Applying for Multiple Credit Cards: 3 Things You Need to Know

Some people think that applying for credit cards is like applying for college—the more applications you send in, the better your chances of getting accepted. But that’s not the case. Creditors get nervous if they see you applying for credit cards en masse. To them, it looks like you have plans to run up a lot of debt, which puts you at a higher risk of defaulting on payments.

Before even thinking about applying for multiple credit cards, here’s what you need to know.

1. Each application counts as a hard inquiry.

When it comes to shopping for loans or mortgages, submitting multiple applications within a few weeks will only show up as one hard inquiry on your credit report. But credit card applications are a whole different story.

Each application counts as one hard inquiry on your credit report and costs you about five points on your credit score, whether you apply for a bunch of cards in the same day or over the course of a few months. With six hard inquiries on your credit report, you’re eight times more likely to default, according to FICO. Since hard inquiries stay on your credit report for two years, it’s best to apply sparingly.

2. With lots of cards, your average length of credit history will go down.

As you get new credit cards, the average length of your credit account history will go down. Your credit history length accounts for 15% of your credit score, so think twice before getting a bunch of cards at once. It could take a few years to bounce back.

3. It might create more problems than it solves.

So you got turned down for the credit card of your dreams. Applying for several cards afterward won’t fix the root of the problem—which is probably your less-than-stellar credit history. It will just make things worse.

If your application was denied, focus on making on-time payments, paying off debt and establishing a good credit history so that your next application will be accepted. If you have bad credit, consider applying for a secured card.

The takeaway: Applying for multiple cards is tempting. But hard inquiries stay on your credit report for two years and can make it harder to apply for other kinds of credit down the line. It’s better to take it slow, do your research and apply to one card at a time.

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Applying for Multiple Credit Cards: 3 Things You Need to Know

Some people think that applying for credit cards is like applying for college—the more applications you send in, the better your chances of getting accepted. But that’s not the case. Creditors get nervous if they see you applying for credit cards en masse. To them, it looks like you have plans to run up a lot of debt, which puts you at a higher risk of defaulting on payments.

Before even thinking about applying for multiple credit cards, here’s what you need to know.

1. Each application counts as a hard inquiry.

When it comes to shopping for loans or mortgages, submitting multiple applications within a few weeks will only show up as one hard inquiry on your credit report. But credit card applications are a whole different story.

Each application counts as one hard inquiry on your credit report and costs you about five points on your credit score, whether you apply for a bunch of cards in the same day or over the course of a few months. With six hard inquiries on your credit report, you’re eight times more likely to default, according to FICO. Since hard inquiries stay on your credit report for two years, it’s best to apply sparingly.

2. With lots of cards, your average length of credit history will go down.

As you get new credit cards, the average length of your credit account history will go down. Your credit history length accounts for 15% of your credit score, so think twice before getting a bunch of cards at once. It could take a few years to bounce back.

3. It might create more problems than it solves.

So you got turned down for the credit card of your dreams. Applying for several cards afterward won’t fix the root of the problem—which is probably your less-than-stellar credit history. It will just make things worse.

If your application was denied, focus on making on-time payments, paying off debt and establishing a good credit history so that your next application will be accepted. If you have bad credit, consider applying for a secured card.

The takeaway: Applying for multiple cards is tempting. But hard inquiries stay on your credit report for two years and can make it harder to apply for other kinds of credit down the line. It’s better to take it slow, do your research and apply to one card at a time.

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5 Benefits of Good Credit

There’s no way around it: Having good credit is important. We hear as much from parents, colleagues and, sometimes, complete strangers. A stellar credit history shows potential lenders that you’re likely to repay loans in full and on time, which can help you lock in better rates on car loans, mortgages and other financial products. What’s more, it’s worth noting that the advantages of strong credit extend far beyond receiving good rates on loans. Here’s a closer look at the benefits of good credit.

Qualify for excellent credit card deals

A strong credit history will help you qualify for the best credit cards, which include low interest rates, rewards and cash back. As well as helping you save money while providing you with a wide range of perks, these factors will encourage you to keep using your credit card, which will boost your credit score if you continue to make payments when they’re due.

Improve chances of landing an apartment

Much like a potential lender, your landlord will want to determine your financial trustworthiness by taking a look at your credit score. This gives him or her better insight into how likely it is that you’re going to pay your rent on time every month. If that three-digit number is too low for your landlord’s liking, procuring your dream apartment may become difficult. Even if you’re able to get an apartment with a bad credit score, your landlord may increase the security deposit or request a co-signer on the lease.

Receive better car insurance rates

In order to predict potential losses on customers, some car insurance companies factor in credit scores when determining the price of monthly premiums. The better your credit score, the better your shot of receiving a reasonable deal. You may be turned down altogether if your credit score is too low.

