Would This Help Build Credit or Should I Wait?

Would This Help Build Credit or Should I Wait?
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#1

I got my first credit card in Jan. 2018 through Amazon for cashback from Amazon purchases. Now I am considering getting a credit card through Paypal to get cashback there and/or through Targyet because of the free shipping and 5% off Target purchases benefits. I know I will use those cards rather than a general use for cashback on takeout or gas which I don’t purchase. I mostly grab deals through Amazon, Paypal and Target. Currently my credit score is above the low end of excellent and just want to do something to keep it improving in the background for when I need it. Would getting one of these credit cards help or hurt because my credit history is young?

I’m probably over thinking it but thought I would I ask. One thing to note is I am super on top of paying things off on time so I am not worried about the interest rates.


#2

Hi, BrightHalo. Glad to have you in the NerdWallet community. A second card might help. A question for you: About what percent of your credit limit are you using? I know you pay it off every month, but credit scores reward you for using only a small portion of your limit. (The highest scorers se less than 10%.)

It’s smart to wait at least six months between credit applications, and it sounds like you’re doing that. A new card will add to your available credit, which should help your score, assuming you don’t run up balances, and it sounds like you will not. That helps a factor called “credit utilization” that is weighed heavily in calculating credit scores.

You might also be able to use a credit builder loan to help your score (credit scores also reward you for credit mix — having both credit cards and loans with level payments. But as high as your score is already, time and continuing to pay on time are going to help more than anything else.

Congratulations on getting started. It sounds like you are well on your way. Let us know if we can help you further.


#3

BrightHalo - thanks for joining our community. We’re happy to have you and hope to be a helpful resource throughout your credit building journey! :nerd_face:

Bev offered some solid advice here, and I just wanted to share a few informative articles that may be useful:


#4

People seem to go in one direction or the other with your situation. Some like to grow credit slowly and wait quite awhile to add another account. Others, who have decent scores, like to add a couple, take a temporary ding and then have the cards mature together making them less susceptible to sudden drops as they’ve added more of a portfolio and given it some time to all age together.

Whether you go with one extra card or two, you’re automatically going to get an instant ding - a shorter one for inquiry and a longer one for your AAOA (average age of accounts) taking a hit. But if you’re looking for the long run and you don’t mind sitting back and gardening for a little while after, it can be advantageous to have several cards all aging together. However, if that doesn’t hit you right then you can hold onto just the one card you have now and wait for it to add significant age but remember, it will be cut in half when another account is added, thus why some people like to layer.