Episode 16: Starting and Rebuilding Credit

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Thanks for joining me for episode 16 – Starting and Rebuilding Credit – actionable easy steps you can take to later get premium credit cards!


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Support my work through Patreon, Paypal, the Cash App, and referral links by visiting the donate tab on my website. Subscribe on YouTube; like on Facebook; follow on Twitter; and follow on Instagram.

Visit my other podcast project at stoicsolutionspodcast.com where you can find practical wisdom for everyday life inspired by the ancient philosophers of Greece and Rome.

Thanks to generous patrons and fans of this podcast who help support my work. Have a great day.

Mentioned in podcast:

Watch me on daily livestreams for the month of March and maybe beyond on Cakeologi’s YouTube channel! Visit Cakeologi’s website.

Schedule a free 15-minute consultation with full-time business coach and YouTuber Cakeologi who can help you formally establish your business, build business credit, and get premium business credit cards. When you select from various paid services after the free consultation, I will receive credit for referring you. Listen to Cakeologi on episode twelve of my podcast.

Discover IT Secured card

Discover IT card

US Bank Harley Davidson Visa

Rough Transcript:

You’re listening to the Hurdy Gurdy Travel Podcast. I’m your host, Justin Vacula, here to help you travel the world at next to no cost through credit card points, miles, benefits, and rewards. Make money, save money, and take advantage of great deals!

Visit my website at HurdyGurdyTravelPodcast.com where you can read episode transcripts, complete a free credit card questionnaire to receive tailored recommendations, follow me on social media, view helpful resources, listen to past episodes, and contact me.

Thanks for joining me for episode 16 – Starting and Rebuilding Credit – actionable easy steps you can take to later get premium credit cards!

Some personal and podcast updates: I’m recording on March 23th of 2020 now day seven of shelter in place here in the Philadelphia area. As promised, I’ll release more episodes than usual in coming days. I’ll also be livestreaming daily from YouTube at 8PM Eastern Standard Time with supporter of the show Cakeologi. Join us for laughs, helpful tips, and a chance to have your questions answered live! Visit his YouTube channel at Cakeologi – C-A-K-E-O-L-O-G-I. More information can be found in the show notes.

Most of my videos talk about what many call premium credit cards – those for people with a strong credit profile and scores around 725 and greater. What about people with delinquencies, bankruptcy, collections, missed payments, and generally low scores? How about those just starting with credit perhaps in their teenage years or older who just haven’t had credit cards? This episode will provide some tips to start and rebuild which can also be helpful for some intermediate users or people new to maximizing credit card benefits by signing up for multiple cards. This episode, I think, is more information-dense than others, more talk about specific strategy rather than general, so please also view the transcript at hurdygurdytravelpodcast.com.

If you’re brand new to credit cards without items on your personal credit report, I’d suggest starting with the Discover IT secured card. Many starter cards won’t give great signup bonuses or earn potential, so I wouldn’t focus on those things, but at least the Discover IT Secured gives 2% cashback at gas stations and restaurants on up to $1000 in spend each quarter and 1% cashback on all other spend. This cashback won’t amount to much, again, as I usually say, category return especially return on everyday spend doesn’t make much of a difference unless you’re spending large amounts, but it’s something. Especially with Discover IT secured, you won’t have a large credit line because, as per the card terms, you must make a security deposit ranging from $200 to $2500 which establishes your credit line. The card has no annual fee; reports to Equifax, Transunion, and Experian; and should eventually convert to an unsecured card – a regular card with a credit line rather than a security deposit dictating the credit line. People with scores of 650 and up will likely have success getting approved for the better Discover IT card and can skip the secured card if approved for the regular unsecured card.

In addition to the Discover IT Secured, Discover IT or if you can’t get approved for Discover IT secured for some reason, I’d next suggest a card most people don’t talk about – the US Bank Harley Davidson Visa. The application is interesting because you apply for the regular unsecured card and, if denied, you have the option for a secured card which shouldn’t be a second hard inquiry on your credit report or cause you to have to complete another application.

The regular unsecured Harley Davidson card has a signup bonus of a $150 Harley Davidson gift certificate after spending $500 in sixty days and 0% APR for the first twelve billing cycles. Spend on the regular version of the card gives 2% back in the form of points which can be used for Harley Davidson purchases with spend on restaurants, gas stations, and lodging and 1% everywhere else. The earn rates and categories aren’t exciting, but you can’t be picky when starting out.

Most importantly, the Harley Davidson card will establish a relationship with US Bank which should improve your approval chances for their valuable credit cards in the future. I’m a huge fan of their Altitude Reserve card, that’s an episode for another day, and as of time of recording, there’s talk of US Bank releasing two new Altitude cards, the Altitude Connect and Altitude Go, which look promising. Altitude Reserve requires a US Bank relationship and this can be difficult to come by as US Bank can be strict with approval sensitive to multiple credit card inquiries, and you can’t get a checking account with US Bank if you lack a local physical branch. Even with a local branch, a credit card should help approval chances when paired with a checking account. If you don’t get the regular Harley Davidson card, take the offer for the secured card and, in either case, you’ll be more likely to get more cards with US Bank in the future.

