Credit Scores and Credit Cards in Grad School

[Torgo]

I'm a 26 year old grad student.  Zero debt of any kind and to my knowledge have never paid interest on my credit card, which is the same basic card I've had since age 18 and has increased in limit several times.

I have found a cash-back card which fits my spending habits better, as well as another card that gives a hefty $450+ signing bonus with enough early spending which I can manage given some upcoming one-time purchases and multiplies up even better given some upcoming conference travel it would help for. 

I'm trying and failing to understand the relationship between credit score and credit cards and feel pretty stupid as a result.  I see so many contradictory bits of information on the effects of having/opening/closing multiple credit cards.  Can anyone break it down for me, and thus provide some advice on if this would be worth it?  There is a near zero probability of me needing to get into any sort of debt in the next two or three years but I don't want to harm myself unnecessarily.

[frugaliknowit]

You don't say how long you have had your existing card. 

First, there is a lot of information on myfico.com.

A lot of the "advanced churning" you read about in this forum are geared to folks with long credit histories and high scores.  I am thinking your credit history is probably short or on the short side?  If that is the case, assuming you want to have a high credit score, each move you make has more of a negative impact than say someone with a 20 year credit history who has 5 credit cards and a seasoned mortgage. 

If you want to expand the number of cards you have and maintain a decent credit score, I would apply for one at a time and check your credit score annually.  There's no way to say exactly to what degree each move will negatively impact your score.  Just move slowly.  If you are planning to apply for a car loan or mortgage soon, I would wait.

Also, remember that wealth building is much more important than credit building.

[johnny847]

There's no need to move slowly. I'm a 23 year old grad student. I got my first credit card 09/2013, and I've now got 10 credit cards. Despite this, I still have a Transunion FICO score of 730. The signup bonuses I got:

10k Amex Membership rewards points
50k Amex Membership rewards points
50k US Airways Miles (converted to AAdvantage miles today)
$444.44 from Barclaycard Arrival+
$25 Sallie Mae Mastercard (got this for the 5% on groceries, gas, and bookstores - includes Amazon, not the signup bonus)
$50 Fidelity Amex

You can read all you want about credit scores but you need to keep the bigger picture in mind. So long as you don't want a mortgage, car loan, etc. in the near future, you really don't need to worry about your credit score. You say you won't need anything for the next 2-3 years so you'll be fine. Just apply for whatever you want. If you are harming your credit too much, then you'll start getting denied credit cards, and you know to slow down.

Despite my 10 cc's gathered in less than 2 years (and I actually had only two cards until 08/2014) I still have a 730 TransUnion credit score (as reported by Barclaycard). This is my true FICO score. Sites like Credit Karma, Quizzle, and Credit Sesame are credit score estimators. Being estimators, they can be incorrect. For example, right now Credit Karma estimates my Transunion credit score at just 694.
Don't take the estimators' scores at face value.

[Lhazzmat]

I'm 27 and was having this same issue a few months ago. I started using CreditKarma and it helped SO much. You can research it if it makes you nervous, but there really isn't a catch that I've found. It's free, very well known, the way they make money is by providing recommendations (so basically advertisements). The reason it's so helpful is it will break down each area that impacts your credit score, tell you how you're doing in each area, etc. I finally feel like I understand what is impacting it as a result. You can even input potential changes and it will tell you how it might impact your credit score up or down. I found it really helpful!

[Torgo]

Thanks for the advice.  Yeah there's no thoughts of getting into serious churning or anything but I saw some obvious bonus points benefits from getting an additional card or two (and possibly entering a yearly cycle of getting signing bonuses) and was uncertain what suddenly getting two or more cards would do.  Thinking there HAD to be a catch.

As for a question that was asked, my current card has been in existence since 2007.  I understand that keeping it around even if I have other cards will help?

