Credit advice for our young newbies

After playing this game for almost thirty years, I can tell you that this hobby, has provided me with life opportunities that never would have been possible without the advice and guidance that came from those that helped me get started. 

Steve Belkin for one, always had time to answer my questions. Randy Peterson provided a platform and community (Flyertalk) that taught me oh-so-much. Maybe I can save you new, young players some time and grief with a few suggestions on starting out with credit cards.

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Your first attempt at credit 

When I first figured that this hobby was a hidden gold mine, I was “all in” immediately. I wanted to try every play, apply for every card and take part in every mistake fare.

Fortunately for me, I already had established credit with previous car loans and a mortgage or two in my past. For the younger crowd, if you are fortunate to “catch on” early, a credit card may be your first venture into the world of credit.

Make your first move a positive one 

If your first attempt at establishing credit is with a credit card, try one of these two techniques. Do NOT apply for a premium travel rewards card as your first credit attempt.

1. Build credit with your bank

If you have a bank account in your own name and have used it successfully (without overdrawing) for at least six months, consider your first credit card to be the base card offered by your bank.

You can pick it out of the bank’s offerings. It will have no annual fee and a lousy rewards program and rewards structure. Why bother, you ask? Because you want your first experience to be an approval, not a rejection. And this will give you a chance to prove to yourself that you can handle having a credit card, paying the balance in full every month and on time. 

If you mess up, even once, please review your commitment to yourself and your future credit file. You are not starting off on the right foot.

2. Build credit with a store charge card

If you do not have a banking relationship, consider a store charge card as your first venture into the world of credit. You know, the one they hawk at the checkout counter offering you 20% off today’s purchase if you apply right now. That card absolutely requires payment in full each month and will help you build a new credit file.

Make sure to ask the counter clerk (or, if necessary, their supervisor) if the store card reports to the national credit reporting agencies. If not, pass and look for another first card. You are attempting to build a credit file that looks good enough to allow you to apply and be approved for the kind of credit cards that pay so well.

Use whichever card you start with responsibly for at least 6 months. Check your new credit file with Experian, Equifax or Transunion, the three major credit reporting agencies in the USA.

You are looking for a credit score of 700 or above before attempting to apply for one of the good cards. If the score is not that high yet, keep using the card you have responsibly and maybe add the other choice from the two above to help build your credit file and score faster.

Final thoughts

Now, I know the naysayers will say “But that way you are using up one of your 5 spots in the Chase 5/24 rule.”  I’m talking about a brand new credit file here, for somebody just starting out. They are better off starting out with an approval than a denial from a premium card.

I know some of this information may seem too basic for this audience. But I think it’s a good reminder to pass on this information to those you know who are thinking about joining us in a life full of fun, profits and adventure.

Current data indicates that 43% of American have a credit score less than 700. Let’s do all we can to make sure only those with a commitment to success are playing the game with us.