After these two cards, I wouldn’t recommend new credit cards for at least a year. It will take time for your credit to build or rebuild and more inquiries will hurt your score and likely lead to rejections. Further cards will also interfere with your ability to get cards with Chase. I’ve mentioned Chase’s 5/24 rule in many episodes: five or more personal accounts will prevent you from getting cards with Chase in most cases and may interfere with your chances to get cards with Barclay’s bank and Bank of America. I’ll talk about why this is important later in the episode.

Additional credit cards, as I’ve mentioned, especially at this point, won’t generate great return on spend. Some praise the Apple credit card and cards with Navy Federal Credit Union which may be easy approvals offering large credit lines, but I view the Discover IT Secured and Harley Davidson Visa as much stronger choices especially if the Discover IT Secured graduates to a Discover IT generating a 5% return on spend for rotating categories and you max said categories every quarter. As I’ve mentioned, the US Bank Harley Davidson Visa establishes a valuable relationship with US Bank.

Navy Federal Credit Union’s best credit card, the Flagship card, is okay at best and doesn’t require you to have a significant relationship other than a checking account. Flagship is not worth a 5/24 slot in my eyes and the other Navy Federal credit union cards’ signup bonuses and earn potential are really lackluster early in the game. Don’t fall into the hype associated with huge credit limits – high credit limits will come in time and you don’t really need them unless you’re putting in large volume of spending. Apple Card is a dead end and easily the most overrated card of 2019 – I’ve discussed this in other episodes – no signup bonuses and categories which don’t amount to much is a no-go early in the game. Navy Federal cards can be okay much later in the game, but I see no good reason to get them early if you can instead get in with Discover and US Bank. Play the long game and be strategic. Don’t lock yourself out of Chase as you’ll miss wonderful cards like the Ink Business cards with massive signup bonuses and earn potential even if you don’t travel.

After the Discover IT Secured and/or whatever Harley Davidson card, you may also become an authorized user on a card from a very trusted family member or friend who will pay their bills in full each month and not hurt your credit by making poor decisions. Being an authorized user on a card which reports to all three bureaus is optimal – Capital One can be very good here. Do note, though, that being an authorized user can take up a 5/24 slot, so do some research on DoctorOfCredit.com and Google first, but this route isn’t necessary if you can get the Discover IT Secured and/or the Harley Davidson Visa regular or secured.

This authorized user route can be helpful, though, if you can’t get in with both issuers especially if you’re under the age of 18. Parents out there, survey your credit card portfolio and consider making your children authorized users as early as possible if they can be added under the age of 18. Navy Federal Credit Union gains some power here if Discover and US Bank are no-gos. The Capital One Platinum secured card can also be a good option. Options, options!

After one year, and after getting a personal checking account with Chase if you’re able to (a checking account likely will increase your approval chances and may give you a cash bonus), I would suggest the Chase Freedom card to establish a relationship with Chase. Listen to episode 14 for why I do not recommend the Chase Freedom Unlimited card.

You will likely not get approved for the superior Chase Sapphire Preferred or Chase Ink cards at this point, so you can start with Freedom. Three months later, about 15 months after your initial credit cards. or even the same day as getting Chase Freedom, you can start with American Express by getting a business card if you’re able to reach signup bonus spend goals.

Establish your business and EIN well before this point – as early as you can. Listen to episode 12 of this podcast with Cakeologi for more details. Offers change day to day with American Express, so feel free to check in with me to see what’s best for you by completing my credit card questionnaire at hurdygurdytravelpodcast.com. After this, well, options open quite a bit and that’s outside the scope of this episode. Congratulations on your first three or four cards assuming no speed bumps and you’re on your way to more premium cards!

As is the case for everyone, your credit profile stays healthy when you pay big balances in full before statement closing dates or shortly after. Don’t pay interest – pay off balances to avoid finance changes and be careful with managing intro 0% APR periods. Before applying for cards, make sure your credit utilization is low and check to see which bureau banks will pull from before applying for cards – see that your Equifax report, for example, is in good shape before applying with a bank which will very likely pull from Equifax.

Indeed, it’s some effort to build and rebuild credit, but it’s well worth it especially considering how fragile lines of income and life in general can be – it’s amazing to have options; use points and miles to travel; utilize credit card perks and statuses while traveling; save money with great offers, and even get cashback on daily spend.

Hopefully this episode was helpful – a quick ten to fifteen minute overview for you to begin your points and miles journey.

Thanks for listening and stay tuned for more content!

Visit my website at HurdyGurdyTravelPodcast.com where you can read episode transcripts, complete a free credit card questionnaire to receive tailored recommendations, view helpful resources, listen to past episodes, and contact me.

Support my work through Patreon, PayPal, the Cash App, and referral links by visiting the donate tab on my website. Subscribe on YouTube at Hurdy Gurdy Travel Podcast; like my Hurdy Gurdy Travel Podcast Facebook page; follow HGtravelpodcast on Twitter; and follow Justin Vacula on Instagram.

Schedule a free 15-minute consultation with full-time business coach and YouTuber Cakeologi who can help you formally establish your business, build business credit, and get premium business credit cards. When you select from various paid services after the free consultation, I will receive credit for referring you. Listen to Cakeologi on episode twelve of my podcast.

Visit my other podcast at stoicsolutionspodcast.com where you can find practical wisdom for everyday life inspired by the ancient philosophers of Greece and Rome.

Thanks to generous patrons and fans of this podcast who help support my work. Have a great day.

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