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- I’ve had more than 20 credit cards, and my credit score has consistently remained in the high 700s because I always pay my bills in full and on time and keep my total credit utilization low.
- I also manage my credit card applications to avoid having too many recent inquiries. These are the hard pulls on your credit that happen whenever you apply for a new credit card or another type of loan.
- Having too many credit inquiries in a short period of time can be a red flag to potential lenders, so it’s best to space out your credit card applications.
- Before I apply for a new credit card, I always check my credit report to see how many inquiries I have on it. If I have two inquiries within the past six months or four inquiries within the past year, I don’t apply for anymore credit cards until that number goes down again.
- If I were applying for a mortgage or an auto loan, I would try to keep that number even lower.
- See Business Insider’s list of the best rewards credit cards »
When I tell people I’ve had more than 20 credit cards in the past six or seven years — because I’m a little obsessed with using credit card points to book travel — I often get a grimace in response. “Your credit must be terrible,” they reply. “Do you not care about your credit score?” is another popular response.
“Actually,” I tell them, “my score has increased since I started collecting credit card rewards.” It has. My score has always been good, but now that I juggle lots of credit cards at once, it stays in the high 700s.
By stacking my wallet with rewards credit cards, using them as my main payment method, and always paying my bill in full and on time, I’m building a robust payment history — the single most important factor in your FICO score. I’m also keeping my credit utilization low — the second most important factor in your FICO score — because I have lots of available credit.
However, there is one credit score risk that comes with jumping at every good credit card offer you see: recent inquiries. When you apply for a credit card or a loan, the lender does a hard pull on your credit report, called a hard inquiry. Your credit report will list inquiries from the past two years — after that, they fall off your report.
Here’s how I use my credit report to manage my recent inquiries while still taking advantage of lucrative sign-up bonuses and rewards rates.
I always check the “inquiries” section on my credit report
When I see a credit card offer that catches my eye, I log onto my Experian account and check my credit report before applying. I always scroll immediately to the “inquiries” section, which lists the inquiries potential lenders are able to see.
When I look at my inquiries, I’m able to see who made the inquiry (for example, which credit card issuer), when it was made, and when it will be removed from my credit report. This gives me a quick glance at how many recent inquiries I have on my report, which then informs whether or not I decide to apply for the credit card offer, as having too many recent inquiries can be bad for your credit score.
Get your free credit report
You can check your credit report for free through AnnualCreditReport.com. In fact, while you usually only get free access once per year, you can currently get your free credit report from the three major credit bureaus once a week through April 2021.
How long do inquiries affect your credit score?
New credit (recent inquiries) is only responsible for 10% of your FICO score, so having a handful of them on your credit report probably won’t drag your score down more than a few points.
However, if you have lots of inquiries within the past few months, that can cause a bigger hit to your credit score. A rapid succession of credit applications signals to a lender that you could be a risky borrower. A lender may wonder why you’re applying for so much credit all at once.
The bright side is that inquiries don’t have a lingering effect on your credit score. Their impact starts to lessen after a few months, and after one year, inquiries no longer impact your credit score. And again, after two years, an inquiry is removed from your report entirely.
How many inquiries is too many?
Given that Experian has explicitly stated that inquiries start to lose their effect on your credit score after a few months, I have no worries about applying for multiple credit cards at once if I come across a lot of good offers. However, I do still try to keep my credit card applications at a reasonable level — otherwise, I could start being denied for these credit cards.
I never apply for more than two credit cards within six months or four credit cards within one year. Credit card applications are usually the only inquiries on my credit report, but I make sure to keep my inquiries to a maximum of five per year.
That being said, I don’t have plans to apply for financing — a personal loan, an auto loan, or a home loan, for example — any time soon. So, I’m really only concerned with small dips in my credit score as it relates to my eligibility for rewards credit cards. Those stakes aren’t very high.
If I did have plans to buy a house or a car within the near future, I’d try to keep the inquiries section of my credit report completely clean for at least one year before applying for financing.