The data in the credit report are primarily used as proof that you will manage credit well, using your past activities as evidence. If you have never had a mortgage then there is no evidence, either way, as to how you will manage a mortgage. However, if you have had one for years and always paid on time, there is lots of evidence. That evidence translates into additional overall score points.

Until you prove you can handle it, the score reflects (some of) the risk that you can't.

There are many, many people on this board who successfully cancel their airline cards within the first year and still maintain excellent credit scores. In fact, there are many who did that with multiple cards in a year and still have great credit scores. Of course, everything in moderation and if you are planning on obtaining a mortgage or something similar in the next year or two, be even more careful. Otherwise, one of the primary ways that people around here build up their frequent flier accounts is by obtaining sign-up bonuses on credit cards. Often these have a first year fee waiver. Many then cancel before the card renews and they have to ever pay the annual fee.

To get started, I would just select one airline card (or hotel) that gives a nice sign-up bonus to get you going. Then, use that card for purchases you were going to make anyways and watch the points stack up. Register for dining programs and shop through shopping portals when making purchases online. If you find overtime that you don't seem to be getting a good value out of doing this, stop. If you find that it is a great value, keep going. Maybe even get another card or two with great sign-up bonuses as time goes on. Good luck!

Yes, I am going off topic here, sorry...

I have had CC credit lines as high as some mortgages, this should show I handle money responsibly. One banker told me that "homeowners" are seen as being more responsible. Well, I am a homeowner, I own several homes, I just don't have mortgages! Why does having a mortgage mean you are more credit worthy???? I really want to know the answer to that... I get quite perturbed at this line of reasoning quite frankly! Seems to me that many people I know with mortgages are a lot more likely to get into trouble with a few miss paychecks than those without such a huge monthly commitment.

Anyway, I was told that having a mortgage for several years would up my Fico by 40-50 points or so. I wonder if taking out a HELOC (but not using it) would have the same effect? Having some extra points would give me a lot more leeway to play the game and not worry about minor hits to my credit as much.

You already know the answer.

FICO is just a number, calculated automatically by a model. ~10% is "Types of credit used". It is what it is.

If it makes you feel any better, we think you can handle credit just fine.

Yea, well thanks and all that, but "we" err. "you" don't count where it really matters!

I never met a mile I didn't like, or a loyalty program or coupon offer etc. etc. and I've never felt that attitude has been anything but "worth it". I hope you get into it too, OP.

Thanks for the correction, it is calculated from the time the account was opened. So my numbers aren't right, but this is still a negative since there is a short card or multiple short cards that are lowering the average until they drop off.

Agree, I also think you can handle credit fine, but they think that a mortgage is evidence of credit-worthiness. Also though, they want to see how you can manage risk and aren't interested in how you manage cash.

If you really want to increase your score, you can buy an official FICO score and a score report which will give you some information on how you can improve your score (or more accurately, they will give some general statements on how they got to your current score, and you have to figure out whether it can be increased and how to do it), but it is becoming more difficult to find because other companies are selling scores that are not actually FICO scores but are branded as them and have much less helpful advice. If you are going to buy an official score I might drop by a FICO forum first to make sure you are buying the right one.

I got one from myfico.com and its only negative point was that I had no mortgage.

Oh well, I have only been turned down for credit once and was able to get them to reconsider when I called in, Its just that the whole mortgage thing is a sore point with me. OK. OK. Gripe completed...... lol

Yes it's worth it!

But only if.... you acquire the miles at next to nothing and/or you have skills at getting a high redemption rate using them for awards. Otherwise, save hours out of your days and take the 2% rebate.

Most of the accumulation comes from signup bonuses and from flying, not from spend.

Oh yeah it is worth it. The AA 75,000 can get you and a guest to Europe in the off-season as long as you add another $3500 in spending. (You have to spend $1500 to hit the bonus.)

You can use the special short-term offer with the SPG Amex to score you a ton of free hotels to use while you are in Europe.

I look at that and say that between the two cards available you have the option of saving over $2000. I would say that is worth it!!

I'm relatively new to all of this so would appreciate some confirmation - but I was under the impression there are two additional strategies to manage the ongoing annual fee as well:

1 - Call before renewal and ask for a retention bonus to keep the card another year. From what I've read it seems like lots of people have good success getting something (5-7.5k miles) which can offset most if not all of the annual fee for that year.

2 - If you can't get a bonus then most companies will have a FREE credit card available that you can downgrade to. Since you are simply changing the type of card no credit pull is required and the account can effectively remain open without fees. I wouldn't do this forever with all cards but is a potential strategy for helping to stagger which cards you cancel every year and keep up the average life.

Others please correct me if I am incorrect here as this is something I will be facing in the coming months as well

Yes - this works especially well for Citi issued cards. There are threads in the "Other Credit Cards" forum with specific experiences.

This technique can be especially effective in keeping utilization down. Just remember to occasionally use the card. I recently had way too much trouble being approved by Citi because of a card they cancelled due to disuse. Eventually I got past the issue but they claim their policy is to cancel a card after 6 months of dormancy and to report it as a negative cancellation.

The other time this is useful is having surplus credit line available that can be "shifted" to get another approval. Lots of reports here of folks who were denied, especially by Chase, who could negotiate to move credit line from an old card over to a new one.

Sounds like you're doing a lot of reading to educate yourself. Excellent work.

This worked for me. I was originally denied for the Chase Sapphire card, but I reduced the limit on a CO card. The result: I nabbed 100,000 Sapphire points.

I have about 3 cards approaching the deadline for an annual fee. I plan to ask them to waive the fee or provide some kind of bonus. If that doesn't work, I will downgrade to a no-fee card. If that isn't an option, I will cancel.