Having a fair credit score in the 630 to 689 range is a lot like rooting for a team that makes the playoffs every year but ultimately always falls short of winning the title. You’ll qualify for loans and credit cards, and yet the lowest rates and best credit card deals will probably remain just out of reach. The good news is that you don’t have to be a fringe contender forever.
Although using multiple lines of credit can improve your credit score, applying for credit cards without a solid game plan can end up hurting it. Here’s what you need to know before starting a new credit card application.
Effects of applying for credit cards
When you apply for a new credit card, the card issuer will run a credit inquiry on you. Every time that happens, your credit score is docked several points. That’s why it’s a good idea to space out your credit card applications instead of sending them out with reckless abandon. If there are two cards that you really want, send in your application for one and wait six months before applying for the other card.
Because applying for a new credit card puts a small dent in your credit score, you’ll want to be sure that your chances of getting approved are good. That may mean applying for a fair credit credit card. These cards typically have reasonable rates and even come with rewards. Once you’ve demonstrated that you can use one or more fair credit credit cards responsibly, you’ll eventually qualify for an upgrade.
Why is having multiple credit cards a good thing?
Before taking you on as a customer, a potential lender will want to get a better sense of your financial trustworthiness. Part of that includes determining how well you’ve managed lines of credit in the past. If you’ve successfully juggled multiple credit cards over the years by making your payments on time and in full, a lender is likely to view you as a reliable borrower.
Once you’ve obtained a second or third card, don’t immediately cancel your original credit card. The length of each credit card account is documented in your credit report, and the longer you can maintain each card, the better. Keeping a credit card account open, even if it’s unused, is therefore a good idea. Just be sure that there aren’t any outstanding balances that are accruing interest.
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