To Johnny847:  Wow, that Sallie Mae Mastercard actually blows my option I was looking at for a rewards card out of the water given my spending habits (aka food and books).  Just might go for that.  Simultaneously the Barclaycard is competitive with the other new signup bonus card I was looking at, Chase Sapphire Preferred.

Any thoughts on if it would be better to get the bonus card or the signing bonus card first if I staggered them?

[johnny847]

To Johnny847:  Wow, that Sallie Mae Mastercard actually blows my option I was looking at for a rewards card out of the water given my spending habits (aka food and books).  Just might go for that.  Simultaneously the Barclaycard is competitive with the other new signup bonus card I was looking at, Chase Sapphire Preferred.

Any thoughts on if it would be better to get the bonus card or the signing bonus card first if I staggered them?

There are limits on the cashback - it's 5% on the first $250/250/750 per month for gas/groceries/bookstores (which includes Amazon). But as a single grad student I've never hit those limits.

I'd just get both at the same time. The signup bonus for the Sallie Mae just requires one purchase, so that's no big deal. Make sure you have a plan to spend $4k on the CSP though. If you don't know about manufactured spending, you should look it up.

[Torgo]

4k is actually quite easily doable with no shenanigans during the upcoming three months due to a rather unique confluence of events including one upcoming month of rent of the entire 3-person shared house I am living in being on me due to a recently-negotiated shuffling of security deposit responsibilities, some upcoming reimbursed conference travel, and a planned splitting of the cost of buying a nice telescope this spring (one-time expense for many years).  The upcoming burst of one-off expenses is actually one of the reasons I started looking around for reward options.

Yeah those limits on the 5% aren't likely to bite me either.  A quick spreadsheet shows that will get me far more than any of the other reward options I was considering even if I only consider groceries.

[johnny847]

4k is actually quite easily doable with no shenanigans during the upcoming three months due to a rather unique confluence of events including one upcoming month of rent of the entire 3-person shared house I am living in being on me due to a recently-negotiated shuffling of security deposit responsibilities, some upcoming reimbursed conference travel, and a planned splitting of the cost of buying a nice telescope this spring (one-time expense for many years).  The upcoming burst of one-off expenses is actually one of the reasons I started looking around for reward options.

Yeah those limits on the 5% aren't likely to bite me either.  A quick spreadsheet shows that will get me far more than any of the other reward options I was considering even if I only consider groceries.

Ah so this is a one off. Nice. Though let me ask you - do you have a plan for the points that you would get? CSP points are most effective when used for travel. Do you have some travel plans in mind?
I ask because the CSP has the annual fee waived for the first year. But, if you don't use your points after the first year, you're either going to need to pay the annual fee, transfer your points to a hotel/airline partner, or transfer your points to a Chase Freedom. But when you transfer to a Chase Freedom, you will lose your ability to transfer to airline or hotel partners.

You can still use your points for cash at 1 cent per point. But it's something to think about because you can get much better value if you transfer to airline or hotel partners.

[Cwadda]

Check out the link in my signature for credit cards for us students :)

[Torgo]

Pulled the trigger.

Got the Sallie Mae mastercard and the Chase Sapphire Preferred.  That's ~ $650 this year from all and >150 every year thereafter from the mastercard, more on the one-time if it goes towards travel.

My travel plans are currently limited to a conference in August and possibly seeing some old friends across the country next month.  The former does not require airfare, just hotels, and the latter doesn't require hotels, just airfare.  Still the 25% boost from just CSP I think is still a good deal (not OPTIMAL but that would require getting even more and pinning things down with regards to the conference too early).  There's also going to be train-tickets in November and December for seeing family for holidays.

I will be on the lookout for other options.  Thanks Cwadda!  One of what I did was on that page, hah.  I mean even if I just entered a yearly cycle on signup-bonus cards or something, that's still a month of free rent per year...

[reddityeah]

I'm also a grad student but with no income at all. I have 3 cards, and credit score of 780. I haven't really applied to any cards recently for fear of getting denied. I want to get Sallie mae and double cash, as well as another card since I have some big expenses coming up. Should I try and apply?

