When you’re shopping for your next credit card, you may see many enticing deals and bonus offers you don’t want to miss out on. But how many credit card offers should you actually take? Applying for too many credit cards at once and juggling balances on more accounts than you need can damage your credit score. Here’s what you need to know before going for those credit card deals.
No real limit on credit cards
Theoretically, you can open as many credit cards as you want — there’s no rule that you can’t have more than five, 10 or even 20 credit cards at once. The quantity of your lines of credit isn’t a factor in determining your credit score. Instead, the type of credit you have is part of your score, so having a balanced mix of student loans, auto loans, mortgages and credit cards can help you. If you open many credit cards at once, you could throw off the balance a bit. But this is only a small factor in your credit score, so it’s not too concerning.
Consider the impact of hard inquiries
One potential issue you should know about is that 10% of your credit score is based on new credit. Whenever you apply for a new credit card, a hard inquiry is placed on your credit report, which gives your credit a small ding. Doing this on occasion makes little impact, but having too many too close together is a warning sign to lenders that you may be gearing up to overspend. This means if you apply for a slew of credit card offers all at the same time, your credit score could go down due to so many hard inquiries at once. Note that hard inquiries will stay on your report for two years.
Keep your credit usage reasonable
Here’s another factor to consider: How much you owe on each credit account makes up a whopping 30% of your credit score. If you have a large number of accounts with balances or owe a high amount on many accounts it makes you look overextended and will hurt your credit. If you take several credit card offers in a short time frame, the best way to keep your credit intact is to keep your balances low and show that you don’t need to use all of your available credit. TransUnion, one of the three major credit bureaus, recommends keeping your balances under 35%. In other words, if your credit limit on one credit card is $10,000, aim to never carry a balance larger than $3,500 on it.
There’s no perfect answer
We can’t give you an exact answer for how many credit card deals you should apply for, since everyone’s credit situation is different. Just be sure to avoid applying for many cards at once; it might be smart to wait and see whether you are approved for one card rather than applying for multiple cards at once. And don’t forget to keep balances low across all your cards to avoid tanking your credit score.
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