Making these decisions early on helped me build a lasting credit score while earning points and miles

Jul 7, 2020

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When I first started my points and miles journey, I was a 20-year-old college sophomore who’d never held a credit card in my name before. I had big dreams of fancy first-class suites and luxury hotels, but I was also playing the long game. While I was primarily interested in racking up as many points and miles as humanly possible, I also wanted to build a sustainable credit score that would benefit me later in life when I needed a mortgage or car loan. Here are the decisions I made that helped me out long term, even after those early welcome bonuses had come and gone.

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In This Post

Being added as an authorized user on my dad’s credit card

(Photo by Isabelle Raphael / The Points Guy)
(Photo by Isabelle Raphael / The Points Guy)

Before I left for college, my dad added me as an authorized user on his 20+ year old United℠ Explorer Card so that I’d have it in case of emergencies. I put it in the back of my (mostly empty) wallet, not thinking much of it, and sort of forgot about it until my sophomore year, when I went to apply for my first credit card. I went to go check my credit score, not even sure if I’d have one at this stage of my life, and was shocked to see that Credit Karma was showing 20+ years of on time payments for me, and a score in the 740s.

Photo courtesy of Credit Karma
(Photo courtesy of Credit Karma)

This was how I learned the massive advantage that comes with being added as an authorized user — you essentially get to “borrow” the credit history of whoever adds you. Here I was, not old enough to legally drink, with a very good credit history that stretched back all the way to the year I was born!

Using this springboard, I was able to get approved for several amazing travel rewards cards in my first year, including the Chase Sapphire Preferred® Card and the American Express® Business Gold Card. Instead of using my early applications to try and build credit with starter cards (which generally come with lower bonuses and fewer perks), I was able to start off with some heavy hitters.

Now a lot of people are nervous about this approach — especially asking their parents to add them to their credit cards. I say parents, but really any older individual you trust with good credit would work. The key here is to boost your average age of accounts, so whoever you know that’s had their card open for the longest is the person you should ask.

Further Reading: Credit cards with the greatest value for authorized users

Many people are worried that adding someone as an authorized user is risky because they can rack up charges and leave you on the hook, but there’s an easy way around that: just don’t give them the card. In order for your credit score to benefit, the authorized user account simply has to be open. You never need to spend anything on the card, and you don’t even need to have it in your possession for this to work. So parents, add your children as authorized users to help boost their credit, and either set a limit on what can be spent on that card or simply put it in a sock drawer or rip it up.

Picking cards with no annual fee that I could keep open forever

When you’re just starting out with your first credit card(s), one of the biggest weaknesses on your credit report is likely to be your low average age of accounts, or length of credit history. This category counts for roughly 15% of your credit score, and if your age of accounts is too low, you might get automatically rejected from a number of cards. In fact my first two rejections ever, for the Citi Prestige® Card and the old Chase Ritz Carlton Card, were both because my average age of accounts had dipped below one year during my first big application spree.

The information for the Citi Prestige Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

The factors that make up your FICO score. Image source: FICO.
The factors that make up your FICO score. (Image source: FICO)

Having your parents add you as an authorized user can help you circumvent this for your early applications, but it’s important that you work actively to build a strong credit history yourself. One of the best ways to do this is by opening no-annual-fee cards that you can (and should) keep open forever, even if you don’t use them very often (note: make sure to put a small charge on them every nine-12 months to avoid having the account closed for inactivity.

There are a lot of cards in my wallet that I plan to keep open for a long time, but the only ones that I know with 100% certainty I’ll keep open forever are the ones that don’t charge an annual fee. Benefits change, loyalty programs get devalued, and your favorite card right now might be obsolete in five years. By including a few no-annual-fee cards in your early applications, you can hedge against this and build a sustainable credit score.

Related reading: The best no-annual-fee credit cards for 2020

It just so happens that two of my favorite cards, for beginners and points pros alike, don’t carry annual fees. I’m talking about the Chase Freedom® and Chase Freedom Unlimited®, which are technically billed as cash-back cards but can earn Ultimate Rewards points if you also hold a Chase Sapphire Preferred, Chase Sapphire Reserve or the Ink Business Preferred. The Freedom Unlimited earns 1.5% back/1.5x points on purchases with no caps or limits, while the Freedom earns 5x on your first $1,500 spent in rotating quarterly categories. These were two of the first cards I applied for, thanks to Chase’s 5/24 rule, and they’ve continued to age well on my credit report and help boost my score.

The information for the Chase Freedom and Ink Business Preferred card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

(Photo by John Gribben for The Points Guy)
(Photo by John Gribben for The Points Guy)

Starting with cards that were easier to get approved for

The early days of building credit history are like a game of chutes and ladders. Your score inches up ever so slowly, but any mistakes can set you back quite a ways. This is why it’s very important not to overreach and to focus on cards that you have a good chance of getting approved for.

Getting rejected from a credit card doesn’t actively hurt your score (you just get a new inquiry but no additional negative mark), but if your credit report has a lot of recent inquiries and not a lot of total accounts/length of credit history, banks may read between the lines and decide not to approve you the next time you apply.

Related reading: 7 Ways to Maximize Your Chances of Being Approved for a Credit Card

What I mean by all of this is that even if you believe firmly in the value proposition of The Platinum Card® from American Express or the Chase Sapphire Reserve®, that probably shouldn’t be the first card you ever apply for. There are plenty of great starters cards that are easier to get approved for, allowing you to earn points and build credit without dealing with the confusing sting of rejection early on.

Related reading: The best first credit cards for 2020

I was approved for the first seven cards in a row I applied for. It wasn’t until I overreached and started applying for premium cards such as the Citi Prestige and Ritz Carlton Rewards card that I ran into trouble. I learned a lot from those rejections and patiently waited until I’d had a full year of credit history with Chase specifically before applying for the Chase Sapphire Reserve shortly after it launched.

Bottom line

Your first couple of credit card applications are incredibly important, as they lay the foundation for how your points and miles strategy will shape up in the years to come. If you pick the right cards, you can earn hundreds of thousands of points and miles all while building a lasting and sustainable credit score that will reward you for decades to come.

Featured image by Eric Helgas/The Points Guy

Chase Sapphire Preferred® Card

WELCOME OFFER: 60,000 Points

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More Things to Know
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
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Intro APR on Purchases
N/A
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

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