cancel
Showing results for 
Search instead for 
Did you mean: 

Applying for cards

tag
mispoken1
Established Member

Applying for cards

This must be a question that has been posted in the past; if so, sorry for the double post.  I've been told be several people that as long as you dont apply for credit cards more than 4 to 5 times in a rolling 6 month period then there should not be a drastic change to your FICO score. Here is one place I read this on mymoneyblog.com Currently my bank offers a couple of cards that could really help me rack up the reward points if I apply and am granted a card.  At present I have 1 credit card and student loan debt with a 775 FICO.  What is the consensus on applying for new cards?

 

Thanks

Message 1 of 3
2 REPLIES 2
Lel
Moderator Emeritus

Re: Applying for cards


@mispoken1 wrote:

This must be a question that has been posted in the past; if so, sorry for the double post.  I've been told be several people that as long as you dont apply for credit cards more than 4 to 5 times in a rolling 6 month period then there should not be a drastic change to your FICO score. Here is one place I read this on mymoneyblog.com Currently my bank offers a couple of cards that could really help me rack up the reward points if I apply and am granted a card.  At present I have 1 credit card and student loan debt with a 775 FICO.  What is the consensus on applying for new cards?

 

Thanks


 

The person writing this blog is not taking into account all the factors that go into a FICO score.  While he is correct in saying that having a lot of credit cards does not equal a low FICO score in and of itself, he is incorrect about the effect that multiple applications will have on his credit score.

 

First, the inquiries made by the credit card companies will each have a negative effect on his credit score.  If he really gets 10 new cards every year (i.e. 5 cards every 6 months period), he is going to have 10 recent inquiries on his credit report.

 

Second, in addition to average account age, the FICO score also takes into account the length of time since a person last applied for new credit.  In his scenario, this will always be 1-2 months.  This persistently short time frame will count against his score.

 

Third, even if he has 20 cards that are 7 years old and gets 10 new cards in a single year, this will drop his average account age to 5 years, 8 months (I've aged the 7 year old accounts in my calculation).  If his current account age were much longer (e.g. an average of 20 years old) and gets 10 new cards, the magnitude of his average account age will drop will be greater - from 21 years to 14 years, 4 months after one year of applying.  If his average age drops too much, his FICO score will drop as well.

Message 2 of 3
haulingthescoreup
Moderator Emerita

Re: Applying for cards

I lost between 50 and 70 points on all three scores after 4 apps resulted in 5 new accounts in one month's time and dropping my AAoA down to three years. Ten months later, the scores are back up about 20 points below where they were, but believe me, you'll feel it.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 3 of 3
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.