You Want To Build Your Credit
Responsibly owning more than one credit card can help you build a good credit score by maintaining your credit utilization ratio, which represents the percentage of available credit you use per month. Experts recommend keeping your utilization at around 30% of your total available credit, so having more than one card means you can spend more without going over your desired ratio and hurting your score.
Apply For A Secured Credit Card
Secured credit cards are designed for people with bad or no credit. These cards require you to make an up-front deposit typically between $200 and $1,000 as a guarantee against the card’s line of credit. Your credit limit on the account will usually match the deposit. For example, if a card requires a $750 deposit, your credit limit will be $750.
There are a handful of secured credit cards, though, that require only a nominal security deposit and charge no annual fee, yet provide a higher line of credit, like the Capital One Platinum Secured Credit Card. The deposit is returned if you close the account with a zero balance.
Tip: The annual percentage rates on secured credit cards are typically higher than average, so carrying a balance is prohibitively expensive. The key is to use the card responsibly, charging no more than 30% of the credit limit and paying off the balance each month in full.
Here are a few features to look out for on secured credit cards:
Do Lenders Run Credit Again Before Closing
A lender will typically run your credit at least twice: when you apply for your new loan and just before closing. For this reason, its important to not open any new accounts, rack up new debt, close old accounts or make other credit report-related changes prior to closing day. Any unexpected credit changes can result in a delayed or even denied mortgage loan.
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Two Credit Cards Every 90 Days
Amex is likely to limit approving you for two credit cards every 90 days. If you apply for two credit cards on the same day, data points suggest one of your applications will be put on hold as an automatic fraud prevention mechanism. There are conflicting reports on how charge cards are counted in this two card limit. To be safe, assume Amex will limit approving you for no more than two total cards, including charge cards, every 90 days.
How Long Does The Credit Card Application Process Take
If you apply for a credit card online, the credit card application process usually takes only a few minutes to complete. How long it takes to get approved for a credit card can vary, but in many cases, youll learn right away whether you have been accepted or rejected. You may be asked to provide additional financial information or proof of identity before the lender can make its decision.
If you are accepted for an instant use credit card like the Apple Card or the Uber Visa Card, youll be able to start using your new credit card right away. Otherwise, youll need to wait for the card to arrive in the mail, which could take seven to 10 business days.
If your , the lender is required to provide an explanation. This is commonly called an adverse action notice, and it can arrive via email or by letter. Expect your adverse action notice within seven to 10 days of your credit application, and use it to understand why you received a credit denial.
If your credit score wasnt high enough to meet the qualifications, for example, you might want to take some time to build your credit score before your next application.
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Can You Apply For The Same Credit Card Twice
Remember: Credit card issuers set their own application policies. So whether you can apply for the same credit card twice depends on the issuer and its policy.
If your application is denied, you have the right to know why. As the CFPB explains, âThe creditor must tell you the specific reason for the rejection or that you are entitled to learn the reason if you ask within 60 days.â
And if youâre able to improve your creditworthiness, you might be able to successfully reapply in the future.
Can I Be Denied A Mortgage After The Closing Disclosure Is Issued
A final closing disclosure is provided to a buyer no less than three days prior to closing on the loan. While this document outlines all of the agreed details of the home mortgage offer, its not a done deal until the loan is closed and funded. Due to last-minute financial changes or even the results of a final credit check, a lender can still deny a buyer their mortgage loan even after issuing the closing disclosure.
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Is It Good To Have Multiple Credit Cards
The effect on your credit score is probably one of your major concerns about having multiple credit cards. That is a common consideration, but having more than one credit card can actually help your credit score by making it easier to keep your low.
For example, if you have one credit card with a $2,000 and you charge an average of $1,800 a month to your card, then your credit utilization ratiothe amount of your available credit that you useis 90%. Where credit scores are concerned, a high credit utilization ratio will impair your credit score. It may not seem fairif you have just one card and pay it off in full and on time every month, then why should you be penalized for using most of your credit limit? But thats how the credit scoring system works.
