Thursday, March 16, 2023

How Soon To Apply For Another Credit Card

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Wait For Automatic Credit Card Limit Increases

How Long Should You Wait To Apply For Another Credit Card?

Many credit card companies increase your credit limit automatically, without you having to lift a finger.

If you demonstrate that youre a responsible credit card user, and use the card enough to warrant a credit limit increase, you could get a higher credit line as frequently as every 6 or 12 months.

You can increase your odds of getting an automatic credit limit increase by:

  • Building a positive payment history, never making late payments, and never causing payments to be returned.
  • Using the card frequently, which generates swipe fees for the bank. If you dont use the card often, you likely wont be offered a credit limit increase.

Luckily, automatic increases wont generate a hard inquiry on your credit report, as you must agree to those beforehand.

Avoid Unsecured Credit Cards After Bankruptcy

There are a handful of unsecured credit cards aimed at consumers with bad credit, such as the . The majority of these cards come with very low credit limits, high APRs of between 25% and 29.99%, and annual fees that can easily exceed $100 a year. Some also have a one-time processing fee to open the account and monthly servicing fees on top of the annual fee. In short, you pay a lot for the privilege of avoiding a security deposit.

Similarly, store credit cards also have lower qualification standards, so a bankruptcy may not disqualify you. But these, too, come with low limits and high APRs, and usually have limitations on where they can be used.

Because of their fees, unsecured credit cards for bad credit typically are more expensive than secured cards. There are plenty of secured cards that dont charge annual fees, and you can get your security deposit returned as long as you pay your balances off in full every month. But with these unsecured cards, the fees you pay wont be returned.

Keep The Status Quo During The Process

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Will applying for a travel rewards credit card before closing on your purchase or refinance disqualify you from obtaining the financing? he said. No, not necessarily.

However, Karetskiy says it could. And it will likely cause more work, time and stress for both you and your loan officer.

The lenders job is to make a yes-or-no decision on an applicants request for credit based on the applicants current and past two-year income, credit and asset history, he continued. It is in the best interest of anyone requesting credit to keep the status quo on everything related to their qualifications, most importantly, their credit.

Brian Rubenstein, senior director with Ally Home, says applying for a new credit card before you sign on the dotted line for your mortgage could place you under more scrutiny during the loan review and underwriting process.

Theyll need to be prepared to provide more documentation to help the lender fully understand the debt obligations associated with the card as part of the borrowers overall financial picture, he said about home buyers.

In short, opening a new credit card just adds an additional item that must be checked out during the home mortgage process, he said.

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Bank Of America Application Restrictions

According to cardholder reports, Bank of America uses a 2/3/4 rule: You can only be approved for two cards within a 30-day period, three cards within a 12-month period and four cards within a 24-month period.

This rule only applies to Bank of America® credit cards, though, not all credit cardsso, if youve taken out four cards from other credit issuers in the past year, you can still apply for a new card with Bank of America.

If Youve Applied And Been Denied

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I am a homeowner who has been through the mortgage application process multiple times. Back in 2016, I decided to move from a condo to a single-family home. I waited until the day after closing to apply for a few new cards. It had been about seven months since my last new credit cards were opened. All my applications were approved on the day after closing.

I moved again in 2019 only this time, I waited about two months before applying for any new rewards credit cards. One of the cards I applied for was the Citi Premier® Card. The result: pending, then denied.

The number of recent inquiries was cited as a reason for the denial. Knowing that it had been about six months since my last new credit cards were opened, I decided to call the cards reconsideration line to discuss and hopefully overturn the denial.

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Four Or Five Amex Credit Cards Total

American Express will limit you to a total of four or five credit cards at any given time. This rule applies to both personal and business credit cards so theres no getting around it that way. However, the good news is that if you are an authorized user on an Amex card, that will NOT count against you for purposes of this rule.

Some people have been able to get approved for even more than five Amex credit cards but those seem to be the exceptions and not the norm.;

What Happens When You Apply For A Credit Card

New credit inquiries account for 10% of your credit score and stay on your credit report for two years.

While hard inquiries have a negative impact on your score, the effect you’ll see depends on the number of accounts you have and the length of your credit history. If you have a limited credit file, you’ll likely see a bigger impact. One hard inquiry results in a drop of less than five points for the typical consumer, according to FICO.

