How I got my credit score above 800 before I turned 22 (Part 1)

A screenshot of my credit scores on Credit Karma (June 14, 2022)

As a teenager, I realized that managing my personal finance well would be hugely beneficial to my adult life. Before I turned 18, I was already eager to begin the journey, so I did as much preparation as I could, so when I became legally eligible to open a credit card in my name (on my 18th birthday), I could start the journey as quickly as possible. After all, after I graduate college, I could be needing to make large loans such as for a new car or a new house.

Along the way, I made many decisions, and even encountered a few surprises that go against common wisdom.

Getting a head start

This story starts with when I was about 16 or 17. I was almost an adult and I was eager to prepare myself to be successful in adulthood. After much online research, I learned that the first step that I should take was to get myself added as an authorized user to someone with good credit. This is because even if someone is only an authorized user for a credit card, most credit card companies will report the credit card payment history to the credit bureaus in the authorized user’s name as well. Essentially, the authorized user inherits the credit history of the card to which they are being added. I noticed my parents had great credit, but not excellent credit. That’s fine; I figured I just needed a good boost to my credit history. I had them add me to an older account that was opened when I was just 4 years old. This account was my family’s Citi DoubleCash card and I thought it was a good choice for several reasons:

It was opened a long time ago. Credit bureaus assign higher credit scores to people whose open accounts have a high average age. This is because the longer the account has been open, the more payment data there is on the account, and therefore demonstrates more trustworthiness than a younger account.
It had no missed payments. By being added to this card, I was getting a card with timely payments placed on my credit history, which shows that I have access to an account that has been paid on time.
I could use my family’s credit card to buy things when they send me on errands. (Hey, not all the reasons have to be about building credit!)

Now, before you get the wrong idea: this doesn’t mean I inherited my parents’ credit scores. It meant my credit score will be similar to theirs because we both have the same account on our credit histories.

Sure enough, when I turned 18 and could finally access my credit report from one of the credit bureaus, I saw my score was around a 760. This is considered barely good enough to get a mortgage with prime interest rates (i.e. the lowest ones available from that lender). However, as I would soon learn, this 760 was actually meaningless.

I admit that I am very fortunate to have parents who have always paid off their balances on a well-established credit card account, and they were willing to trust me enough to add me as an authorized user. However, upon reflection, it probably did not help me much with building credit after getting the first card of my own. Believe it or not, nowadays, it is actually mostly a liability; I’ll share why in part 2.

Why was the 760 meaningless? Well, I thought I was all set to apply to other good cards with this high credit score. This is where I made my first mistake! I tried applying for a Citi DoubleCash card because, I thought, 2% cash back is great, I have a high enough credit score for this card, why not get the same card? Bad choice! I had no other credit accounts on my account, especially none of my own, and Citi’s system was not stupid—they knew I had no credit history of my own. Since this card is considered a card that requires good credit, I was immediately denied from this card for not having enough credit history to meet this classification.

Recouping from a rejection

Shocked, I decided to temper my expectations. This was a good lesson that a credit score calculated solely by being an authorized user was actually not very useful and wouldn’t get me a fast pass to getting good credit cards. So I set my eyes out on a secured credit card. It turns out, as I entered my freshman year of college, I became eligible for a student credit card. My research showed that the best student credit card with the most cash rewards is the Discover it® Student card. I applied for it and this time, I was approved. I soon got it in the mail and began using it.

This card features unlimited 1% cash back on all purchases, as well as revolving elevated 5% cash back categories that rotate every quarter on up to $1,500 of purchases, so essentially up to $75 back for the elevated bonuses.

It also would give me $20 every year that I had good grades in school, which came in the form of self-reporting my GPA. As long as it was above a 3.0, they would give me this credit without even requiring proof. The Discover card also doesn’t have any foreign transaction fees. They would also be able to frequently consider me for credit limit increases without doing a hard inquiry on my credit account.

Time to upgrade

After about a year of using it, I became disillusioned with this card for a few reasons:

Low cash back amount and niche 5% back categories. 1% back is better than nothing, but there are higher amounts offered by other credit card issuers, such as from Citi and Chase. Furthermore, some quarters only had cash back categories that were irrelevant to me. For instance, one quarter, it was only wholesale clubs. That was basically Sam’s Club; Discover cards aren’t accepted at Costco. My family is a Costco family. Therefore, that was a frustrating quarter where my card’s 5% back potential went to complete waste. More generally, I was not going to modify my spending habits to get more 5% cash back. The typical person’s categories of spending is going to be the same month-to-month. Therefore, across a longer period of time, 1.5% or 2% or higher cash back consistently over all months of the year was going to net me more money back.
Low credit limit. I was only granted around $2,000 initially, and it led to my big-ticket purchase of a MacBook Pro not being able to be fully covered by my Discover. This was humiliating for me, considering I had a high-paying internship when I made the purchase. Now, I understand why my limit was so low, but to this day, that card still has a credit limit of about $4,000 or so.
Low merchant acceptance. Discover has its own network and is probably the least-accepted card at stores in the United States. Abroad, Discover has partnerships with other networks, but they are neglected (I’ll explain about their issue with China UnionPay in another article). The lack of foreign transaction fees ended up being minimally useful for me.
Low-quality redemption options. The main choice is pretty much to apply the cash back towards the statement as a statement credit.

In November 2019, I decided enough was enough and I should try applying for a credit card that required at least a somewhat-established credit history and offered better benefits. At this point, I had been using my Discover card for nearly a year and had spent about $10,000 on it, all completely paid without carrying a balance. This demonstrated to not only Discover, but also anyone who requested my credit report (such as other credit card companies), that I was able to borrow a significant amount of money responsibly.

