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Applying for Multiple Credit Cards: 3 Things You Need to Know

Dec. 15, 2014
Credit Cards
3 Things to Know About Applying for Multiple Credit Cards
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Some people think that applying for credit cards is like applying for college—the more applications you send in, the better your chances of getting accepted. But that’s not the case. Creditors get nervous if they see you applying for credit cards en masse. To them, it looks like you have plans to run up a lot of debt, which puts you at a higher risk of defaulting on payments.

Before even thinking about applying for multiple credit cards, here’s what you need to know.

1. Each application counts as a hard inquiry.

When it comes to shopping for loans or mortgages, submitting multiple applications within a few weeks will only show up as one hard inquiry on your credit report. But credit card applications are a whole different story.

Each application counts as one hard inquiry on your credit report and costs you about five points on your credit score, whether you apply for a bunch of cards in the same day or over the course of a few months. With six hard inquiries on your credit report, you’re eight times more likely to default, according to FICO. Since hard inquiries stay on your credit report for two years, it’s best to apply sparingly.

2. With lots of cards, your average length of credit history will go down.

As you get new credit cards, the average length of your credit account history will go down. Your credit history length accounts for 15% of your credit score, so think twice before getting a bunch of cards at once. It could take a few years to bounce back.

3. It might create more problems than it solves.

So you got turned down for the credit card of your dreams. Applying for several cards afterward won’t fix the root of the problem—which is probably your less-than-stellar credit history. It will just make things worse.

If your application was denied, focus on making on-time payments, paying off debt and establishing a good credit history so that your next application will be accepted. If you have bad credit, consider applying for a secured card.

The takeaway: Applying for multiple cards is tempting. But hard inquiries stay on your credit report for two years and can make it harder to apply for other kinds of credit down the line. It’s better to take it slow, do your research and apply to one card at a time.

Image of too many applications via Shutterstock.