How I got my credit score above 800 before I turned 22 (Part 2)

This is part 2 of a two-part post. For part 1, see: How I got a credit score above 800 before I turned 22 (Part 1).

I wasn’t planning on applying to a new credit anytime soon, as I was content on the credit cards I already had: Discover it® Student, Chase Freedom Unlimited, the Apple Card, and the Amazon Prime Rewards Visa Signature Credit Card. Across these four cards, I had the following benefits combined:

• Unlimited 5x points on Amazon.com and Whole Foods purchases (Amazon Prime Rewards)
• 5% cash back on rotating categories every quarter up to $75 back which is equivalent to $1,500 of qualifying purchases (Discover it® Student)
• Unlimited 3x points on dining and drugstores (Chase Freedom Unlimited, as of the pandemic)
• Unlimited 3% cash back on all purchases at Apple and select other merchants (Apple Card)
• Unlimited 2x points on gas (Amazon Prime Rewards)
• Unlimited 2% cash back on all Apple Pay purchases (Apple Card)
• Unlimited 1.5x points (Chase Freedom Unlimited)

I had a solid collection of cash back and rewards that span a sizable portion of my purchases. Even purchases that don’t fit this category still get the equivalent of 1.5% cash back.

But the 100,000 sign-up bonus points offer for the Chase Sapphire Preferred wasn’t going to last forever. (Sure enough, it did disappear about 4 months after the elevated offer was launched, so I’m glad I took advantage of it when I did.) This sign-up bonus could potentially save me $1,000 at least. With the Chase Sapphire Preferred, one particularly enticing benefit is each point is worth 1.25¢ when booking travel through Chase Travel. On here, one can book flights, hotels, and rental cars. The selection of hotels is great, the booking website is easy to use and powerful for finding the right hotel, and the pricing is fair. Through this, 100,000 bonus points would buy me $1,250 of travel. While I later learned there are better ways to use these 100,000 points, this method requires no special tricks and works as advertised. This was particularly enticing for me and I really wanted to use this benefit.

As the Chase Sapphire Preferred provides more powerful uses of Chase Ultimate Rewards points, it’d be better for me to use it as much as I can. However, that doesn’t mean I have to stop using my Chase Freedom Unlimited card; in fact, I can use them in tandem. It’s possible to stretch the 1.25¢/point spending benefit of the Chase Sapphire Preferred, as well as other points-based benefits of the card, further by transferring Chase Ultimate Rewards points from other Chase cards. The points I had accrued from my Chase Freedom Unlimited could be transferred without limits and without fees, 1:1 to my Chase Sapphire Preferred. As long as I make the transfer, I essentially get 1.875¢ per dollar spent on my Chase Freedom Unlimited to redeem on travel. That’s pretty close to 2%.

The Chase Sapphire Preferred has an annual fee of $95. Thus far, I only had credit cards without annual fees. By opening this card, I would need to keep paying $95 each year or cancel the card. Canceling a card is bad for credit history for a few reasons, so I’d need a way out that doesn’t damage my credit history. I decided that if I ever wanted to cancel the Sapphire Preferred, I would actually instead do a product change to a Chase Freedom card (closed to new signups). This would let me keep the same credit account open so my credit history wouldn’t get affected. The only change is that the card is now under a different product (and therefore without an annual fee to pay).

I was pretty confident I would be approved. I now had a credit score of over 750, I had 4 credit cards on each of which I had spent thousands of dollars, and I had a perfect payment history on each of them. I also had a few internships that brought my adjusted gross income to over $70,000 for the year.

After applying in June 2021 and providing my adjusted gross income of around $70,000, I got approved for the card immediately. I was granted a credit limit of $19,000, which was mind-blowing to me, considering my existing cards had credit limits of only around $4,000 to $6,000. With a credit limit of $19,000, I added a significant amount of credit to my total credit limit, which would help significantly with decreasing credit utilization and would therefore help my credit score significantly.

Now, I just had to reach the $4,000 threshold within 3 months to get my 100,000 points sign-up bonus. Over the next few months, my focus was on spending the $4,000. With enough spending in restaurants, groceries, travel, and other needs (and volunteering to front money when splitting the restaurant check with friends), I eventually did reach the $4,000 threshold and I was able to get the 100,000 bonus points.

