credit card advice
Many people wonder when is the best time to apply for a new credit card. They want to be more likely to be approved for a great card and less likely to damage their credit.
You are about to learn that timing is everything.
One at a time
When you’re ready to acquire a new credit card, you may be tempted to apply for several different cards at once.
This may be because you are not sure which you will qualify for, or perhaps you can’t decide on the best card for you so you try all of them. This is a bad move.
Every time you apply for a credit card, your credit report receives a hard inquiry. Applying for multiple credit cards at once results in many hard inquiries at the same time, which will lower your credit score.
This sense of desperation alarms creditors and puts you at risk for being denied for the card of your dreams. Instead, choose the one credit card you want the most (two at the most) and apply.
If you know you have poor credit, do not go for a rewards card that says it is for people with good credit. It’s not worth the hard inquiry if you know you won’t be approved.
If you aren’t, you may want to spend some time working on improving your credit before you apply for another one.
“Once you apply, wait and
see if you’re approved.”
Avoid too much credit at once
If you have just recently applied for a mortgage loan, an auto loan or another large line of credit, it may not be the best time to apply for a credit card.
Having a large debt-to-credit ratio can result in poor credit and make you look too risky for lenders.
Additionally, having a poor credit card utilization rate – meaning you always spend the max on your credit cards – can harm you.
Using less than 30 percent of your credit limits will show creditors you’re responsible, according to credit score company myFICO. Spend several months making on-time payments to those new loans before you apply for a new credit card.
Keep your cards open
Do not cancel your existing cards just because you are about to start shopping for a new credit card, especially if any of those accounts were open for a long time and in good standing.
Keep your long-standing accounts open, as they can help contribute to good credit.
If you really do not want those credit card accounts open anymore, cancel them after you have applied for and been approved for your new credit card.
Are you sure you really need a new credit card right now? If your main reason is because you need more access to funds, myFICO recommends calling your existing credit card companies and ask if they will raise your credit limits.
“While a request for an increased limit may count as an inquiry just like opening a new card would, it won’t reduce the average age of your credit accounts, which is also important for your FICO score,” the company said.