Author Topic: Travel Hacking + Credit Score Wizards, Read Me  (Read 3518 times)

jpo

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Travel Hacking + Credit Score Wizards, Read Me
« on: August 28, 2012, 11:43:25 AM »
I am planning on a trip next summer that will include purchasing two airline tickets with American Airlines for about $800.

It looks like Citi has a credit card offer where I can earn 30k miles and $100 off to help pay for the tickets. This will be not quite enough to cover the flights, but it would cut down the cost to about $300 or so, covering the cost of two tickets at 12.5k miles each ($400 off) and then $100 off the remaining bill.

However, I will be shopping for a mortgage in early 2014 and am wondering if opening this card will significantly impact my credit score. I currently only have 2 credit cards that are ~2 and ~5 years old, so opening another this close would drag down my average length of accounts further. So far I have been meticulous with my credit and have a score in the mid 700s. Also, the card has a $95 annual fee, waived for the first year. Even if I cancel the card after I take out a mortgage, I would at least be paying $95. I do not spend on travel regularly, so the card wouldn't get used much if at all.

Is this being penny wise and pound foolish? Not sure how much doing this would impact my credit score/potential mortgage rate to save ~$400.

AJ

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Re: Travel Hacking + Credit Score Wizards, Read Me
« Reply #1 on: August 28, 2012, 12:16:16 PM »
If your score was 800+, I would say go for it. No one can say for sure how much it will ding your credit, probably not much at all, but you want to ensure your score is at least 740 when you apply for your mortgage to get the best rate. It sounds like you would be cutting it rather close.

gecko10x

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Re: Travel Hacking + Credit Score Wizards, Read Me
« Reply #2 on: August 28, 2012, 12:37:27 PM »
I agree with AJ, except that I think the number may need to be 760 for the best rates.

jpo

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Re: Travel Hacking + Credit Score Wizards, Read Me
« Reply #3 on: August 28, 2012, 12:51:47 PM »
If your score was 800+, I would say go for it. No one can say for sure how much it will ding your credit, probably not much at all, but you want to ensure your score is at least 740 when you apply for your mortgage to get the best rate. It sounds like you would be cutting it rather close.
Last time I checked was Jan 2011 and it was close to 740. I assume it has gone up with longer accounts, continued on-time payments, and higher credit limit since then but probably not to 800.

Sounds like it is not worth the risk if I am this close. I also forgot to mention, I have a Chase 5% card and can get 5% back in the 4th quarter of this year on airline tickets, so $40 off anyway.

trammatic

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Re: Travel Hacking + Credit Score Wizards, Read Me
« Reply #4 on: August 28, 2012, 01:40:31 PM »
Any hit this has to your credit will be long gone before 1Q14.  Typically, credit hits go away after about 6 months, and then you should see a bump in your credit in that your utilization rate is lower.

AJ

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Re: Travel Hacking + Credit Score Wizards, Read Me
« Reply #5 on: August 28, 2012, 02:37:41 PM »
Any hit this has to your credit will be long gone before 1Q14.  Typically, credit hits go away after about 6 months, and then you should see a bump in your credit in that your utilization rate is lower.

You're thinking of the inquiry hit, which will get better after 6 months, but won't be totally gone for 2 years. Plus, the OP is right that it will drag the average account age down, which will decrease it as well. It will only help his credit utilization is he carries CC debt (I'm assuming he doesn't if he is planning on buying a home soon). Otherwise, it will just be more of 0%.

jpo

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Re: Travel Hacking + Credit Score Wizards, Read Me
« Reply #6 on: August 29, 2012, 11:08:03 AM »
Any hit this has to your credit will be long gone before 1Q14.  Typically, credit hits go away after about 6 months, and then you should see a bump in your credit in that your utilization rate is lower.

You're thinking of the inquiry hit, which will get better after 6 months, but won't be totally gone for 2 years. Plus, the OP is right that it will drag the average account age down, which will decrease it as well. It will only help his credit utilization is he carries CC debt (I'm assuming he doesn't if he is planning on buying a home soon). Otherwise, it will just be more of 0%.
I pay off in full each month, and utilize less than 10% of my limit.

MJT

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Re: Travel Hacking + Credit Score Wizards, Read Me
« Reply #7 on: August 29, 2012, 11:15:40 AM »
Here is a blog that discusses travel, credit card rewards, credit scores, etc.  I think it may have information about various travel rewards programs that could help with your travel plans.

http://milevalue.com/free-first-class-next-month-how-many-cards-can-you-personally-apply-for/