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- If you have a good handle on your finances and credit, there could be situations — specifically, if you’re trying to get as many rewards points as possible — where it makes sense to get more than one credit card in a day — but only if you’re a responsible credit card user with good credit.
- When you open a credit card, the issuer runs a "hard" credit inquiry to see your credit activity. If you open multiple cards in the same day, however, the applications can’t see each other on your credit report yet, and are more likely to approve you.
- Multiple applications will have a negative short-term impact on your credit (your credit score will drop due to the inquiries) but should rebound within a few months and can help your score in the long term.
- Again, this tactic is ONLY for people with a good handle on their credit.
If you have good to excellent credit and feel confident that your credit score is moving in the right direction, you are in the best position to take advantage of top-tier rewards credit cards. If you’re doing some research and find that you like more than one card, why not get both?
While there are some short-term issues with applying for and opening new credit accounts, it isn’t a huge issue if you already have great credit.
When you apply for a new credit card, the credit card company requests a copy of your credit report and credit score from one of the three big credit bureaus. After getting your credit information from Experian, Equifax, or TransUnion, the card issuer makes a decision on your application.
Read more: The best credit card rewards, bonuses, and benefits of 2019
When they get a copy of your credit, the credit bureau records the request as a hard credit inquiry. Hard inquiries are visible on your credit report for two years and pull down your credit score by a few points in most cases.
The pursuit of new credit makes up 10% of your credit score, and more new credit means bad news for your credit score. Lenders consider getting new credit a sign of risk. If you opened a few new cards recently, you may be turned down for a new card. That is the case even if you have a stellar credit history.
But there is a way around that limitation that makes sense in some cases.
This advice is only for people with a good handle on their credit. If you regularly carry a balance, avoid opening a bunch of new credit cards. If you can pay them off in full each month, the strategy below could make sense for you.
Why applying for multiple cards at once makes sense — sometimes
When I already had a credit score over 720, I decided to get into travel hacking. This is the term for using strategies to maximize your travel while minimizing what you spend. That generally includes earning as many reward miles and points as possible, typically through credit card rewards.
If you choose cards that align with your spending habits, you should rack up points fairly quickly. I carry the Chase Sapphire Reserve, American Express Gold Card, Chase Freedom, and Chase Freedom Unlimited in my wallet every day to ensure I get 1.5x to 4x points for every dollar I spend.
But you can earn a whole lot of points at once when opening a new card. Most high-end cards offer a bonus, and if you time it right you can sometimes pick up 100,000 points when opening a new account, after meeting initial spending requirements.
If you find multiple great cards with great bonuses, what should you do?
If you have excellent credit, you should consider opening them both at once. Because it takes about a day for a credit application to show up in your credit report, applying for multiple cards in the same day means the card issuers don’t know about each other until the following day. By then, you’ve hopefully been approved for both cards.
I know of some credit card enthusiasts who have opened five or more cards in a day, though I think my personal record is somewhere around three or four. My credit score would go down by 10-20 points when opening the new accounts, and it’s possible yours could go down more. But if your credit score is already firmly in a top tier, a temporary dip of a few dozen points shouldn’t cost you anything.
Always know what’s happening with your credit
This kind of strategy works if you are well-versed in what’s happening with your credit. If you don’t know your credit score and don’t know what’s on your credit report, head to one of these sites to get your information at no cost.
- AnnualCreditReport.com: The official government mandated website for your free annual credit report from each of the three major bureaus. I space them out so I can get one every four months rather than all three at the same time.
- Credit Karma: Credit Karma is the most popular and oldest website that gives you a truly free credit score. Credit Karma uses VantageScore, a competitor with a similar scoring model to the FICO score. You can get your credit report and score from two of the three top bureaus from a convenient mobile app or web interface.
- Turbo from Intuit: Intuit is best known for TurboTax, Mint, and QuickBooks. A newer entrant to the Intuit product family is Turbo. This free app gives you your credit score and other useful insights into your credit.
- Your credit card: Many credit card issuers give you a free credit score with your account. Some banks even give you one for free if you don’t have an account. Check your credit card benefits section online to find out if you have access to this benefit.
With good information on your credit, you can confidently apply for new cards knowing your odds of approval and understanding the basics of what happens when you apply for a new card. Check out Credit Karma’s credit score simulator to get an estimate on what would happen to your credit if you apply for and open a new account.
Don’t obsess about ‘perfect’ credit
The best possible credit score is 850, but there’s little difference between a 780 credit score and an 850 in the eyes of most lenders. As long as you can get a score that qualifies as "excellent," typically around 750 and above, you should be in great shape.
If you are, you shouldn’t worry too much about the impact of two or three new cards on your credit score. If you pay them off in full each month and always pay on time, they should only boost your score in the long-run.
- Read more about credit cards:
- A joint credit card can be a convenient way to keep household expenses in one place — or a risk you might not want to take
- Paying off your credit card can quickly improve your credit score, but it has another benefit that might feel even more important
- Your credit score is based on a complicated, murky calculation, but you can fix it by focusing on 2 easily controllable factors
- I have 26 credit cards and excellent credit. Here’s the best advice I can give you on keeping up your score, no matter how many cards you have.
See Also:
- I have 18 credit cards, but there are just 5 I keep in my wallet at all times
- I have 18 credit cards. After years of struggling to keep them straight, here’s the best strategy I’ve found so far
- The best Chase cards you can sign up for now
Source: Business Insider – ehoffman@businessinsider.com (Eric Rosenberg)