How do I build up the perfect credit card roster ?

Before diving into this, keep in mind, this is a marathon, not a sprint. Every decision and action has its own time and place and following the guidelines I am going to be laying down can greatly improve your chances of

A. Getting another card
B. Improve your credit score
C. Landing higher access to diversified credit lines

Patience is key – time.

If you’re in the credit card game (yes, it is a game you’re trying to win – get rewards for your everyday spends) you actually have to plan a lot before getting any card.

Additionally, you can’t just go out and get all of the fancy top of the line cards in one day. This is a slow grind – one that will not just reward you with perks and benefits but also with a longer credit history – the longer you keep your accounts active.

You’re more likely to be given a credit line increase of $10,000 for renovating your house if you have a solid credit history of 5 years than if you just recently got a credit card (and probably under $4,000 limit).

Like wine, older the account and it is well maintained, the better it ages.

Credit score beyond a certain point isn’t worth spending time

If you get a score over 750, be happy. It isn’t really worth your time anymore to run after that perfect score of 850 because it’s not going to give you any additional benefits. After an average borrowing age of 1 year, your credit score generally stabilizes and can sustain temporary hits ( drop in score) when you apply for a new line of credit.

These short term hits are recoverable and actually benefit you in the long run (provided you pay them off on time and maintain them in good light).

The Strategy

Card #1

Your first card is the most important and one you’re going to keep basically forever. It is this important to choose a good starter card. We recommend the Discover cash back or Chase Freedom Unlimited.

Keep this starter card for at least 6 months – paying it off on time and maintaining a low utilization rate.

Card #2

Keeping the Chase 5/24 rule in mind (rejected if >5 cards in the past 24 months) it’s beneficial for you to build out a Chase base of cards. Hence the Chase freedom card seems the value returned. With rotating 5% quarterly categories, it can compliment the Discover cash back – maximizing your returns.

Getting a second line of credit is going to hurt your score but it’s not permanent. Now you have to maintain two accounts and give them equal importance. Set-up auto-payments to never miss a payment.

Card #3

You should ideally aim to get card #3 after 10-12 months of getting your first card. By now your score would’ve improved and can sustain another inquiry (process banks use to check your credit report). Now is when you need to ask yourself – do I want more cash back (low value returned) or travel rewards (high value returned)?

Chase Sapphire Strategy to maximize returns

If Rewards is your cup of tea, then by all means, get the Chase Sapphire Preferred after 15 months of getting your starter card. This card is recommended for the following reasons-

1. No annual fee for year one.

2. Sign-up bonus of 50,000 BP after $4,000 spend in first 3 months.

3. Offers 10,000 referral bonus (upto 50,000 BP / year) if your friend/family is approved.

4. Using your CSP, try to maximize on the referral reward effectively earning you 100,000 BP (SIGN-UP + REFERRAL)

5. Product change to Chase Sapphire Reserve at the end of first year holding the. CSP.

6. Redeem the Bonus points now at a 1.5x multiple towards travel.

7. Combine all BP from the other Chase cards in the Ultimate Rewards and pool them with the CSR point.

If so far you’ve collected three Chase cards, read here.

Card #4

Your fourth card can be another Chase card (airline card – if you travel a lot) or the ink series card if you are a business owner – high sign-up bonuses. If you want to diversify your portfolio, AMEX is a good place to start with. We recommend the AMEX Blue cash as it is a great Groceries and Gas card. Alternatively, the Citi double cash is another great choice to enter the Citi ecosystem.

It is important to get an entry level card in each back before applying for their more premium cards. This gives the bank data points to collect on you as a potential customer and borrower.

Card #5

Card five should definitely be a card you get after 18 months of getting your first card. We don’t have any recommendations as by now, you would’ve been so accustomed to reading about the various cards that add value to you, you will know better what you require.

Make sure benefits don’t overlap

Just a tip about creating this card roster. Make sure you don’t have overlapping cards. Each card should compliment the others. For example, if you have the Chase Reserve, hold off on the AMEX Platinum as they offer a lot of similar benefits. Get the platinum once you decide you no longer want to keep the Reserve.

The best time to get the cards with great sign-up bonuses (w/ high minimum spends) is when you know for sure you have a big expense coming up.

Links to the cards we mentioned are attached for your convenience.

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