If your application is denied, lenders must tell you why and provide information on how to access your free credit report. It’s possible the lender determined you have too much debt compared to your current credit limit, that you don’t have a long enough credit history, or that you have too many missed or late payments.

Contact the lender if any of your circumstances have changed since you applied for the cardperhaps you paid off another balance or increased your income, for instance. Request that the lender reconsider your application. If the answer is still no, refer to your credit report and aim to address the negative information that may have contributed to your rejection.

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Do You Have A Big Purchase Coming Up

If you plan on taking on a large expense, such as a major appliance or cost of a medical procedure, it can be a good idea to put that charge on a card offering no interest on new purchases for six to 18 months. These cards allow you to pay off debt over time without incurring interest fees just make sure you pay off your balance in full by the end of the intro period.

One option for financing a big purchase is the Capital One® Quicksilver® Cash Rewards Credit Card. This card offers no interest for the first 15 months on new purchases . Plus, you earn 1.5% cash back on every purchase.

How To Become An Authorized User

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One possible option if youre starting to build credit from scratch or if youre looking to bounce back from credit problems is to become an authorized user on someone elses account. This means that youll gain access to a credit card in your name thats attached to someone elses account. For example, a parent may allow their child to become an authorized user on their credit card to get them started with responsible credit usage.

To become an authorized user, the family member or friend who is authorizing you to use their account has to notify their card issuer. Theyll also need to provide them with your name, Social Security number and date of birth. Different issuers have different age requirements to add an authorized user. This can typically be done over the phone or online with the issuing bank.

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Capital One Credit Card Limitation Rules

Capital One limits consumer credit cards to two cards per individual. Technically, you can have more than two Capital One cards but for some of the cards, Capital One doesnt accept new applications.

Heres how some cardholders have more than two Capital One credit cards:

  • Old credit card accounts. They already had more than two Capital One cards when this rule was implemented in 2011. If they decided to keep their cards, the rule didnt affect them.
  • Capital One acquired banks. Individuals who held credit cards by banks bought by Capital One, such as HSBC, dont count toward the two-card rule.
  • Cobranded credit cards. Cobranded cards issued by Capital One and a retailer dont count toward the rule. For example, you can get a GM BuyPower Business Card from Capital One® in addition to your two Capital One cards without conflicting the rule.
  • Secured credit cards. Capital Ones secured cards dont count toward the rule. If you started with a secured Capital One credit card and managed to build your credit, you are still eligible for two more Capital One credit card slots.
  • Business credit cards. You can freely add Capital One business credit cards to your personal card selection if you need more than two without conflicting the two-card rule.

Is it possible to have more than two Capital One credit cards?

Some Finder readers claim they have applied for more than two Capital One credit cards after Capital One imposed this rule, and they claim they were approved.

Your Credit Score Is Too Low Or You Have A Thin Credit History

If youre new to credit or working to rebuild your credit, you may have applied for a card that is targeted to people with higher income or a better credit history. That does not mean you cannot apply for another card right away, but youll need to know what your options are.

In many cases, your best option might be a secured credit card. These cards arent ideal because they require a security deposit, usually equal to your credit limit. But they can be a great way to build, or rebuild, your credit and get you where you want to be so that you can apply for a better credit card in the future.

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Bottom Line: Is It Good To Have Multiple Credit Cards

Being a multiple credit card holder is good as long as you keep track of payments due, avoid overspending and maintain a low credit utilization ratio.

However, if you know you have a tendency to run up large balances or if you have difficulty staying organized with payments, it’s probably best to avoid having multiple credit cards.

Before Applying For A Credit Card Know The Credit Score Ranges

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When youre applying for a credit card, companies take several factors into account, including:

  • Your credit scores
  • Monthly rent or mortgage payment

Of those three, your credit score carries the most weight in credit card approval decisions.

One way to evaluate your odds of being approved for a credit card is by checking your credit scores to determine where they are on the range of scores. FICO credit scores, which are the scores used by 90% of top lenders, range from 300 to 850.

Mike Pearson, credit expert and founder of the credit repair site , explains how the score ranges affect your approval odds. If you have a credit score of 750 and above, youll have your choice of nearly any credit card on the market, including prime cards, which feature premium rewards and perks, Pearson says. Your credit score isnt the only thing that goes into getting approved for a card like thatand you could still get rejected on the basis of a too-high or a recent late paymentbut if you have an excellent credit score, you stand the best chance of getting approved for most prime cards.

