How Multiple Credit Card Applications Affect Your Credit Score
December 19, 2011

I have a lot of people ask me if their credit score drops every time they apply for a new card. The answer is: not by much. If it does drop, it will usually be just by a few points (out of a total of 850, so not enough to make a big difference).

The next question becomes: what happens if I apply for several new credit cards at the same time? Here, it becomes a little trickier. Generally, banks treat multiple credit inquiries—that’s when a lender asks FICO for your credit score when determining whether to extend you new lines of credit—within a short period of time (my guess is it’s usually just about 30 days) as a single credit inquiry. That’s certainly true when a consumer is shopping around for auto, student or mortgage loans.  Plus, only the inquiries that result from a consumer seeking new credit count towards that consumer’s FICO score.

Credit inquiries when it comes to applying for credit cards are a different beast. In its own words, FICO says “opening several credit accounts in a short period of time represents greater credit risk.” That’s because you’re applying for multiple lines of new credit rather than submitting several inquiries for a single new line, such as a mortgage.

So how much will credit inquiries affect your score? The answer varies from person to person, and is based on your previous credit history. In general, however, the impact on your score from multiple inquiries is small—and remember that new credit counts only 10% toward determining your overall FICO score, as you can see in this previous post, so as long as you are strong in the other areas like payment history and amounts owed, you should be fine to apply for new cards. That being said, I personally wouldn’t recommend applying for multiple cards from the same bank (ex. American Express, Chase, Citi) within the same month—and ideally you should space your applications several months apart.

Here is a handy rundown of the time frames for each of the major banks behind points-earning cards:

CITI

Citibank has a six-month limit between applications, meaning you shouldn’t apply for more than one card within a six-month period. However, you can usually apply for two cards on the same day without raising any red flags. I recently did that when I applied for a Mastercard and an American Express card that earned me 75,000 American Airlines miles each, and both were approved with identical credit limits.

CHASE

Chase usually mandates that credit card applications come at least one month apart and even then you might get declined at first. However, in my experience, Chase has been very flexible with reconsiderations when you call them at (888) 245-0625, and there’s a handy trick where you can get them to swap or split your lines of credit. So, say you have a Continental OnePass Plus MasterCard that you’re not using much, but you want the Chase Sapphire Preferred Card (one of my personal favorites). If you get declined for the new card, you can call the reconsideration line and ask if it would make a difference to transfer your credit line to the new Sapphire Preferred card, or split your credit on your old card into two lines of credit and get the new card. It’s a bit tricky, but worth the extra effort…especially for 50,000 Ultimate Rewards points!

AMERICAN EXPRESS

Amex is a little more flexible than the other two banks because they have two types of cards: charge cards (Platinum, Premier Rewards, Gold and Green), and credit cards (Blue Sky, Delta and Starwood). It is absolutely possible to have multiple cards—I know people who carry Platinum, Gold and Delta cards, for instance. As with all card companies, however, American Express uses a lot of factors to decide how many cards you can have at one time, and there are ways to work within the system so you get the ones that make the most sense for your points strategy.

Just to note: if you have a charge card, your available credit reported from that card will only be the highest amount your balance has ever gotten up to. This can have a temporary negative effect on your credit if you charge $10,000 and once your statement closes, it looks like you have $10,000 in available credit and you are using up 100% of it until the bill is reported as paid in full. So, with charge cards, it may benefit you to have a huge month and pay the bill off so it reports your available credit as a large number, and then continue to pay your bill off monthly then apply for a new card.

WHAT’S RIGHT FOR YOU

I would never advise anyone with less than healthy credit to apply for multiple cards at once. For one thing, you probably won’t get accepted. For another, you should first concentrate on fixing your credit so that you can then take full advantage of the lucrative credit card deals that are out there. That said, don’t be afraid to apply for multiple cards at once your credit is good since credit inquiries have a minimal effect on healthy credit reports, and if you stay within each major bank’s guidelines for application timeframes, you can really start raking in those points.

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