Should I get a second credit card? (How to up credit score)

[magnet18]

According to mint, my credit score is 694

It was in the low/mid 700s, but recently dipped 25 points

I/we (DW) have 3 lines of credit
Babys first credit card, opened 2ish years ago right out of college.
- from the local credit union we bank with. 
- $4K max (i picked the max), 1% cash back, no fees, never paid interest
Rv loan, opened in march, closing in December
Honda fit, opened in August, planning on letting it ride on minimum payments for the next few months at least

Here's the breakdown
On time payments - excelent 100%
Credit usage - poor 65%.  This had been in "good" territory until i got caught with ~$3.5K on the card last month before paying it off
Average age of credit - poor, 1.1 years
Total accounts - 3, poor
Inquiries - 4, good (was 1 until I financed the Honda.  Thanks Honda)
Derogatory marks - excellent, 0


Looking to buy land in a year or two, what's the best way to get/ keep my credit score as high as possible?

Also, if you couldn't tell, I don't like credit cards, DW and I are both happy with our little $4K credit union card.  The banker actually stared at me slackjawed after seeing my income then having me ask for a $4K limit.  If there's a good way to up it without credit cards I'd be interested.

But I want a good interest rate on land.  If that requires getting a chase card or something and sticking it in the safe I guess I will.

Also selling tradelines someday a few years down the road sounds like good passive income.


Recommendations on what to do/cards to apply for?

[secondchance]

You should ask for a credit limit increase on your existing card.  This won't hurt your score in any way and will increase it by lowering your credit usage.

You just opened two new lines of credit and they hurt your score, so I'm not sure a third is what you want.

Also, what are you doing with $3.5k on the card, and why did you want to limit it to $4k? Neither of those is bad alone, but together it is bad for your credit and it sounds like you might want to explore your relationship with credit and spending.

[kpd905]

You should increase your limit, that is probably killing your score, especially if you put $3500 on it.  Either ask for a higher limit or get another card so your amount of total credit lines increases.

You want to stay under 20% of total utilization to keep a high score, that means no more than $800 on your current card if you don't increase the limit.

[TomTX]

While I generally agree with the other posters - I think you should strongly consider (each) having another credit card. You might as well get one with 2% back (Citi DoubleCash is one) or a rotating category card that gives 5% on a category of purchases each calendar quarter, 1% on everything else. Chase Freedom is an example.

And it's not just about credit score - I wouldn't be 100% dependent on a single card with no backups. What if the CU cancels it for some reason? Or it gets lost/stolen while you are traveling and takes a week to replace? Potential hassle factor is high.

Short term - sure, small temporary ding against your credit. By 6-12 months, that drops off and by 2 years it will definitely be a net benefit.

Just to reiterate - you need more available credit on your existing card as well. At worst, stay under 30% utilization. Even better to stay under 10%. Yes, that means for having a $3,500 balance when it closes, you want >$36,000 in available credit.

Seems crazy, but that's how credit scoring works.

[magnet18]

Thanks for the replies, I hadn't really thought of upping the current limit.

You should ask for a credit limit increase on your existing card.  This won't hurt your score in any way and will increase it by lowering your credit usage.

You just opened two new lines of credit and they hurt your score, so I'm not sure a third is what you want.

Also, what are you doing with $3.5k on the card, and why did you want to limit it to $4k? Neither of those is bad alone, but together it is bad for your credit and it sounds like you might want to explore your relationship with credit and spending.

I thought to get another card since I was also dinged for not having enough lines of credit.  From what I understand, the inquiries fall off after 2 years, I'm not sure if we would buy inside or outside that window though.  Not looking to buy immediately, definitely whatever is best for long term growth.

The card had 3.5K on it because of some home improvement spending, and I wasn't keeping track of the balance.  It's paid back off.
The 4K limit is because I was fresh out of college, totally broke, just getting it so I could buy tires, and thought "I've heard these things are dangerous and cause trouble, I'd best cap the amount of trouble I can get myself into as low as possible."

Relationship with spending, I'll be honest here... I handle debit cards excellently, and check the balance daily.  Credit cards, for some reason, I check the balance every couple weeks and go "shit, best pay that".  Since it's a 4K max, I've always just cash-flowed payments out of the income stream easily, it's usually just food and gas racking up, but I feel generally less in control than I'd like.  When we were just starting to mustache, the only way we paid them off was hiding them in our cars for emergencies, and using debit cards.  If we kept using them while trying to pay them off, we always just sat at an equilibrium point and never actually got anywhere.

