As I mentioned in an earlier post (which I consider part 1), I am in the market for a second credit card, and promised to explain why.
Don’t worry. I’m not in any financial trouble; far from it, actually. But we would like to buy a house or condo about 5 years from now.
What does that have to do with a second credit card? Some time back I read on the Canadian Mortgage Trends blog that beyond having a good credit score, “lenders often want to see a minimum of 1-2 years of satisfactory payment history and at least two trade lines.”
Depending on which company is used, I have either a 799 or an 839 credit score, both of which are well above national averages. Still, the fact that my credit history is mostly made up of my 12-year-old credit card, a couple of inactive department store cards, and two student loans I paid off 3 years ago, it got me thinking.
Armed with print-outs of a recent credit score and report, I met with a mortgage specialist at my bank when I was in Canada last December, just to talk hypothetically. He said that based on my score and a look at my history, he would give me a mortgage at prime, but said/hinted that, yes, having a second active credit card would help, and maybe give me some more bargaining power if it had some history to it.
Since any mortgage is 5 years or so down the road, it seems like the best time to add a new card to my portfolio. First, it will give some history to the card. Second, it will take care of the second trade line. And third, by getting the card now, the effect of a lower credit score (which will happen as soon as I apply for new credit) will be made moot by the fact that it will be a five-year-old card by the time I look for a mortgage.
The only problem? In my search for my second card, I’m finding myself being very very picky. It just may take me 5 years to select the one I want.