Is it bad to have multiple credit cards? No, if you handle your credit wisely, keep your credit line utilization ratio below 30%, and keep track of payment due dates.
To improve your credit score, most credit experts recommend that you should avoid using more than 30% of your available credit per card at any given time. By spreading your $1,800 in purchases across several cards, it becomes much easier to keep your credit utilization ratio low. This ratio is just one of the factors that the FICO credit scoring model takes into account in the amounts owed component of your score, but this component makes up 30% of your credit score. Only your payment history is weighted more heavily in determining your credit score.
Will Applying For Multiple Credit Cards Hurt Your Credit Score
Providing you wait at least 3 to 6 months between applications , it shouldnât affect your score much at all, but applying for multiple credit cards at the same time can do a lot more damage.
With each application, your credit provider must run a hard credit check. While one of these every once in a while will only have a minimum impact , too many inquiries at once can hurt your score and make you seem less reliable, affecting your applications in the future.
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New Cardholder Bonus Limitations
If youre hoping to earn a new cardmember bonus of cash or points, or get a low introductory interest rate, youll want to pay close attention to issuer limits around how often you can apply for a credit card.
For example, Citi doesnt 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 havent received a new cardmember bonus for Citi Rewards+, Citi ThankYou Preferred, Citi ThankYou Premier/Citi Premier, or Citi Prestige in the past 24 months.
If youve 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.
How The Banks View Inquiries
When lenders are processing applications for credit, they appear at the number of inquiries which have recently been made. It can take between three to six months for your application information to pay off so it doesnt count against you being an indicator of risk. The greater inquiries you have, the less likely you are to be approved by a few of the more desirable credit card companies.
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Discover It Secured Credit Card
Verdict: Numerous benefits for consumers who have filed bankruptcy.
With the ability to earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, 1% unlimited cash back on all other purchases – automatically, the Discover it® Secured Credit Card is one of the best cards for bankruptcy filers. Not only does it provide you with your FICO Credit Score for free each month, so you can track your progress toward rebuilding your credit, but it will also double your cash back at the end of your first year.
Like most secured credit cards, you’ll have to supply a security deposit up front to open your account. Discover will monitor your account, and if you pay your balance off on time each month, after seven months, they may refund your deposit and upgrade you to an unsecured account.
- Rewards: Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, 1% unlimited cash back on all other purchases – automatically. With Cashback Match, get an unlimited dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.
- Deposit required?: Yes refundable deposit required starting at $200
- Minimum credit line: $200
Comparing The Best Credit Cards After Bankruptcy: Earning Rate
Of the three cards we’ve chosen, only the Discover it® Secured Credit Card offers users any rewards on their spending.
The Discover it® Secured Credit Card offers users 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, 1% unlimited cash back on all other purchases – automatically. Discover will also automatically match all the cash back you’ve earned at the end of your first year. These are great benefits considering there is no credit score required to apply, so you can earn rewards on your responsible use of your card all while working to rebuild your credit.
While the other two cards on our list don’t offer any rewards structure, for consumers who have filed bankruptcy, it’s much more important to focus on responsibly rebuilding your credit than on earning rewards, so these cards are good options, too.
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Can You Have Two Of The Same Credit Card
Many credit card issuers will indeed approve you for another one of their credit cards as long as you meet the qualification criteria. And, if youve always managed your current credit card well, that may make it easier for you to get approved for the new credit card.
However, dont assume that youll get approved for the exact same terms as your current credit card. The credit card issuer will approve your application based on your current income and credit standing, which may have changed since you applied for the first card.
Month Bonus Rewards Restriction
Another restriction you may see in the Wells Fargo terms and conditions is targeted at the bonus rewards earned by new cardmembers and restricts the bonus rewards earned on a card to once every 15 months. The language states, You may not be eligible for introductory annual percentage rates, fees, and/or bonus rewards offers if you opened a Wells Fargo credit card within the last 15 months from the date of this application and you received introductory APR, fees, and/or bonus rewards offers even if that account is closed and has a $0 balance.
