One can find excellent credit cards with exciting rewards on all spending for travel to groceries. A single card may not help you to make all your dreams come true. Therefore, one may be tempted to apply for more than one best credit card.
Many individuals may be unaware that many credit card applications within a short time frame can impact their credit score adversely. Your credit score is crucial for eligibility for any credit line. It is also considered when thinking of ‘how to increase credit card limits‘. They need to avoid multiple credit card applications at once. There must be a waiting period between two credit card applications that improve the chances of getting approved for a new credit card and hence, credit score.
Why should you wait between credit card applications?
- Consumers must know that applying for many cards at once can hurt their credit score.
- When individuals make many credit card applications, banks pull their credit reports to check their creditworthiness. It is a hard inquiry.
- A hard inquiry usually leads to a small decrease in your credit score. Therefore, multiple credit card applications are seen negatively by banks and can decline your application, decreasing the applicant’s credit score even more.
- A hard inquiry can decline your credit score by five to ten points. If you hit six or more inquiries, it can affect your credit score adversely. Such hard inquiries can be reflected in credit reports for over two years.
Let us see what industry experts say on how long individuals should wait between multiple credit card applications.
The General Thumb Rule for Multiple Card Applications
Different banks may have different rules for accepting or rejecting credit card applications. Regarding how long one should wait to make multiple credit card applications, individuals should know about the 5/24 rule and the right time to apply for a new credit card.
- The 5/24 Rule
Following the 5/24 rule, banks may reject applicants who have submitted more than five applications across issuers within 24 months. There is no official disclosure for which credit cards are covered under this rule. It can be considered that the rule applies to most, if not all, credit cards.
- Right Time To Apply For a New Card
Many banks find multiple credit card applications in a short period a red flag and tend to disregard four or five inquiries in a year. They find such applicants riskier and more likely to reject them.
Consumers should limit themselves to just two of their credit cards. However, they can make a new application to get credit card every six months. It is a good idea to wait for a full six months, but if you want, you can keep a difference of 90 days between two new credit card applications. Otherwise, they may see negative impacts on their credit score due to hard inquiry.
Thus, an individual looking for multiple credit cards can do it strategically. How many credit cards you need is up to you. Make sure you do not fall for a massive pile of credit card debt with multiple cards and impact your credit score negatively. You need to be wise to apply for and use multiple credit cards to maximise your rewards. As an option, you can focus on how to increase credit card limits to meet your sudden financial obligations when you have no time to wait for months to get a new card.
How to Increase Credit Card Limit
- Track and Improve your credit score
The credit score in India lies between 300 (lowest) – 900 (highest). A 700+ score represents good debt management and creditworthiness of an individual. It is suggested to check your credit report before applying for a credit limit increase on your card.
Check if there are any incorrect values in your credit report. There can be a mistake in your name or age, or there can be a missed update for a closed loan account, etc. If you find any, submit a request to correct it immediately.
Several ways help raise your credit score. You need to control your credit utilization ratio. It is good to utilize your credit limit below 30%. Also, don’t delay any EMI. Your debt repayment behavior affects your credit score and, thus, your credit card limit.
To Sum Up
Thus, the waiting period between credit card requests protects your credit score from the adverse consequences of many credit inquiries. You can take maximum benefits of available credit cards with strategic applications. Whether you want to approve a new credit card or hope to increase your credit limit on a card, banks perform multiple credit checks, including your credit score. A consumer’s credit score is important for every bank issuing credit cards. Therefore, maintaining a high score is crucial.