When choosing a new card to use, one consideration I had was being able to use a credit card at Costco, which meant I needed to use a Visa. Ultimately, I decided to apply for a Chase Freedom Unlimited. Some of the reasons I chose to apply for this card over others, including the Citi DoubleCash card, include:

Unlimited 1.5x points count as 1.5% cash back but also as other redemption options. As I would later learn, Chase Ultimate Rewards are some of the most powerful credit card points out there.
It was a Visa card, so I could use it at Costco.
While there were no rotating categories, it was more likely than not that my purchases wouldn’t be categorized as part of the quarterly elevated 5% bonus. I was also jaded with the allure of the rotating quarterly 5% bonus categories, which is why I avoided applying for its sister card, the Chase Freedom. (Note: the Chase Freedom Flex did not exist at this time.)
It had a sign-up bonus! If I spent $500 within the first 3 months, I would get 20,000 Chase Ultimate Rewards points, worth at least $200.

At the time, the Freedom Unlimited did not come with the 3x points for dining and drugstores, so I did not factor this into consideration when applying for it.

By applying, I was taking a risk. It was easy to be approved for the Discover It Student card because it’s tailored towards college students who just turned 18 and obviously didn’t have credit scores. But for the Chase Freedom Unlimited, this was a “real adult” card. It was the big leagues and this time it wasn’t a joke.

Thankfully, I got approved! And my credit limit was about $5,500, more than double my Discover card’s credit limit. Due to the plethora of benefits, I immediately switched most of my purchases over to the Freedom Unlimited, unless it happened to be covered by Discover’s 5% cash back category.

Diversifying my card collection

I was very content with this for about a year. Then, in October 2020, I wanted to apply to some more credit cards, for a few reasons:

I wanted to increase my total credit limit, summed up across all of my accounts. This is because it can help lower my overall utilization percentage. I was always going to keep a few hundred dollars temporarily on a credit card, because I wasn’t going to pay off my balance immediately every single time I made a small transaction. I’ll always have about $1,000 in balances hanging around, so if my total credit limit were $10,000, it would constitute a 10% utilization, whereas if my total limit were $100,000, it would only be 1% utilization. Less than 2-3% utilization is best, under 5% is great, and under 10% is good. Anything above 10% is bad and can adversely affect credit scores by a few dozen points. (Keep in mind, I am not saying I carried a balance month-to-month, I’m just saying that I still had a balance on my card, and even if it’s still paid on-time, the time that it’s still on your credit card account can negatively affect your credit score because it counts as credit utilization.)
I wanted to get even higher cash back or higher rewards. This time, I wanted cards with higher rewards in certain merchant categories, except instead of rotating every quarter, they would always be available. It would most likely be less than 5%, but at least it was consistent year-round, and this, to me, is more important than having a brief period of 5% cash back. At this point, I had a car, so nicer rewards on gas would be particularly helpful for me.
I didn’t want to pay foreign transaction fees. Unfortunately, the Chase Freedom Unlimited has a 3% foreign transaction fee.

I ended up going with two cards at the same time: the Apple Card and the Amazon Prime Rewards Card. Both had at least 1% cash back, had consistent year-round elevated categories, and lacked foreign transaction fees.

Apple Card:

2% back on all Apple Pay purchases
3% back on Apple, Nike, and some more select merchants
1% back on everything else
Cash back was instantly given in Apple Cash as soon as the transaction was posted to the account, and it was as good as cash.

Amazon Prime Rewards:

5x points at Amazon.com and Whole Foods Market
2x points on restaurants, gas, and drugstores
1x points on everything else
$125 gift card just for being approved
Points could be used on Amazon.com and select other partners

Here, 1 point = 1¢ in value.

The Amazon card had more relevant categories for me. Specifically, Amazon and gas were what I was going to use this for. (By late 2020, Chase had announced unlimited 3x points on restaurants and drugstores, which is superior to Amazon’s 2x points.)

Getting 2% back by using Apple Pay was particularly enticing. I would sometimes use it over my Chase Freedom Unlimited card whenever Apple Pay was available.

When I went abroad in early 2021, I used my Apple Card primarily and enjoyed unlimited 2% back, which meant I saved twice as much money than if I had used Discover. That is a huge difference, and it all came down to which credit card I used. Neither cost money, but one was for more creditworthy individuals. This proves what everyone keeps saying: the higher your credit score, the more benefits you get.

Applying for both the Apple Card and Amazon Prime cards allowed me to have more accounts to prove my creditworthiness (on which I would spend and then promptly pay off my balance) and also allowed me to raise my total credit limit by about $11,000, bringing it to around $20,000 at this point (excluding the limit of my parents’ Citi DoubleCash card). This was a significant improvement over my original limit and would help me significantly lower credit utilization percentages on my credit reports.

The best small perk of both of these cards was they shipped me a free metal credit card. That’s right, both of these cards are made of metal instead of plastic.

These credit cards ended up being very helpful and helped me save more money than if I had just stuck with my Chase Freedom Unlimited.

The journey continues

With 4 of my own credit cards now under my credit report, two issues I had to take into account now with applying to more credit cards was (1) the average age of my accounts was going down and (2) I would be adding more hard inquiries to my credit account. While these are slightly detrimental, applying for more accounts at this point has other benefits for my credit score that actually surpass the bad effects from low average age and hard inquiries. More on this later.

Around June 2021, I saw that the Chase Sapphire Preferred was offering a limited-time sign-up bonus of 100,000 points, worth at least $1,000, which was the highest sign-up bonus ever offered as of mid-2022. This would be a card with an annual fee, and at this point, my perspective on credit card rewards pivoted significantly. Now, I turned my attention from standard cash back to using points for travel, to get even more value from my credit cards.

This is part 1 of a two-part series. See the conclusion of the story in part 2.