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Travel for Less

Rewards Credit Cards and Your Credit Score

Part 3

Does applying for rewards credit cards impact your credit score?


People new to rewards cards often feel skeptical about them and worry if buying such cards will negatively impact their credit score. There’s nothing wrong in being worried about the credit score! After all, your credit score is something that you must protect with your life!

 

Someone we know signed up for 12 different rewards credit cards in the last 12 months, and has earned more than 750,000 miles in the process, while refinancing his home at the best possible interest rate and taking 2 different auto loans. The credit cards he applied for and bought had zero impact on the loans he took. His credit score is as good as it has ever been!

 

When it comes to credit, there are 3 important ways in which you can protect it effectively.

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Empower yourself with knowledge

 

It goes without saying that you must monitor your credit report regularly in order to protect your credit score. Never apply for any rewards credit cards if you’ve no idea about your credit score. Furthermore, keep a close tab on your score after you apply for the card/s, so you can schedule your next application/s accordingly.

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There’s nothing wrong in being worried about the credit score! After all, your credit score is something that you must protect with your life!

Put up a brave front

 

Don’t hesitate to dispute something that you feel isn’t right with your credit report. You have every right to do so. If you see that your score has dropped because of some delinquent activity that you never indulged in, file a dispute through your credit monitoring website. The chances are high that your score will come back up to normal soon.

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Protect your credit

 

All of us have different credit portfolios, but none of us can afford to take it easy on the credit score maintenance front. Make sure that you pay the balances on your rewards credit cards in full every month. We all go through ups and downs, but clearing your credit cards’ outstanding balances should always be your top priority.

 

In the event that you do need to keep some balance, ensure that it’s below the 20% mark; meaning that your credit utilization or debt-to-credit ratio should never go over 20%.

 

Don’t close your old credit cards as aged credit accounts contribute significantly to the credit score. Furthermore, it may also help if you maintain good diversity in your credit accounts, by opting for different credit products like mortgage, auto loans, retail loans, credit cards etc.

 

Let’s now move onto the most important section of this guide: The basics of award booking!

 

Want to read this later? Download this guide as a PDF or eBook.

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