Building Credit References

LavaKnight · October 2009

Hey all,

So recently my banker saw my interest rate that I have through the bank credit card that I have, and tried to lower the interest rate on it for me. Thing is, it's my only credit card, and he said that he couldn't get a better rate due to my lack of credit references. And here I thought building credit was just about having and paying off one card regularly.

I have pretty decent credit (though I don't know my exact score), but I'm wondering if down the line, it would benefit me to have more credit references? I have no debt, and always pay my sole credit card off every month, never buy more than I have money for, yada yada yada. Therefore, a lower interest rate isn't all that important to me, as I usually don't carry a balance.

However, if having multiple credit references would benefit me in the future, when I'm looking towards car or house loans, I might consider opening a second card. I order through Amazon every once and a while, and wouldn't mind getting the bonuses associated with their card.

So, in summary, should I have more than one credit card, and does it matter if it's a store card (Amazon), vs some other type of credit card?

Thanks for the H&A!

Gabriel_Pitt · October 2009

One of the things that your credit score references is how much credit you have available vs how much you use (credit utilization rate). IIRC, the best rate for credit-building purposes is about 10% (i.e. you have $5k in total availalbe credit, and put $500 a month on your card) . So long as you use them responsibly, there is no downside to having extra credit cards. Heck, you can apply for two or three more cards and then just not use them at all. What the score utilization score is concerned with is how much of your total limit you use, and doesn't care about activity individual cards.

It sounds like with your history, you'd be getting a rather low starting limit to begin with, and it's the accounts with tens of thousands of dollars in spending limit that companies are canceling or cutting the limit on due to lack of use, so getting a couple extra cards and then not using them wouldn't be a problem.

LavaKnight · October 2009

Will it do much in the long-term for lowering interest rates, and building credit? From what I have heard, you can't get higher than some credit score of X if you don't have enough credit references. Is this true? My limit for my bank credit card keeps on increasing, so if references don't matter as much as % total credit, it wouldn't make much sense for me to get another credit card.

If references to matter as much as I have been led to believe, than I might just get it over with and get that Amazon card.

Thanks again for the help and information!

Penny Arcade

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