I’m rollin’ in credit card bonuses. A year ago I had almost no credit history. No personal loans, no credit cards or car loans. Now I have 4 credit cards that I love and I can’t wait to get my next one.
Start with a secured credit card
Because of my limited credit history I had to start with a secured credit card. This card doesn’t offer a sign up bonus but it’s a great way to get started if you have limited credit history. I went with the Discover IT secured card. I put a $700 deposit on it, set up auto-pay so I never missed a payment, and made sure to keep my spending low so my credit utilization is optimal at less than 6%. After about 6 months of paying on time and in full, Discover returned my $700 deposit and turned my secured card into a regular Discover IT card. This card is pretty good in that it has a 2% cash back on restaurants and gas and 1% on everything else. But since we are on the FIRE journey and we work from home, we really don’t spend much on gas or restaurants.
Credit utilization is an important part of improving your credit score but it’s not the only thing. Learn what factors determine your credit score here.
Become an Authorized User
If you are lucky enough to know someone with a long and excellent credit history and that trusts you ALOT, see if they would be open to adding you as an authorized user on a card with them. I did this with my husband on our Southwest card and it resulted in a huge bump in my credit. Not to mention we were both able to meet the spending limit to get the 40,000 bonus miles on Southwest Airlines with a low fee of $69.
Because my credit history is so short and I only had a couple cards, I didn’t risk applying for the cards with the really nice sign-up bonuses just yet. The card I really want is the Chase Sapphire Preferred. This card has a 60,000 point bonus with a $95 annual fee- we will probably get this card next year when we can travel again. But I would have been rejected for that card if I had applied with such little credit history.
So instead I started with a card with no annual fee so that I could keep it long term and improve my credit history length without being charged every year for the privilege of using the card. The card I chose has the best sign-up bonus you can get without paying an annual fee. The Chase Freedom has a $200 sign-up bonus and it currently has a 5% cash back on grocery spending and 1.5% on everything else.
Take It Slow
My credit card strategy has two goals. The first is to improve my credit score so that lenders clearly see me as a safe bet. I personally don’t have any intention of needing to borrow money from lenders in the near future. The only reason I want excellent credit is so that I can get the best credit card sign-up bonuses so I can use them to TRAVEL FOR FREE- this is my second goal.
Right now Chase has the best sign-up bonuses so I’m planning to stick with Chase cards only for a while. But unfortunately Chase also has their own rules. Chase will reject your card application if your credit report has more than 5 hard credit pulls in a 24 month period. So that means taking it slow and waiting several months between each new application. Taking it slow is also better for my credit as well.
Since You’re taking it slow, it’s important to apply for the cards with the best bonuses available. Chase Ink for business has a 75,000 point sign up bonus after you spend $7500 in the first 3 months. I’m not sure how long this offer will last. The usual bonus for this card is 50,000 after you spend $5k in the first three months.
100 Point Credit Improvement
Over the last year of working on my credit score it has improved about 100 points, from Fair to Very Good and I’m currently about 30 points from Excellent. Over the past year my husband and I have earned a total of 169,032 ultimate rewards points and Southwest miles. Just taking a little time to learn about credit has really paid off.
Over the next year my credit history should have improved enough that I should be eligible to get the credit cards with the very best sign-up bonuses like the Chase Ink, British Airways Visa Signature Card, and the Chase Sapphire. So when it comes time for our nomad life to begin, we will be stocked with miles and ready to go!