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Multiple Credit Card Applications Can Affect Your Credit

Multiple Credit Card Applications

It is true that you need to get credit to build a good credit score and this can be done by getting a credit card and using it responsibly. However, making various credit card applications in a short  span of time can also damage your credit score. The reason multiple credit card applications affect your credit score is because 10% of your FICO credit score is determined by new credit inquiries you make. Each time you make an application,  your credit is checked by the creditor to decide if your credit card should be approved. This  leaves an injury to your credit report which is included in your credit score.

Various Applications Hint Desperation

Multiple Credit Card Applications Hint Desperation

Consequently, the more credit card applications you make, the more your credit score drops. So as 10% of your credit score is affected by a new credit application, your credit score can fall as  much as 70 points if your credit score is 700. Then again, it also depends on the other information in your credit report. If your credit score  isn’t affected by the various inquiries, there is a chance of creditors denying your application  only because you had recently made various applications. This is because multiple applications are considered to be a sign of desperation for credit, where  desperation is always a turn off. While most people can regain these points within six months of applying for a loan or credit card application, the points may really count for those who had a poor credit score to begin with.

Makes You Look Like A Financial Risk

Opening numerous credit cards in a short time span is a negative indicator of a person’s financial  responsibility. This leads to a negative impact to your FICO score as it indicates you are a  financial risk. As your FICO score predicts how dependable you are with borrowed money, showing any  behavior which is correlated to mismanaging of credit is reflected with a drop in your credit  score. However, if you have already made the mistake of applying for many credit cards at once,  responsibly managing these multiple accounts leads to a quick re-bounce of your FICO score. This is done by paying bills on time and keeping balances below 30% of available credit. Unfortunately, data collected over the past few decades prove that this is not the case most of the  time, and those consumers who open various accounts in a short span of time end up running up  balances and missing payments.

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