Credit card advice?

[P3]

Ok, so fiance and I are going to buy a house in a year. We were looking in the market about a year and a half ago, and had our credit reports run. My realtor said I had good credit, but not enough. I've heard horror stories about people with multiple credit cards so I always limited myself to one card. I've had the same credit card for two-ish years, and was only a day late on a payment once. So now that we're going to try to buy in a year, I took my realtors advice and I'm going to build my credit over the next year.

Currently I have a credit card with Capital One. They've been pretty good to me, and I'm always paying it off. That is currently 20% APR or something like that.

I just accepted one of those pre-approved credit cards with WaMu (my bank) for 0% APR for the first year, then 9% APR after that.

I picked up a Victoria's Secret credit card today. I'm not really sure of the APR. I don't buy bras that often, but it's the only place I go for bras.

I got another letter in the mail from American Express for a pre-approved card. It's 0% APR for the first 15 months with 10.75% APR afterwards.

My question is, should I go ahead and get the American Express as well? Or will the Capital One, WaMu, and Vicki's card be enough? Mom said I should wait a while to get another one because my credit score is probably low because they check it when you accept their card. I'm honestly kind of scared. Not because I don't trust myself with that many credit cards, but because I've grown up hearing all those horror stories about people claiming bankruptcy at the age of 20. Advice? Oh... and *tactful* advice is appreciated 

[TheChicagoCrew]

The number of credit cards you have does not increase your credit score.

If you have, say 2 credit cards that get used and paid off regularly that builds credit.
If you get a car loan and are able to keep up with payments, that builds credit.
Mortgage, etc.. builds credit.

 The more credit cards you accumulate OR apply for the more you seem 'needy'. You only want a couple that you can use regularly and pay off the entire balance with ease. You need to have them for a good period of time too before it starts building credit. Don't max them out. Don't pay late. You don't want to regularly apply for different lines of credit (credit cards, auto loans, house loans, etc) as this shows up on your record and does not look good to companies that you are REALLY wanting to give you a loan.

 I have had a total of 1 credit card. Screwed it up due to family financial matters and could not pay it. Finally got it paid off but it is still on my record (though says "PAID" now). I just NOW got approved, after 3 years, for another credit card. I will treat this one with lots of care and use it properly. I need to build up my credit. The mortgage helps a great deal, but is not the be all/end all of building credit.

-Melina

[JR1030]

I think it's a bit dangerous to get too many credit cards...not because you will load 'em up, but because you could load them up, which would then make you a credit risk - read up on it, and see what the experts say.

I found a couple of articles:
http://articles.moneycentral.msn.com/Banking/YourCreditRating/BeefUpYourCreditScoreIn5steps.aspx

http://www.bankrate.com/brm/news/credit-scoring/20040128a1.asp

http://financialplan.about.com/od/creditdebtmanagement/a/improvecredit.htm

[Marybelle]

Yup, every credit card you get is "potential debt".  So, if you have $15,000 in open credit, the bank looking at your mortgage will assume that that is actual debt for the sake of figuring.  So, less is more, in this case.  The 3 you've go should be more than sufficient for building credit.

[NutKitty]

At the same time, wouldn't the mortgage company be looking at the ratio of debt she has available vs. what she would actually be using?  In that case, isn't it good to have a higher credit limit because it shows she is capable of keeping it under control? 

I do agree that the cards you have now are enough, Princess3.  The Cap1 is considered subprime (tho they do have some better cards), and I believe Amex is NOT subprime - in which case, it would be a good card to get.  Don't get rid of the Cap1 card though, since you want the life of the card to show on your reports, and having that one store card is also actually helpful. 

Also, try to not spend any more than you can pay off each month, if possible.  I personally try to never carry a balance, or use more than 30% of what I have available...  but it is confusing, because sometimes it looks good to the credit card companies if you are carrying a small balance, because they profit off of it, and in return you could possibly get higher increases. 

[JR1030]

Yup, the articles I posted talked about that a bit.  Very informative.

[P3]

I really liked the articles you posted, they were extreeeemely helpful JR. Thank you!

I think I'm going to go ahead and stick with the three I have. I usually keep a small balance on my Capital One, but pay it off frequently (if that makes sense?). Plus, American Express isn't usually accepted is it? I know my mom has one of each and AmEx is the one she uses the least because it's mostly a travel card.

[hairless_love]

I don't know much about credit cards...but I'm curious for how long you've been with WaMu. If it's been awhile and they're treating you good...that's great! If you just barely got an account there....WATCH OUT. Washington Mutual screwed me over big time when I had an account there. And the people at the bank were always very rude. My experience with them was a very very bad one. Maybe I just had a bad branch though.

[looneycartoonie]

When I was 18 I screwed up my credit like you wouldn't believe. It's taken me this long to get it over 700 and I've found that the easiest way to get your credit higher is to have credit cards with very low balances and to keep your inquiries to a minimum. Every time you apply for a credit card or have your credit checked then you get points lowered on your credit report. Credit card inquiries stay on there for years and it effects your credit score adversely. If you have credit cards then they do look at the amount of credit that you've been extended compared to what you've been using. I used to work in the mortgage industry and my best advice is to stop applying for credit cards, use very minimal amounts on your cards and pay them off completely each month, never be late on a payment and of course keep a close eye on your credit report.

[kmw]

The reason most people declare bankruptcy is medical bills, not because they've charged too many Starbucks on their credit cards.   

But I think money is just common sense.  If you don't have it, don't buy it.  Credit cards aren't free money.  Every purchase on it, without cash to back it up, is a loan.  I wouldn't take out a loan at 20% interest to buy movies or a cute pair of boots, so why should it be charged on a credit card if I don't have the $$ in my budget to pay for it?

Between my husband and I, we have 7 credit cards (major ones plus store cards).  Our total credit limit is around $70,000.  We carry a $0 balance 11 months out of 12.  And this year I'm saving up all year for Christmas, so the goal is to carry a $0 balance 12/12 months.

I understand sometimes job losses or moving or life causes unexpected expenses to have to be put on a credit card.  Which is why I think an emergency fund is a better first step than applying for another credit card.