How long should I wait before applying for another credit card?

Just browse our credit card reviews and you’ll see cards that are great for dining out, filling up your car, or transferring your balances. However, what if you just opened a new credit card?

Unfortunately, submitting too many card applications in too short a period of time can reduce your chances of being approved and can also hurt your credit scores. For an overview of why you should split your credit card applications and guidelines on how long to wait between them, keep reading.

A survey question

Credit applications are the key factor that limits how often you can apply for credit cards. When you submit a loan or credit card application, the lender you are applying to pulls your credit reports using a firm credit investigation. Unlike informal inquiries, serious inquiries appear on your credit reports and stay there for up to two years, essentially creating a record of the credit you’ve been looking for.

Also: How to choose a business credit card

With certain types of loans, such as car loans and mortgages, multiple serious inquiries made within the same time period will only count as one item on your credit reports, allowing you to search for the best rates of interest. However, when applying for a credit card, each serious inquiry is counted as a separate item. Therefore, applying for multiple cards at once will generate a slew of inquiries on your credit reports.

Lenders consider a large number of recent serious inquiries about your credit reports to be a sign of risk. It shows that you are aggressively seeking credit, which could indicate that you are in dire financial straits. People with six or more inquiries on their credit reports are eight times more likely to file for bankruptcy than people with no inquiries on their reports, according to my FICO. Not only that, but serious inquiries can also affect your credit scores, as 10% of the popular FICO credit scoring system is determined by your number of new credit accounts and serious inquiries. A hard inquiry can only reduce your credit by a few points, but a multitude of them can noticeably hurt your scores.

ALSO CHECK:  Australian agencies create digital regulators forum to streamline big tech review

How long to wait between applications

Assuming you recently applied for a credit card and your application was successful, a good waiting period before applying for another credit card is about six months. That’s enough time to show that you’re capable of using your last card responsibly and not just getting as much credit as possible so you can spend recklessly. Depending on your credit health, however, this guideline may change.

Since the number of inquiries about your credit reports is just one of many variables that credit card issuers consider when deciding whether or not to approve your application, consumers with credit scores higher may apply a little more frequently and still be successful.

If your credit is great, you always pay your bills on time, and your credit utilization rate is low, you can try applying for another credit card after just three months of waiting. Conversely, if your credit isn’t that good, you might want to wait a little longer between applications, like nine months. During the waiting period, be sure to pay your current credit card bills on time (and in full, if possible).

Additionally, some financial institutions have their own policies dictating the wait time between requests. For example, Bank of America will apparently only approve customers for two of its own cards within two months, three of its own cards within 12 months, and four of its own cards within 24 months. Chase’s so-called unofficial rule even limits the frequency of your requests based on cards you’ve opened with other credit providers, apparently denying all requests from people who have been approved for five or more credit cards in the course of of the last 24 months.

ALSO CHECK:  Trio of RCE CVSS 10 of 15 CVEs in Cisco Small Business Routers

Also: Best credit card for good credit: Reap the rewards

If you already have a credit card from a certain financial institution and want to apply for another of their cards, you should definitely check that institution’s application policies. In case you can’t find them, consider calling the issuer to ask them (note that they may not share this information with you) or double the wait time between requests as a security measure (for example, if you normally wait six months between credit card applications, wait a year instead). Lenders are often reluctant to extend multiple lines of credit to one person too quickly.

If your application is rejected

These timing suggestions assume you are approved for the cards you are applying for. If you get rejected for a credit card, however, you need to pump the brakes and take a little longer between applications. A decline indicates that you recently requested too many cards or that there is another problem with your credit reports. Either way, asking for more credit cards in this situation can only hurt your credit.

Instead, it’s best to contact the credit card issuer that rejected your request and ask for a detailed reason. Note that issuers are legally required to tell you why you were denied via an adverse action letter. At the same time, you can ask the representative you’re talking to for a reconsideration, which may give you another shot at getting approved.

When reconsidering, be prepared with information about your personal finances, such as your current income and debts, and have answers in mind if the representative asks you why you want the card or why you think your application should be approved. Once you figure out what was wrong with your rejected application, try to rectify the problem and wait a little longer than usual before applying for another credit card.

ALSO CHECK:  Meta shares how it detects silent data corruption in its data centers

It can be tempting to send a bunch of credit card applications at once, but taking it slow and applying for one card at a time will improve your chances of being approved.

[This article was first published on The Simple Dollar in 2020. It was updated in March 2022.]



RELATED POST: