Thread: When should I apply for a second credit card?

Hi guys, I am a newbie here.

Here is my situation. I have moved to North America (Canada to be specific) last summer (just over 8 months ago). Upon my arrival I applied (and got accepted) for a VISA from my bank and an American Express Charge Card (Global Card Transfer). Ofcourse, as expected the VISA came with a very low limit. 6 months after using both cards (AmEx received a much higher spending) my VISA got a credit limit increase. I always pay both cards in full on time. I consider a credit card as a strictly payment method rather than a loan thats why I pay in full and on time and I don't like carrying cash.
I don't have a mortgage nor a lease on a car.

Around a month or so ago I checked my credit report through equifax.ca and I found three hard pulls (VISA, AmEx and Rogers wireless). My credit score was 695 (before the credit limit increase by VISA). I researched and found out that its a decent score for someone who has opened his credit file 6 months ago.

During the past 6 months I have found myself in need for a mastercard as some of the places I visit regularly only accepts mastercard, e.g. Tim Hortons.

A few questions of you don't mind:

1- Is my 695 score a good start for someone who had just opened his credit file?
2- When should I apply for the mastercard? Should I do it now and get it over with (the hard pull that is)? Or should I wait? If wait then how long?
3- How fast does the credit score improve, if I pay on time and full amount each month?
4- I heard that paying the card early improves your score because it reduces the utilized credit on your report (pay before the cycle ends), is this true?

Thanx.

Hi - I have just got my 1st US credit card, with $1000 limit, and made 2 payments as soon as the statements arrived.

How long should I wait before applying for the 2nd card, to build my credit as fast as possible?

Of course I would prefer a good card, such as with cashback etc.

Thanks

Originally Posted by zaf

Hi guys, I am a newbie here.

Here is my situation. I have moved to North America (Canada to be specific) last summer (just over 8 months ago). Upon my arrival I applied (and got accepted) for a VISA from my bank and an American Express Charge Card (Global Card Transfer). Ofcourse, as expected the VISA came with a very low limit. 6 months after using both cards (AmEx received a much higher spending) my VISA got a credit limit increase. I always pay both cards in full on time. I consider a credit card as a strictly payment method rather than a loan thats why I pay in full and on time and I don't like carrying cash.
I don't have a mortgage nor a lease on a car.

Around a month or so ago I checked my credit report through equifax.ca and I found three hard pulls (VISA, AmEx and Rogers wireless). My credit score was 695 (before the credit limit increase by VISA). I researched and found out that its a decent score for someone who has opened his credit file 6 months ago.

During the past 6 months I have found myself in need for a mastercard as some of the places I visit regularly only accepts mastercard, e.g. Tim Hortons.

A few questions of you don't mind:

1- Is my 695 score a good start for someone who had just opened his credit file?
That is definitely a good credit score in your position. Before I got a credit card, I had a 683 all around from student loans (though they weren't paid for yet). Also had a Macy's card for more than a year in good standing.

2- When should I apply for the mastercard? Should I do it now and get it over with (the hard pull that is)? Or should I wait? If wait then how long?
It depends really. If you wish to pay in full every month (which you always should anyways for a reward card) than I would say sure. If you want the best APR and credit limit available, I would wait 6 - 12 months. But you would most likely be accepted for a good bank card.

3- How fast does the credit score improve, if I pay on time and full amount each month?
Not fast at all sadly. It'll take a year to see modest improvement and 2 years before you see great results and be in the 700 club (assuming you haven't maxed out/applied/gotten new credit in that time).

4- I heard that paying the card early improves your score because it reduces the utilized credit on your report (pay before the cycle ends), is this true?
I believe you mean paying before the amount you owe is put on the statement. That part is true. If you want the best FICO scores possible. It would be best to have 2 cards and have one post a balance between 1-9% util and the other post a balance of zero. If before the statement cuts you have a util of 30+%, it would be in your best interest to pay off most of it before it is posted to your credit report.

