A question I asked myself often when I first began applying for credit cards to help my world travels was: Will applying for multiple credit cards hurt my credit score? I had done some research into credit scores in general, but the entire equation of what makes up your score was confusing from the get go.
The part of the equation that applying for multiple credit cards may affect falls in the ‘credit inquiries’ section. There, you’ll find all the times you’ve checked your credit applying for all of those credit cards. The only ones that affect your score are those for new credit, not for businesses that are just checking your score (like renting an apartment).
If you’ve been applying for multiple new credit lines in a short period of time, of say, a month, it will affect your score negatively. However, the time that this negatively affects your score is shorter than other items such as bankruptcies and missed payments.
Furthermore, to improve your FICO score, try to keep your credit inquiries in a 30-day time span. Spreading them out over a longer period of time may hurt your score even more.
The amount of new credit line requests also has an affect on the magnitude of negativity on your score. One credit request will be treated much more favorably than five credit requests, for obvious reasons. You don’t want to go applying for two dozen credit cards in a week, though. I’d caution you against that!
Also, for those that are manic about exactly how many points they’ll lose because of a credit inquiry, I’ve got bad news. There’s no exact formula, and FICO can’t tell you exactly either. But, FICO’s website says that it’ll be around five points.
If you already have a great credit score, of, say, 750, applying for a few new credit cards in a short time span isn’t such a big deal. If you’re worried about getting premium auto or home loan rates, this will likely not drop you down to a lower level. So, relax!
How to Protect Your Score
All in all, if you are thinking of applying for a new credit card, you have to factor a few things into account. One, is your credit score healthy enough to ‘take the hit,’ as they say? Have you been a responsible customer and kept your credit score in an ‘excellent’ range (above 650-700)? Then, apply away. If you are applying for more than one card, I would recommend applying for them in a very small window of time, to minimize the already small effect they have on your score.
Furthermore, I would not worry about credit inquiries affecting your potential rates for auto or home loans. These affect your credit for much shorter periods of time than bigger issues, like the amount of credit that you are using or if you have a bankruptcy in your history. What cards are you looking to put in your wallet? I wish you all the best in your applications. I hope that your FICO score, and your points balance, stays high and healthy!