Question
Though I have lots of cards, I probably have a good credit rating. That's because, following advice in this forum, I usually pre-pay much of the balance before my statement closing date.
Given this payment pattern, how often can I apply for a new card without lowering my FICO score significantly? I'd like to apply (or re-apply) for around 3 cards right now, but assume it may be better to space the applications over several months. Is it OK to apply for one card per month, say?
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Sorry my answer is not for USA members..
For future reference, in AUSTRALIA the time frame does not exist, however 5/queries/month will trigger some alarms.
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At one time the recommendation was to apply for all at the same time. In those days the folks at FICO considered a number of contemporaneous inquiries about a particular type of credit (e.g., mortgage, car loan) to constitute "shopping the market" and all similar inquiries within (I think it was) a 14 day period were considered to be one request.
I have heard (but have not confirmed) that this now excludes inquiries concerning revolving credit (such as store cards or credit cards).
Anyone know?
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this board has lots of info on credit, including cards, inquiries, etc, so go there to do indepth search:
http://www.creditboards.com/phpBB2/viewforum.php?f=2
in regards to your actual questions, each time you apply for a card, a 'hard' inquiry is generated on one or more of the three credit bureau files that are maintained for you. More than 2 inqs in a 6 month or so period will start decreasing your 'fico' score, usually by 2-3 points per inq. While this may not seem like much, if you're on a threshhold of one level of scoring going to a lower level, anything that pushes you over the edge should be avoided.
Hard inqs stay on your credit file reports for two yrs, but only affect your fico score for 12 months.
To get your TRUE fico score, you should go here and only here to do so, as other 'scoring' sites generate simulations that are often nowhere near accurate.
goto www.myfico.com
skip all the Suze Orman crap and select ONE report to buy:
http://www.myfico.com/Products/FICOOne/Description.aspx?fire=24
here's a couple discount code to try, for 20% off:
'myfico132', 'myfico20'
I've never ordered the 3 at once, i always order each up separately(don't remember why, but there used to be some reason for that); anyway, each credit file is likely to be different, therefore generating different fico scores.
You wanna go to myfico.com to get this, as this is the only site that accesses the credit files and applies the true fico scoring algorithm to your file. All other sites are fake...
There is a WHOLE lot more to this than i've outlined, but this should get you going...
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One might also ask, "How do I cut off my head without killing myself?"
You can't do anything with a credit account without affecting your credit rating at least temporarily.
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Over the last 10 years, I've switched affinity cards frequently. My credit report now shows that I've had about 17 separate credit sources (mostly credit cards, but also home mortgages/equity lines, one store card, etc.) during that time - a few still open; most closed.
To my surprise and anguish, when I checked my FICO score at myfico, I found this was enough to lower me to about the 70th percentile (even though, otherwise, I am an ideal credit risk, and would expect to be well above the 90th percentile). The norm is about 5 credit sources over a 10 year period. This was explicitly called out as the only negative factor on my report. (Closing existing accounts does NOT help until they've been closed for several years.)
So I've completely stopped applying for new sources of credit. (What I have found is that, if I have a card from Amex or Citibank, and I want to change to a different card in the same family, the company will sometimes make the switch as a change to an existing line of credit, rather than an application for new credit. That way it does not impact the FICO score.)
So I recommend extreme caution "chasing" the affinity card offer or bonus of the month - or even the year :)
Answer
Over the last 10 years, I've switched affinity cards frequently. My credit report now shows that I've had about 17 separate credit sources (mostly credit cards, but also home mortgages/equity lines, one store card, etc.) during that time - a few still open; most closed.
To my surprise and anguish, when I checked my FICO score at myfico, I found this was enough to lower me to about the 70th percentile (even though, otherwise, I am an ideal credit risk, and would expect to be well above the 90th percentile). The norm is about 5 credit sources over a 10 year period. This was explicitly called out as the only negative factor on my report. (Closing existing accounts does NOT help until they've been closed for several years.)
So I've completely stopped applying for new sources of credit. (What I have found is that, if I have a card from Amex or Citibank, and I want to change to a different card in the same family, the company will sometimes make the switch as a change to an existing line of credit, rather than an application for new credit. That way it does not impact the FICO score.)
So I recommend extreme caution "chasing" the affinity card offer or bonus of the month - or even the year :)
Perhaps credit companies should be making another entry on your report when you cancel? So there is always an updated amount on their system of how much credit you currently have? :)
Did i just shoot myself in the foot?
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To my surprise and anguish, when I checked my FICO score at myfico, I found this was enough to lower me to about the 70th percentile (even though, otherwise, I am an ideal credit risk, and would expect to be well above the 90th percentile). The norm is about 5 credit sources over a 10 year period. This was explicitly called out as the only negative factor on my report. (Closing existing accounts does NOT help until they've been closed for several years.)
But, as I alluded to in a previous thread: what tangible impact does this have on your life?
My score is less than perfect (by no means bad--just not perfect). But that hasn't affected my ability to apply for new cards, hasn't raised my insurance premiums, and my credit union has told me a number of times that, all other things remaining equal, I could easily obtain another home loan. There's more to life than an imperfect credit rating, especially if you're missing out on points and miles!
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In this thread (http://www.flyertalk.com/forum/showthread.php?t=340631) I explain how my credit score went up over this past year with 10+ credit cards & inquiries.
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Perhaps credit companies should be making another entry on your report when you cancel? So there is always an updated amount on their system of how much credit you currently have? :)
Did i just shoot myself in the foot?
Your credit report does list the cards that you canceled with the note "closed at customer request".
The "negative" that shows up on your credit report is that your credit is not "long term". Most credit agencies give more points for having a long history on a single line of credit.
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The "negative" that shows up on your credit report is that your credit is not "long term". Most credit agencies give more points for having a long history on a single line of credit.Having credit opened and closed in a short period of time is not a negative in your account. It is a nuetral.
The negative would come from having multiple inquiries on your account that cannot be grouped together. Grouped meaning that if your in the market for a car and go to several dealers they'll all qualify you for the loan based on your credit. These multiple inquiries would be reflected (or read) as one inquiry and will not damage your credit score. The time to have mulitple inquiries reflected as one used to be about one month but I think its been extended beyond that now, maybe someone who knows can enlighten us.