You're welcome.

You realize you just answered a post from over a year ago?

Originally Posted by DarkLabel

You're welcome.

Thank you. I had it all wrong then. I was using the card to pay my rent, thinking that the more I used the card, and paid off the balance in full, the quicker my credit score would improve. But you're saying that utilized credit on the statement is a bad thing? (*)

My credit history from England doesn't carry over to the US at all. So the only credit history I have is 2 monthly card payments. How long should I wait before applying for the 2nd card?

(*) But then after a year or two, do you want to start getting close to the limit, so they increase your limit? My only goal is increased credit score.

Originally Posted by johnzo2011

Thank you. I had it all wrong then. I was using the card to pay my rent, thinking that the more I used the card, and paid off the balance in full, the quicker my credit score would improve. But you're saying that utilized credit on the statement is a bad thing? (*)

You can go ahead and keep using it to pay rent/buy anything you wish heck you can use it almost to the credit limit (but never over). Just make sure to pay off most of it before the statement closes. 1 - 9% utilization rate is the best percentage fo FICO scoring.

My credit history from England doesn't carry over to the US at all. So the only credit history I have is 2 monthly card payments. How long should I wait before applying for the 2nd card?
6 months, though I'd suggest a year so that you can really get a good card. 2 years (and probably more credit) if you want something like an Amex. Sadly your credit history has no way of transferring from the UK, BUT if you had an Amex, I believe you can ask them to report to the US bureaus.

(*) But then after a year or two, do you want to start getting close to the limit, so they increase your limit? My only goal is increased credit score.
Having a higher limit is just to help people if they use their cards a lot. For instance using 9$ of a 100$ CL and 900$ of a 10000$ CL is essentially the same FICO wise. But it does show banks you are responsible even with such a high CL and will leave you with less headaches. But almost maxing out your cards WON'T get you a higher CL. Actually using your card frequently and paying it off will usually net you the CLI in 6 - 12 months. Just be sure to ask them NOT to do a hard pull of your credit report when asking for an increase.

And DGenerateKane, I didn't realize

But I am sure that info will help most people.

Originally Posted by DarkLabel

And DGenerateKane, I didn't realize

But I am sure that info will help most people.

Thanks again. They bumped this post because I posted the similar question.

My main goal is to be mortgage-worthy in 12-18 months. I don't really mind how good the card is. So maybe I should go for getting the 2nd card in 6 months instead of 12, to build as much credit history as possible?

Or just add a secured card now?

I have a Capital One platinum mastercard in the UK. I wish it would transfer the credit history.

Originally Posted by johnzo2011

Thanks again. They bumped this post because I posted the similar question.

My main goal is to be mortgage-worthy in 12-18 months. I don't really mind how good the card is. So maybe I should go for getting the 2nd card in 6 months instead of 12, to build as much credit history as possible?

Or just add a secured card now?

I have a Capital One platinum mastercard in the UK. I wish it would transfer the credit history.

If you don't care, check the Capital One website to see if you're preapproved. If not, you can get a secured card right now JUST to be sure that you won't get rejected (too many inquiries is a big no no when it comes to mortgages so you want to be sure you'll get accepted). Orchard Bank also does a special soft inquiry to show you which cards you qualify for so I would definitely go that route if you don't want a secured card.

If I were you, call up customer service to see what they can do about that card and having it report here. You never know and it will help you in the long run.

Be sure to update us on what happens.

Originally Posted by DarkLabel

Be sure to update us on what happens.

I emailed capital one and they just replied with an annoying form email directing me back to capital one in the UK. But since this is an inter-country question, there is no reason why they couldn't have answered it themselves.

Are there any cards that don't do a hard pull? Gas cards? What about a secured card? Do you have a link to "Orchard Bank also does a special soft inquiry"?

Thanks

[MOD. REPLY: Here you go for the Orchard Bank: Secured Credit Cards For Rebuilding Credit]