[johnny847]

Pulled the trigger.

Got the Sallie Mae mastercard and the Chase Sapphire Preferred.  That's ~ $650 this year from all and >150 every year thereafter from the mastercard, more on the one-time if it goes towards travel.

My travel plans are currently limited to a conference in August and possibly seeing some old friends across the country next month.  The former does not require airfare, just hotels, and the latter doesn't require hotels, just airfare.  Still the 25% boost from just CSP I think is still a good deal (not OPTIMAL but that would require getting even more and pinning things down with regards to the conference too early).  There's also going to be train-tickets in November and December for seeing family for holidays.

I will be on the lookout for other options.  Thanks Cwadda!  One of what I did was on that page, hah.  I mean even if I just entered a yearly cycle on signup-bonus cards or something, that's still a month of free rent per year...

Nice.

Yea even if it's not optimal, it's still a great signup bonus.
Also...doesn't the school pay for your travel expenses? A bit confused on that point.

I'm also a grad student but with no income at all. I have 3 cards, and credit score of 780. I haven't really applied to any cards recently for fear of getting denied. I want to get Sallie mae and double cash, as well as another card since I have some big expenses coming up. Should I try and apply?

If you apply and get denied, all that happens is you have another inquiry on your credit report. Credit inquiries only account for 10% of your score. You really don't have much to lose, especially if you haven't applied for credit of any kind recently (your inquiries drop off your report in 2 years).

I think your chances of getting the Sallie Mae are still decent with zero income because it's a card geared to students (though you certainly don't need to be a student to get one). As for the Double Cash, no idea. That's a higher end card. You have a good score but no income. Not sure how they'll judge that.

[Torgo]

The university does pay for my travel, but it's a case of me needing to get the tickets and reservations and then applying for reimbursement before I go.  I screwed that process up during my first conference travel a while back and had to eat a few nights of the hotel stay - very carefully following it now.  Depending on how fast my one-time bolus of money goes I might be able to apply the money to the conference travel, or said travel might wind up being purchased as part of the 4k and the 400 getting applied to other goings on.  Travel after the August conference will include 4 Amtrak tickets planned for November/December/January, and  a distinct possibility of another conference in December.

[johnny847]

The university does pay for my travel, but it's a case of me needing to get the tickets and reservations and then applying for reimbursement before I go.  I screwed that process up during my first conference travel a while back and had to eat a few nights of the hotel stay - very carefully following it now.  Depending on how fast my one-time bolus of money goes I might be able to apply the money to the conference travel, or said travel might wind up being purchased as part of the 4k and the 400 getting applied to other goings on.  Travel after the August conference will include 4 Amtrak tickets planned for November/December/January, and  a distinct possibility of another conference in December.

Ah ok. And damn that blows about screwing up the reimbursement =/. Oh well, live and learn.

I have never actually even considered taking Amtrak for a conference, or for basically any travel for that matter. It should be good for shorter distances though, b/c of no airport security and the fact that train stations are usually close to the city center as opposed to airports.


I'm hoping to go to another conference sometime this year. I've been stacking up Barclaycard Arrival+ miles which should be applied to travel charges to get the full value of the miles, and while I am going on a trip in a week, I don't think I'll charge enough in travel charges to fully cash out all my points.

[Torgo]

Amtrak is actually planned for travel to see my family - I live within walking distance of an Amtrak station here in the Research Triangle area, NC and go see family in the DC area via Union Station in DC and the DC metro.  Longer trip, but add in the travel to and from airports and security and being on time and compare that to actually being able to *move in your seat* and get work/reading done and it's quite quite worth it.  Wouldn't go back and forth to DC any other way.  I would consider using Amtrak to go to a conference in the Northeast corridor should one come up, though once transfers start getting involved plane rides become competitive in my mind again.