With the Chase Sapphire Preferred, I got an additional cash back benefit of 2x points on all travel. Furthermore, it didn’t have any foreign transaction fees, which made it attractive to use when abroad. This card became my primary card for both travel and dining, since, like the other Chase Freedom cards, it also came with 3x points on dining and drugstores. While the 3x points on dining perk exists on the Chase Freedom cards as well, I had a higher credit limit on my Chase Sapphire, so it would be better for me to place my purchases on there and save my credit limit for other miscellaneous items where the Chase Freedom Unlimited gives me a higher cash back amount than if I had used the Chase Sapphire Preferred.

The last card I added to my wallet before I saw my credit score rise up to 800 was my American Express Platinum Card. I had been drooling about this card for a while, since it came with so many benefits and, to be honest, is quite a status symbol. However, I wasn’t sure if I would be accepted for such a high-end card. I was concerned that my credit history was not established enough and my income was not $200,000 a year. I ended up applying for the card and, to my surprise, was accepted. For the story of how I got my card, see The best mistake of my personal finance life ever.

With these additions to my collection, let’s see how much adding a credit card impacts my score.

Chase Sapphire Preferred:

• Hard inquiry made against my credit account, leading to a temporary dip in my credit score
  • Bad
  • Very low impact, temporary
• Lowering my average credit age
  • Bad
  • Medium impact
• $19,000 credit limit
  • Good
  • High impact

American Express Platinum Card:

• Hard inquiry made against my credit account, leading to a temporary dip in my credit score
  • Bad
  • Very low impact, temporary
• Lowering my average credit age
  • Bad
  • Medium impact
• No credit limit
  • That’s right, this card doesn’t come with a specific credit limit. This leads to an odd situation, where my credit limit doesn’t go up, and my debts here apparently do not count towards the credit utilization calculation.
  • No impact

As you can see, the tradeoff is sacrificing my average accounts age for an increase in my overall credit limit. While the Chase Sapphire Preferred clearly helped me achieve a higher credit score with the addition of almost $20,000 to my total credit limit, the Amex Platinum seems to be less useful, and should be considered more useful for its other benefits rather than for credit building.

Now, let’s do a check-in on my overall creditworthiness. Here’s what Credit Karma says about my credit history:

As a 21 year old, I think there’s some things for which I can cut myself some slack:

• Total number of accounts is too low, which shows I only have a “limited” number of accounts. Credit Karma says 0-10 accounts is “needs work”, 11-20 accounts is “fair”, and 21+ is “excellent”. It’s honestly a miracle that I already have 9 accounts.
• Average credit age is too low. Of course it’s low; I could only have opened my own accounts at most 4 years ago. It’s being buoyed by my parents’ 18 year old Citi DoubleCash card, on which I am an authorized user.

Therefore, I think having credit scores above 800 already shows that I am a responsible borrower of money capable of repaying my debts and worthy of new lines of credit.

Since my score went up to 800 on both Equifax and TransUnion, I have applied for another card: Chase Freedom Flex. This added another $12,000 to my total credit limit and did not significantly negatively impact my score.

All in all, my total credit limit is now $85,450. Under 10% utilization is considered to be excellent, so I can spend a few thousand a month, and as long as I have under $8,000 combined on my accounts at any one time, I shouldn’t see any real negative impact on my credit score due to my credit balance. (Again, this is not condoning carrying a balance; this only refers to the temporary balance I have for less than a month, during the payment grace period between when I make the purchase and when my statement payment is due.)

In conclusion, I’m super glad I made the decisions I made in order to achieve a high credit score within years of becoming an adult. This will let me get the best rates on mortgages and other loans I may need in the future, which will save me lots of money. Furthermore, I get to enjoy the best credit cards available on the market, which lets me gain countless benefits at hotels and airlines, while simultaneously also lets me save money on travel expenses for when I next go on vacation!

I highly encourage anyone who is between 18 to 21 to start with a path similar to what I did in How I got a credit score above 800 before I turned 22 (Part 1). You’ll be well ahead of your peers and it’ll let you enjoy life so much more than if you didn’t have a nice credit score.