H I 23

CRIMSONCLOUDATTIRE

STILL ITACHI

 

[aec23]

if you are going to wait at least a couple years to buy a house, i would say to get another credit card or two because it shows more responsibility on your part that you are able to manage multiple lines of credit and pay them off.

what Still Itachi said is on point, the lower your debt/credit ratio the better.

with your credit scores you should be able to get a credit card that offers cash rewards. Chase Freedom is a card i have been using mostly because they have the best rewards programs imo. Discover doesn't give me as much rewards on ALL purchases, but sometimes I use it if im making a purchase that qualifies under the 5% reward for that particular quarter. Also the BankofAmericard isn't too bad either, 1% on all purchases, 2% on groceries and 3% on gas.

No, neither of those credit card companies paid me to say that, but that's my take on the whole situation.

 

[youngcurse]

Dude don't do it save your money as hyperinflation is amongst us !

 

[still itachi]

​

Dude don't do it save your money as hyperinflation is amongst us !

the last thing you would want to do in an environment of hyperinflation is hold on to your money....it'd be devaluing every day.

 

[crcballer55]

You haven't presented a very good argument why you need another card. Are you just trying to increase your score? You're already in the 700's and you don't have any debt. At this point, your score should take care of itself. If anything, ask Cap One for an increase on your credit line. Your best bet for securing a better rate would be to put down a larger deposit.

In today's market, we're seeing that cash buyers make up a significant amount of buyers. Even if you do get a great rate, you may still be shut out if your competition is stronger in that area than you are.

 

[hybridsoldier23]

You haven't presented a very good argument why you need another card. Are you just trying to increase your score? You're already in the 700's and you don't have any debt. At this point, your score should take care of itself. If anything, ask Cap One for an increase on your credit line. Your best bet for securing a better rate would be to put down a larger deposit.

In today's market, we're seeing that cash buyers make up a significant amount of buyers. Even if you do get a great rate, you may still be shut out if your competition is stronger in that area than you are.

The only argument for it would be to lower my credit utilization ratio which usually sits at around 50-60% because of my 4K limit.

I asked Capital one to increase me and have been denied multiple times with no reason why. I'm not getting any rewards so it seems like I should move to a company that will give me rewards and a higher limit as long as that doesn't hurt me credit rating-wise.

Also, I'm planning to put down the standard 20% when purchasing a home. Would you recommend more if possible?

 

[shatterkneesinc]

Dude don't do it save your money as hyperinflation is amongst us !

this guy is a financial expert

 

[nikeairforce1]

if you do apply, apply for like 4-6 cards AT THE SAME TIME (have multiple windows open) so that the credit card companies don't see your inquiries. google app-o-rama for more info.

if you want your credit card utilization % to go down, pay your credit card BEFORE your closing date. get it down to 1%-9% of your credit limit. this way, when your closing date comes, your CC will report the lowered balance.

mid 700s is pretty good, but it could be higher..


go to creditboards.com or myfico forums for more info.

 

[kiendienn]

Here's a good article from John Ulzheimer who used to work for FICO.

http://www.mint.com/blog/credit/how-many-credit-cards-should-you-have-052012/

In short, we can have as many credit cards as we feel comfortable with as long as it maintains a low, or ideally, zero balance. There is no magic number that will help our credit score; as long as our balance is in check, all is well. However, the number of available credit cards will allow us a bit of financial flexibility and insurance (further explained).

 

[crcballer55]

You haven't presented a very good argument why you need another card. Are you just trying to increase your score? You're already in the 700's and you don't have any debt. At this point, your score should take care of itself. If anything, ask Cap One for an increase on your credit line. Your best bet for securing a better rate would be to put down a larger deposit.

In today's market, we're seeing that cash buyers make up a significant amount of buyers. Even if you do get a great rate, you may still be shut out if your competition is stronger in that area than you are.

The only argument for it would be to lower my credit utilization ratio which usually sits at around 50-60% because of my 4K limit.

I asked Capital one to increase me and have been denied multiple times with no reason why. I'm not getting any rewards so it seems like I should move to a company that will give me rewards and a higher limit as long as that doesn't hurt me credit rating-wise.

Also, I'm planning to put down the standard 20% when purchasing a home. Would you recommend more if possible?

Yes, I would suggest as large of a down payment as possible. First, it will help your interest rate as much, if not more than a higher credit score because it will lower the bank's risk if you become delinquent and/or are unable to make your payment. Secondly, you'll be in a much stronger position as a buyer against your competition. When you get a loan, there are opportunities for delays in the closing. With cash buyers, we can close a deal in as little as 14 days. With traditional financing, it can take at least 30 or even up to 60 days in some instances.

When you look into buying, see if you can find a manual underwriter who will look at your overall financial picture (job history, income, assets, & credit). Most of the larger banks put too much emphasis on only one part (especially the credit part) and not enough on the overall financial picture. For instance, self employed individuals don't have a consistent income and thus the bank sees them as a risk instead of looking at what their income has looked like over the last several years and basing it on their lowest point in that time.

 

[hybridsoldier23]

Thanks for everyone's advice. I'm really appreciate to all those who contributed to this small thread. Monetary decisions shouldn't be taken lightly so it was good to get some more opinions than friends and family.

I spoke to a few colleagues at work who also suggested there was no "magic" number of cards to have as stated in that article. Everyone unanimously said that i should attempt to get another card to lower my utilization ratio in general.

I applied for a Visa cash rewards card through my bank/insurance (USAA) and got approved for a 15k limit 10.9 APR (not that it matters since i pay it off every month). I'm going to kill off the balance on my Capital One card and exclusively use the one I just obtained through USAA.

CRC -- I will re-evaluate my budgeting to invest more than 20% down when I plan to buy in a few years.

Thanks again.

 

[champcruthik]

Similar position as OP. Patiently awaiting more resourceful responses. Wish more young adults recognized the importance of building credit proactively from their youth. Thankful my father passed the lesson down to me at an early age.

 

[bence23]

good thread