[johnny847]

Amtrak is actually planned for travel to see my family - I live within walking distance of an Amtrak station here in the Research Triangle area, NC and go see family in the DC area via Union Station in DC and the DC metro.  Longer trip, but add in the travel to and from airports and security and being on time and compare that to actually being able to *move in your seat* and get work/reading done and it's quite quite worth it.  Wouldn't go back and forth to DC any other way.  I would consider using Amtrak to go to a conference in the Northeast corridor should one come up, though once transfers start getting involved plane rides become competitive in my mind again.

Heh. Out of curiosity I checked what my itinerary would look like to go see my folks (I live in Atlanta, they live in suburbs outside DC). Night train, 13 hours, costs about as much or a bit more than a plane ticket. Not worth it for my situation, but seems like a good deal for yours.

[forummm]

Have 3 or more credit lines open. As old as possible. Pay in full every month. Your credit will grow.

[Torgo]

Well I will definitely be keeping around two of mine.  Will see about the sapphire though.

[markstache]

As others have said. Certainly doable. As a fellow grad, my best advice is proceed cautiously. I do one at a time and try to stick to minimum spends I am certain I will meet. I was going to warnabout bureaucratic requirements for re-imbursement, but it seems like you are on top of that. If you do use a flyer specific card (e.g. American Airlines or Delta) to buy a  ticket, I found it helps to get an PDF of the Orbitz or Travelocity page on the same day showing that market price is the same. If you can't justify it that way don't take the risk.

Don't forget to save receipts of books to claim on your taxes as educational expenses.

General question: is there a checklist/wiki page for mustachian grad students?

Ps. What are you studying? My sins have singled me out for a statistics PhD.

[justjenn]

I'm a 25 yr old grad student, and I have about 14 credit cards. I started churning about two years ago, and my credit score has actually gone up since then. A large part of your credit score is your debt ratio. I know you don't have any debt, but if you had say $1,000 in debt and a credit line of $5,000, then getting another card and extending your credit line to $10,000 would lower your debt ratio and increase your score. So as long as you keep paying your cards off at the end of the month your credit score should actually increase.

People get confused about how opening a lot of cards decreases your credit score because your score does drop a few points every time you apply because of the hard inquiry. However, it will bounce right back up in a few months. That's why churners will have an application schedule of once every three to six months.

There will be a drop in your credit score if you cancel credit cards, for the debt ratio reason mentioned above.

Another important part of your credit score is length of accounts. They get this length by averaging how long you've kept each card open, so I wouldn't ever close a card that doesn't have an annual fee.

Sorry if that's confusing, but I hope it helps.

[Torgo]

General question: is there a checklist/wiki page for mustachian grad students?

Ps. What are you studying? My sins have singled me out for a statistics PhD.

I second the first question.

As to the second, molecular biology/genetics.  Currently pushing through the pain of writing up my first first-author publication on the intricacies yeast metabolism.

Another important part of your credit score is length of accounts. They get this length by averaging how long you've kept each card open, so I wouldn't ever close a card that doesn't have an annual fee.

Definitely keeping around my first credit card then.  It's the first one I ever had since age 18.

[markstache]

As to the second, molecular biology/genetics.  Currently pushing through the pain of writing up my first first-author publication on the intricacies yeast metabolism.

Cool. As a homebrewer I strongly support research into the lifecycle of my favorite fungus.

[Torgo]

Me too!  My work centers on the connection between sugar metabolism and the decision to initiate cell division.  Unfortunately most of the strains I deal with in the lab absolutely stink (in the literal sense) and would make really crappy beer - though one of them is originally a sake-producing strain.  I've stuck to cider myself so far.

In other news, halfway to the required spending for the CSP card.  And apparently my credit card application is not exactly private knowledge for the companies I applied (successfully) to - I have started getting credit card offers in the mail at a prodigious rate.  One of them is tempting even after reading the fine print... no fees, and $250 for $1000 spent... bonuses inferior to those I already have though.