Whether you’re inundated with epic credit card signup bonus offers or want to build credit quickly, you’ll probably have a time in your life when you want to get a few credit cards in quick succession. But there’s a waiting period – if you apply for too many credit cards at once, you’ll be rejected out of hand. We’ll help you decide how long to wait before applying for a new credit card and give you some tips on keeping your credit score in good shape.
How much is too much?
There are a number of different theories on how much is too much, and how frequent is too frequent. FICO says that people with six or more inquiries on their credit report are eight times more likely to default, and inquiries stay on your report for about two years. However, this doesn’t mean you can apply for five credit cards in one week and lay low for the next two years. Too many applications too quickly will raise red flags. From the lender’s perspective, someone who needs that much additional credit in a short period of time is probably a risky borrower.
However, the six-inquiry guideline doesn’t necessarily mean you’re limited to three credit cards a year, either. People with excellent credit have reported success in waiting just three months between applications. However, the three-month yardstick best for the “prime” customers: people who spend a lot, make payments on time, have a low debt utilization ratio and typically have higher incomes.
As a rule of thumb, a six-month waiting period is a good baseline. If you have great credit, a high income and a history of on-time payments, you can probably get away with less; if you don’t have good credit, you should wait longer – as much as a year.
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If you’re rejected for your first application
If you apply for a credit card and are rejected, your instinct is probably to just go apply for several other cards. It’s important to resist this urge, and take a few different steps instead.
First, call the credit card company and ask them to explain why you weren’t able to get the card. Be sure to press for clear answers. Most likely, you’ll hear that you’ve been rejected because of something related to your credit history. At this point, you should pull your credit report and review it carefully. Be sure to check for anything unusual, and if you spot an error, start taking steps to have it corrected.
The most likely scenario, though, is that some run-of-the-mill bad financial habits have caused your credit card application to be rejected. The easiest ways to improve your credit score are to:
- Pay your bills on time. 35% of your credit score comes from your history with paying your bills by their due dates. If you have a history of paying late, work on this habit – fast!
- Pay down debt. 30% of your credit score is determined by how much total debt you have. The faster you pay it off, the faster your score will rise.
- Keep credit accounts open. 15% of your credit score comes from the length of your credit history, which means that keeping your credit accounts – particularly your oldest credit accounts – open and active is key to maintaining a good score.
Now that you know how to improve your score, work as hard as you can in these areas for the next three months. Then, try applying for the credit card again.
There are some situations where you need to be really strategic about applying for a new credit card. For example:
- You’re planning to buy a home in the near future. Since even a slight rate increase in your home loan can cost you thousands of dollars over time, you want your credit score to be as pristine as humanly possible when you apply. Wait until after you’ve signed the mortgage to apply for a credit card – whatever the signup bonus is, it’s not worth a higher APR on a home loan.
- You’re trying to rebuild your credit. if your credit has been damaged in the past, you’ll want to re-establish it slowly and carefully. You’ll also want to avoid temptations that got you into trouble before. Even if you think you could get approved, make sure you won’t get into trouble again.
» MORE: How to build credit
- You have bad or limited credit. Each new application dings your score by around 5 points. While this isn’t a huge deal for someone with a score of 800, it’s a much bigger problem for someone with a lower FICO score. If you have poor credit or no credit, you should apply for new cards less frequently than someone with excellent credit.
The takeaway: the time you should wait between credit card applications depends on several of your personal financial factors. Use the information above to guide your decision, and you’ll be on your way to making a good credit card (and credit score) choice.