If you’re thinking about adding a new credit card to your wallet, you may want to consider whether to do so right now or wait a bit. After all, applying for a card can impact your credit score, and there may be additional aspects to think about—for example, if you’re in the process of applying for a mortgage, or if you’re trying to get a credit card sign-up bonus.
Learn more about credit-score pros and cons of applying for a new card; application restrictions for a few issuers and banks; why waiting might be smart; and whether to sign up today.
- The credit card application process temporarily can decrease your credit score.
- Adding more credit can improve your credit score, as long as you keep your balances low.
- Some issuers have restrictions on how frequently you can apply for credit, how many cards you have in total, and how often you can qualify for a new-cardmember bonus.
- Proceed cautiously with a new credit card application in certain situations, such as when buying a home, rebuilding credit, if you’ve been recently denied for other credit, or if you’re unemployed.
How Credit Card Applications Affect Your Credit Score
Applying for new credit cards too often over a short period of time can drag down your credit score right now. Even applying for one card can bring down your score. However, in the long run, adding a credit card or two can help your credit score. Here are the pros and cons.
Negative Credit Impacts
The process of applying for many cards over a short period of time can reduce your credit score, because anything considered “new credit” is worth 10% of your credit score.
After you receive the card, the average age of your credit history will decline. Age of credit is worth 15% of your credit score, and a longer credit history increases your score. If you’ve had one card for 10 years and get a new card, your new average would be five years, not 10 years.
Positive Credit Impacts
Long term, the most significant impact comes from your credit utilization ratio. Each card you successfully open adds to your total amount of available credit. If you’re only using a small amount of credit per month and have a large amount of available credit, your credit utilization ratio improves. This is your amount of debt in relation to the amount of credit available to you. The amount you owe is worth 30% of your credit score—more than any other factor discussed here.
When you get a preapproved credit card offer in the mail, your score hasn’t yet been impacted. However, when you decide to accept the offer and apply for the card, your score could be impacted by the hard inquiry.
Restrictions by Credit Card Issuers
You probably don’t want to take the credit hit for a card you’re unlikely to receive. So it’s important to note that some issuers have various restrictions around applying for and receiving cards, even if you have a great credit score. These reasons may include:
- Combatting card churning, where applicants seek cards, collect points or cash, then cancel the card to collect points or cash again.
- Limiting your total credit limit or the number of approved credit cards to reduce the bank’s exposure if you suddenly can’t pay your bills.
- The broader economy can also influence restrictions temporarily. In the last recession, banks tightened card underwriting standards for several years, including changing score cutoffs and limiting credit lines.
Online message boards and websites discuss a variety of issuer “rules” around applying for a card. These rules are often collected through crowdsourcing experiences, and you may not be able to verify many of these rules, policies, or guidelines on credit issuer websites. These policies or rules also may change over time, and exceptions might be made. Here are a few examples, although this isn’t a comprehensive list.
Card Application Limits
These rules ask that you limit card applications to a specific time frame, and can apply to all applications or just applications within the bank or issuer. Limitations are rumored to include:
- Chase 5/24 rule: If you’ve opened more than five cards in the past 24 months, you’re unlikely to be approved for most Chase cards, with a few exceptions.
- Citi 8/65 limit: You must wait eight days between card applications and can’t apply for more than two cards in 60 to 65 days.
- American Express 2/90 limit: You’ll only be approved for two American Express cards within a 90-day window.
However, these rules were neither confirmed nor denied by the issuers at press time.
Some issuers have their own application policies. For example, Wells Fargo states that if you’ve received a Wells Fargo card in the past six months, you may not qualify for another. Reportedly, you may only be approved for a Discover card once every 12 months or a Capital One card once every six months.
Number of Cards
Some card issuers limit the number of cards you can carry from the issuer, so consider timing if you want to apply for a new card; you may need to close another, first—or not apply at all. You also wouldn’t want to apply for several from the same issuer at once.
For example, American Express has confirmed a four-card limit, where consumer or business credit cards are concerned. It’s rumored that Capital One will only allow someone to hold two Capital One cards. With other issuers, rules may vary by situation. For example, Wells Fargo could limit a customer’s number of open Wells Fargo credit card accounts, depending on several factors.
Don’t forget that any cards you hold with your spouse could also impact your credit score and number of open accounts, and count against your card limits.
New Cardholder Bonus Limitations
If you’re hoping to earn a new cardmember bonus of cash or points, or get a low introductory interest rate, you’ll want to pay close attention to issuer limits around how often you can apply for a credit card.
For example, Citi doesn’t offer a bonus of cash or points if you already received a new cardmember bonus for certain cards in the past 24-48 months, or if you close an account with certain cards within that time frame. For example, with the Citi Premier Card, the welcome bonus is available to applicants only if they haven’t received a new cardmember bonus for Citi Rewards+, Citi ThankYou Preferred, Citi ThankYou Premier/Citi Premier, or Citi Prestige (or if the applicant hasn’t closed any of these accounts) in the past 24 months.
If you’ve received an introductory rate or bonus in the last 15 months for any Wells Fargo consumer credit card, you may not be able to receive another introductory offer or bonus.
When To Be Extra Cautious About Applying for Credit Cards
Applying for a credit card indicates to the issuer that you’re seeking more credit, which could lead to more debt. So avoid making a request right before:
- Buying a house: Don’t apply for cards in the period between applying for a mortgage and your loan’s closure, as new credit card accounts could lower your score and raise your mortgage interest rates.
- Rebuilding credit: If you’re trying to improve your credit, work on making consistent, on-time payments and eliminating your existing debt before applying for new lines of credit.
- Transferring a card balance: Applying for a balance transfer card can help you consolidate debt and pay a low-to-zero promotional interest rate; but remember that you’ll also often need to pay a balance transfer fee and the promotional rate will be for a limited time.
- Recent rejections: If you’ve been rejected for a credit card, the issuer is required to tell you why. If you need to correct or improve your credit report, investigate and act before applying for another card.
- You’re unemployed: Issuers often consider income when deciding whether to approve your card application. If you’re between jobs, it may be best to wait until you’ve lined up your next situation.
If you’ve frozen your credit report, be sure to unfreeze it temporarily before applying for a credit card, so the issuer can review your credit.
Frequently Asked Questions (FAQs)
What’s the best way to apply for a credit card?
According to research from the Consumer Finance Protection Bureau, approval rates vary widely by the means of application, type of card, and your credit score. In-person application and responding to mail or a prescreened offer can be among the most successful strategies where general-use credit cards are concerned.
How long does it take for a credit card application to be reviewed?
Your application for a new credit card could be reviewed immediately and approved within minutes, or it might require a closer look from an analyst and take longer. Each issuer will be different, but you’ll likely get a response in seven to 10 days, via mail.
How long should I wait between credit checks?
In most cases, credit checks or hard inquiries take only around five points off your credit score. Inquiries stay on your account for two years but only impact your FICO score for one year; you may even see your score go up again after a few months. You might let your score recover before applying for another credit card.
How often do I have to use a credit card to keep it open?
Use your credit card a few times per month to build a good record of charging items and paying off charges. However, know that your card issuer can close your account without notice at any time.
What should I do if I was denied a credit card?
You can call the issuer’s reconsideration line to appeal the decision, if possible—the phone number may be included on your denial letter. If denied due to poor credit, you might either need to repair your credit or correct errors on your credit report.