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In this article:
- Why Multiple Credit Card Applications Pose a Credit Risk
- How Long Should You Wait to Apply for Another Credit Card?
It's a good idea to wait at least six months between credit card applications to protect your credit score and avoid exceeding certain card issuers' restrictions. Several applications submitted within a short time frame could damage your credit score for a period of time.
The ideal amount of time to wait depends on your circ*mstances. But if you're rebuilding credit or planning to shop for a mortgage, aim to put as much time as possible between credit card applications. If you're applying for a new card because your last application was denied, that's likely a signal to improve your credit before applying again.
Here's how to determine the length of time to wait between applications for credit cards.
Why Multiple Credit Card Applications Pose a Credit Risk
A number of factors contribute to your credit score, and applying for a credit card impacts two of them: new credit and length of credit history. Here's how.
Average Age of Accounts
The length of your credit history accounts for 15% of your FICO® Score☉ . The older your accounts, the more the credit scoring models trust that you understand credit and will manage new credit responsibly. Once you get a new credit card, both the age of your newest account and your accounts' average age is reduced. That can have a negative impact on your credit score.
Hard Inquiries
New credit—or the number of new accounts in your name and the number of recent applications for credit—account for about 10% of your FICO® Score. Every time a lender checks your credit history as part of a credit application—whether it's accepted or rejected—that request appears on your credit report as a hard inquiry.
Lenders consider several hard inquiries around the same time a sign of increased risk because they don't yet know how well you'll be able to manage the new financial obligation. That can lead to a brief but potentially significant drop in your credit score.
There is some nuance to the effect of hard inquiries on your credit. According to FICO, for example, one hard inquiry typically leads to a score drop of just five points or fewer, and it affects your credit less over time. It will come off your credit report entirely after two years. More than one credit card inquiry in a short time period, however, will have a larger effect on your score.
How Long Should You Wait to Apply for Another Credit Card?
Precisely how long to wait depends on a number of factors, one of them being whether the issuer of the card you want has any restrictions. Some credit card companies will not issue you a new credit card if you've already opened five cards in the last 24 months, across all banks and issuers. Other companies limit you to one new card from their line of credit cards every six months.
Even if those restrictions don't apply to you, consider putting extra time between credit card applications in the following situations:
- When you're improving damaged credit: As you rebuild credit, every credit action you take can be a step toward a strengthened score. A hard inquiry can curb progress by leading to a credit score drop, however slight. Avoid new credit applications unless you're seeking a secured credit card (or a credit-builder loan) that specifically aims to bolster your score. After that, wait at least six months between credit card applications so that you have time to improve your credit before a new hard inquiry appears on your credit report.
- Before or while you're applying for a mortgage: When you're seeking a mortgage, lenders look closely at your debt-to-income ratio (DTI), or how much of your monthly income goes to pay debt payments. Taking on new credit card debt in the months before or while applying for a mortgage will increase your DTI and potentially affect your likelihood of approval. Avoid hard inquiries and new lines of credit for six to 12 months before applying for a mortgage.
The Bottom Line
In the end, the ideal amount of time to wait between credit card applications depends on your specific credit score and financial goals. But since lenders reward careful management of credit, use caution whenever you consider taking on a new credit card. That's especially true if you're thinking about applying for a mortgage or otherwise need to show as high a credit score as possible.
If you're not sure where your credit stands, consider getting your credit score and credit report for free from Experian. That will give you a better understanding of how much leeway you have to apply for a new credit card, and whether it's wise to wait until your score has improved.
