Getting a credit card is the quickest way to improve your credit score and history. However, applying for new ones too frequently in a short time is a red flag. So, how often should you apply for a credit card? It’s time to figure out. Don’t take your eyes off this article, Hanfincal will tell you.
1. How often should you apply for a credit card?
You should apply for a credit card after waiting at least 90 days and even better for a full 6 months. Moreover, the number of credit cards you should have is entirely up to you, and you can apply for new lines of credit at any time.
Waiting between credit card applications protects your credit score from the adverse effects of too many credit inquiries and ensures that you don’t violate credit card application restrictions.
The Consumer Financial Protection Bureau (CFPB) advises only applying for credit that you require. You may be subjected to a hard inquiry when you apply for new credit cards. According to FICO, a hard inquiry may cause your score to drop—usually by a few points. This is because credit-scoring models generally consider how recently – and how often – you’ve applied for credit.
So, before applying for a new one, take a moment to think things through. Speaking with a qualified financial professional may also be a good idea if you have the opportunity.
2. Considerations before applying for a credit card
2.1. Call your credit card issuers
Although it does not have many appealing benefits to keep you there, consider your current credit card. Your creditor may add many features and services that they will not extend to existing customers.
Looking at your creditor’s website and seeing what kinds of features and services they provide is a wise thing to do right now. If you see something you don’t have, call your creditor and ask if it can be added to your account.
It would be in your best interest to negotiate to improve your current account. If you are a loyal customer with a good account, they’re probably going to do whatever they can to keep you around, so you don’t go elsewhere, ask your creditor.
2.2. Think about timing
You should hinder your application for a new credit card for at least 90 days. As a result, another important factor you should consider right now is the right time. To avoid multiple hard inquiries quickly, you should not apply for credit cards during or directly before applying for a mortgage.
Each credit card application may trigger a hard inquiry. Also, keep in mind that hard inquiries can impact your score. Therefore, you might not want that potential impact on your credit scores while applying for another loan.
Furthermore, if you are in financial trouble, do not apply for a new credit card with a high-interest rate.
2.3. Monitor your credit
Keep an eye on a line on your current credit to see where your credit stands. As a result, you begin to consider whether applying for a new credit card is necessary or not based on your previous assessment or according to your wishes.
2.4. Compare cards
When you first apply for a new credit card, you should compare cards to find the best one for you. Although, everyone wants to use a credit card that offers attractive incentives, low-interest rates, or high credit limits. However, finding one that meets your requirements can be challenging.
3. How do credit card applications affect your credit score?
3.1. Positive credit impacts
Your credit utilization ratio has the most significant impact on your credit score in terms of long-term positive effects. Each card you successfully open increases your total available credit. This ratio improves if you only use a small amount of credit per month and have a large amount of available credit. This is the amount of debt you owe concerning the amount of credit you have available to you—the amount you owe accounts for 30% of your credit score.
3.2. Negative credit impacts
Aside from the positive effects, new credit cards can hurt your credit score. Applying for multiple credit cards in a short time can lower your score because anything new credit is worth 10% of your credit score.
The average age of your credit history will decrease after you receive the card. Credit history occupies 15% of your credit score, and a more extended credit history raises your score. If you’ve had one card for ten years and then get a new one, your new average will be five years, not ten.
In addition, there is an excellent option that can support you in increasing your credit scores online. Click the link below to get your scores for totally free.
4. Restrictions by credit card issuers
Credit card issuers have 3 restrictions that you have to know before applying for a credit card:
4.1. Card application limits
Although there is no limitation on the number of credit cards you can have, many credit card companies have rules limiting the number of card applications to a specific time frame.
Your application may be reviewed immediately and approved within minutes, or it may need a detailed examination by an analyst and take longer, depending on different issuers. Here are some general guidelines:
- The American Express 2/90 rule: You can only be approved for two American Express cards in 90 days.
- The Chase 5/24 rule: You’re unlikely to be approved for most Chase cards if you had more than five cards in the last 24-month process.
- Citi 8/65 limit: You must wait eight days between these applications and cannot apply for more than two cards in 60 to 65 days.
4.2. New cardholder bonus limitations
Many credit card companies impose bonus caps on new cardholders. If you want to earn cash or a point bonus as a new card member, you’ll want to pay close attention to issuer limits on how frequently you can apply for a credit card.
4.3. Number of cards
Certainly, the number of card accounts you can carry will be limited by the card issuer, so consider timing; you may need to close another first—or not apply at all. In the case of consumer or business credit cards, American Express, for example, has verified a four-card maximum. Moreover, we but you also wouldn’t want to use multiple credit cards from the same company at the same time.
How often should you apply for a credit card? These are several things to consider before applying for a new one. However, keep in mind that everyone’s financial situation is unique and the factors that affect your application is different. Follow our advice to increase your chances of approval. Hanfincal can also support you in resolving your other financial troubles in the next articles updated every day.
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