The typical American has a credit score that falls somewhere between 300 and 850. The average FICO score is 695, and most people who have a credit score are in the 660 to 720 range.

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If You Get Denied For A Credit Card When Should You Reapply

No one likes rejection, and getting denied a credit card can make you feel confused and upset. If you get denied for a credit card, dont worry. Yes, its understandable that you may even want to apply for another one in the hope of getting approved to make yourself feel better.

But in some cases, you may want to hold off. How long you should wait typically depends on the reason for your being denied.

Apply For The Right Card

If youre rebuilding your finances or establishing credit, secured credit cards might be a good option. While these cards usually require you to put down a cash deposit, it can be easier for you to get approved and may allow you to get back on your feet while minimizing risk to the financial institution. In some cases, you can get upgraded to a traditional credit card after 12 months after responsible credit use.

Its not a lifetime sentence, Harzog says. The secured cards look like other cards. There is no stigma attached to that.

If you have credit card debt, balance transfer cards are another type of card that might help. These cards typically have a 0% APR introductory period for balance transfers, so you can work on paying down your debts with no interest for a set period of time.

Ultimately, youll want to apply for a card that youre likely to be approved for and fits your financial situation.

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Request A Credit Limit Increase

Dont want to wait for your card issuer to increase your credit limit on its own? Heres some information you might not know. You can contact your credit card issuer directly to request a higher credit line.

Requesting a credit limit increase runs the gamut from super simple to involving a little bit of legwork. Bank of America, for example, includes a request link in your online account. Chase, on the other hand, requires you to call customer service to initiate a request.

Before you contact your card issuer, however, note that a credit card limit increase request often results in a hard inquiry on your credit reports. After all, the issuer is considering you for a larger line of credit. So, the process is similar to applying for a credit card.

Although a hard inquiry might lower your credit scores slightly , any negative effect is often outweighed in the long run by the benefits of a higher credit limit. Also, hard inquiries will only affect your FICO credit scores for one year. After two years, the hard inquiries will disappear from your credit reports, too.

Insider tip

Are you looking for a high credit limit to help lower your overall ratio? If so, you might want to consider opening a new credit card instead. A new account will likely give you more available credit.You can also take advantage of any introductory bonuses offered by the card issuer.

Then, your issuer will make one of three decisions:

The result of a successful credit limit increase request

How Often Should You Apply For A New Credit Card

When To Apply For Your Next Credit Card?

While the number of credit cards you should have is up to you and you can apply for new lines of credit as often as you want, its a good idea to wait at least 90 days between new credit card applicationsand its better if you can wait a full six months.

Waiting between credit card applications helps protect your credit score from the negative effects of too many credit inquiries, and it also helps ensure that you dont run afoul of credit card application restrictions.

Capital One, for example, is known for limiting applicants to one new credit card every six months, so if you apply for a new Capital One card before the six-month restriction is up, your application will likely be rejected.

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Compare Credit Cards That Will Pair Well With Your First

If youre ready to apply for another credit card, consider getting a product that covers the weaknesses of your existing card.

For example, your current card might offer poor rewards for certain spend categories. You can get a new card with bonus rewards in those categories, giving you strong cash back, points or miles for more of your expenses.

If You Get Denied For A Credit Card Challenge The Denial First

Before you apply for another credit card, find out if the bank that denied you is willing to reconsider your application. You can call the banks reconsideration line and speak with a human and plead your case.

Here are the reconsideration lines for some of the top credit card issuers:

  • American Express Reconsideration Line: 877-399-3083
  • Barclaycard Reconsideration Line: 866-408-4064
  • Capital One Reconsideration Line: 800-625-7866
  • Chase Reconsideration Line: 888-270-2127

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Card Pairings To Consider

Youre ready to sign up for a second credit card, but which one should you get? And why? A lot depends on your lifestyle and what would most benefit you. Maybe you have a basic cash back card, but youd like extra money for your grocery shopping. Theres a card for that.

Or youd like to rack up travel points while dining out;for a trip youll take when the world opens back up theres a card for that, too. Or maybe, you want to maximize the money you spend on all those streaming services youve grown so addicted to again, theres a card that can give you a boost with that.

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