Open to suggestions about that.  TBH, at this moment, if I opened another card for daily use, I would want a similarly low limit.  If I opened a high limit card for selling tradelines/upping total credit, I would just stick it in the safe and never use it.

You should increase your limit, that is probably killing your score, especially if you put $3500 on it.  Either ask for a higher limit or get another card so your amount of total credit lines increases.

You want to stay under 20% of total utilization to keep a high score, that means no more than $800 on your current card if you don't increase the limit.

Thanks

While I generally agree with the other posters - I think you should strongly consider (each) having another credit card. You might as well get one with 2% back (Citi DoubleCash is one) or a rotating category card that gives 5% on a category of purchases each calendar quarter, 1% on everything else. Chase Freedom is an example.

And it's not just about credit score - I wouldn't be 100% dependent on a single card with no backups. What if the CU cancels it for some reason? Or it gets lost/stolen while you are traveling and takes a week to replace? Potential hassle factor is high.

Short term - sure, small temporary ding against your credit. By 6-12 months, that drops off and by 2 years it will definitely be a net benefit.

Just to reiterate - you need more available credit on your existing card as well. At worst, stay under 30% utilization. Even better to stay under 10%. Yes, that means for having a $3,500 balance when it closes, you want >$36,000 in available credit.

Seems crazy, but that's how credit scoring works.

Thanks

This is an aside: regarding it getting canceled/lost, debit cards/checks/cash, I'm not seeing the hassle?  Ran around europe for 2 weeks with no credit card.


So how/when is utilization actually measured?  Is it when the credit card company checks the balance and issues a bill, or do the credit reporting companies check randomly throughout the month?

I've always been in the 10% utilization range, just by paying it off regularly, but mostly by luck, because I don't know when things actually "close"

Also, what's a "normal" mustachian credit card limit?
(I apparently understand quantum mechanics better than I understand credit cards.)

[Catbert]

I'd get a second credit card.  As TomTX noted credit cards can get hacked/shutdown/frozen so it's great to have a back up.  It's good to have even if you decide to keep the card in your sock drawer except for a short outing twice a year to keep the card active.

The ding on your credit for a hard pull should be minimal and the increase in your available credit and decrease in your utilization % should offset it.

[TomTX]

This is an aside: regarding it getting canceled/lost, debit cards/checks/cash, I'm not seeing the hassle?  Ran around europe for 2 weeks with no credit card.

Apparently you carry a heck of a lot more cash than I do, or have very low travel expenses. Or you use debit, which IMO offers less protection for your money.

So how/when is utilization actually measured?  Is it when the credit card company checks the balance and issues a bill, or do the credit reporting companies check randomly throughout the month?

It's measured when the statement closes and they generate a bill.

I've always been in the 10% utilization range, just by paying it off regularly, but mostly by luck, because I don't know when things actually "close"

As another poster commented, you don't seem as disciplined with credit as we had thought. The close date should be on the bill.

Spending on credit is spending real money, just as much as a debit card. You should track it.

The only real difference is that if there is a screwup/stolen card - your checking account is drained via debit until the bank figures things out. Maybe you start bouncing checks. With credit - you report the issue, and it's largely the bank's problem.

Also, what's a "normal" mustachian credit card limit?

Dunno. I have >$200k in available credit across all my cards (not counting the Amex which don't have a predefined limit) and utilization is extremely low. I've had a credit limit as much as $50k on a single card.

I NEVER carry a balance. Everything gets paid off before the due date every month.

[magnet18]

Thanks for the replies everyone

As I mentioned before, i always pay it off every month, I just wasn't aware of when statement closing was, I'll look that up

It's clear I need to get more disciplined, I'll spend the next two months changing up my habits and the way I manage the card.  An annoyance with this one is there isn't an automated auto-pay feature, which is how I managed to forget and have a statement close

It's not that I lack discipline either in general or with money, but with a credit card I definitely just capped myself low enough it wasn't a concern and then never put any time or energy into thinking about it again.  At best credit cards are a blind spot for me, at worst an unhealthy life sucking relationship with credit, so I'll get a little self exploratory for the rest of the year and reevaluate in January.