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You Have A Low Credit Score
Itâs always a good idea to pull your credit report before applying for any new cards. This way, youâll have a clear and current picture of your credit score and can avoid cards that you may not be approved for . If thereâs a chance you could be rejected for the card youâre interested in, your best bet is to wait and build your score up before applying.
How Can I Keep My Credit History In Good Shape And Improve My Chances Of Credit Card Approval
When it comes to improving your chances of getting a new credit card, a smart strategy is to keep your credit history clean and free from black marks.
Some of the steps you should follow to increase your chances of approval while maintaining a good credit history:
- Make timely repayments. A sign that youre trustworthy with a line of credit is you guessed it paying your bills on time.
- Avoid payment defaults. Defaulting on loan payments looks terrible on your credit report and could also lead to severe legal repercussions.
- Dont overspend. Learning to curb your expenses will benefit both your credit file and finances in the long run.
- Check your credit report regularly.Request your free yearly credit report and check that it is error-free. If you find something on your file that legitimately doesnt belong there, contact the reporting agencies so they can investigate and rectify the matter.
- Submit one application at a time. This will limit unnecessary hard pulls on your credit file. Choose the most suitable credit card, apply and wait for a response. If your application has been declined, consider applying for the next most suitable card. Youll want to wait for a small period of time before applying again.
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How Do Multiple Credit Card Applications Hurt My Credit Score
Every time you apply for a new charge card, the action is recorded and sent to the major credit reporting agencies. These credit inquiries do drop your credit score by a few points. When numerous hard pulls show up on your credit report, its a red flag. When theyre close together, you may discover that your score will drop significantly. Some credit card companies automatically reject applications that are made within 6 months through the same person. Your FICO credit score reflects ten percent based on new credit. When a new credit card inquiry is made, you receive a dip in the score. It may rebound quickly unless there are a lot of inquiries. This makes lenders suspicious that you may be planning to take on a hefty amount of debt and this could make you a poor credit risk for them.
How Often Should You Apply For A Credit Card
In theory, you can apply for new credit cards as often as you like. Since the average online application only takes a few minutes, you can apply for a lot of cards in a very short amount of time.
But that doesnt mean you should apply for multiple credit cards all at once. In most cases, waiting between credit card applications is better for your credit scoreand it can even improve your chances of getting accepted.
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Can You Apply For Multiple Credit Cards From The Same Credit Card Issuer
Whether you can apply for multiple credit cards from the same credit card issuer depends on the issuer and its policy. Since credit card issuers set their own policies, the answer might differ from issuer to issuer. And the answer might also depend on how many cards youâre applying for at once.
Still, there are reasons people might consider having multiple credit cards from the same issuer. For example, it could give you access to rewards and perks that come with different types of credit cardsâas long as you use the cards responsibly.
Just keep in mind that too many applications over a short period of time can affect your credit scores. And having multiple credit cards means keeping up with more than one monthly credit card bill.
How Applying For Multiple Credit Cards At The Same Time Might Affect Your Credit Scores
Whether youâre trying to build or rebuild credit or earn rewards, it may be tempting to apply for multiple credit cards at once.
After all, itâs common to get multiple rate quotes on other types of creditâincluding auto financing and mortgagesâto find the best deal. And if you shop around for auto loan or mortgage rates over a short period of time, it might not affect your credit score much at all.
Thatâs because, as the Consumer Financial Protection Bureau explains, âWhen lenders offering the same type of loan request your credit score within a time span ranging from 14 to 45 days, it will only count as a single inquiry, depending on the credit scoring model used.â
With credit cards, however, each application could result in a separate hard inquiry. As FICO® explains, a hard inquiry may temporarily lower your credit scoreâtypically by just a few points. But multiple hard inquiries over a short period of time could have more of an impact on your credit.
Why? Because, as the CFPB explains, âIf you apply for a lot of credit over a short period of time, it may appear to lenders that your economic circumstances have changed negatively.â So, the CFPB recommends applying only for the credit you truly need.
Keep in mind that there are multiple credit scores and scoring models. And scoring companies like FICO and VantageScore® have different versions of their own scores. So you might see slight differences in your score depending on which model was used.
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