Lock in utility services

Before taking you on as a customer, a utility company might look at your credit report to get a better sense of your payment history. If your credit history isn’t up to snuff, the utility company may require you to pay a deposit or ask for a so-called letter of guarantee in which a friend or family member agrees to pay your bill if you fail to.

Get a job

Though they have to get your permission beforehand, some employers will request to see your credit report as part of your job application. Red flags like past bankruptcies or frequent late payments may make them reluctant to extend you a job offer, as they may worry that these financial struggles will distract you from the demands of the job.

Because the effects of good credit can be felt in so many parts of your life, it’s important to do what you can to boost your credit score. Paying your credit card bills in full and on time is a great place to start, and will set you up for success as you apply for jobs, apartments and insurance coverage.

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Reduce Credit Card Debt with These 6 Tips

Having more than $15,000 in credit card debt is a lot, but it’s about average for U.S. households, according to NerdWallet analysis. Carrying this, or any amount of credit card debt, from month to month can be overwhelming and disastrous to your credit score. Paying off this debt is possible, but it takes focused determination and smart budgeting.

Before you start sending the credit card company a stack of money each month, sit down with all of your account information and total your credit card debt. That goes for all credit cards, including store cards and gas cards. Take a look at your balances, interest rates and minimum payments due.

1. Make a plan. If you have an end date in mind (the date by which you’d like to have all zero balances), use the NerdWallet payoff calculator to determine just how much you’ll have to pay each month. This tool is also great for illustrating just how fruitless it can be to pay only your minimum payment every month.


2. Consider a balance transfer. Credit card companies often offer balance transfer credit cards with 0% APR for an introductory period of up to 18 months. If you’re paying 19% interest on a high balance, cutting this interest could save you hundreds of dollars. NerdWallet’s most recent roundup of balance transfer cards will help you find the one that works best for you.


3. Stop spending. The more you add to your credit card balance, the more difficult it will be to reduce your credit card debt. So, stop spending. If you don’t have cash, don’t make the purchase.


4. Look for places to save. Find places to cut expenses and direct those savings to your debt. Maybe you can go without cable television for a few months, or perhaps you can reduce your restaurant budget to only one meal out per month. Cutting back on the things you enjoy can have double the benefits: reducing your spending and giving you incentive to pay off your debt.


5. Look for opportunities to earn. Maybe you can take on a part-time job for a few months or earn some cash on the side doing freelance projects. If you’ve made your household finances work without a part-time gig, all of the money earned here can go toward paying off your credit card debt.


6. Be flexible. You didn’t rack up your credit card debt overnight, and it may take much longer to pay it off. If you make a plan to put $400 on your balance every month, but have a tough month, don’t feel bad about cutting that payment to $350 (as long as you always make at least the minimum payment). Just pick it back up the following month (or earlier) with renewed dedication to getting debt-free.

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Will My Spouse’s Debt Hurt My Good Credit?

Handling finances within a marriage can either be a piece of cake or seem complicated and complex, especially if your spouse’s credit isn’t as healthy as yours. You may be asking yourself if your spouse’s debt will hurt your good credit.

If you’ve already tied the knot or are thinking of getting married, you should know a few things. Marriage itself does not affect your good credit or your individual credit report, according to credit reporting agencies like Experian. In fact, you will always have a separate credit report from your spouse. Even if you change your last name, your good credit will still exist, since credit scores and reports are based on your personal Social Security number.

Your spouse’s credit, in turn, will not instantly improve just because of your married relationship.

However, your good credit has the potential to become damaged when and if you and your spouse commingle your credit.

For example, if you become a joint cardholder on any one of your spouse’s existing credit cards, late payments and delinquency will reflect on your credit report. When you agree to become a joint cardholder, you become responsible for the existing and accrued debt on those cards. If you are simply an authorized user, you are not technically responsible for any of the debt, but late payments will reflect on your credit report.

The same is true if you and your spouse apply and take advantage of offers for credit cards for people with good credit. If you apply for a credit card with your spouse and are approved, reports for that credit card will appear on both your credit reports, negative or positive.

Your good credit can also be damaged if you and your spouse cosign on a loan for a car or even for a mortgage. Simply applying together will not have an affect on your credit, though your spouse’s poor credit could win you a higher interest rate or even a decline stamp. However, if you are approved, your good credit could take a hit if you or your spouse make a late payment on the loan for which you were both approved.

If you are set on combining your credit without giving up your ability to apply for credit cards for people with good credit, one option would be adding your spouse as an authorized user to your existing credit cards or new ones. Every time you pay on time, your spouse’s credit will improve.

Many financial advisors, however, recommend that to protect your credit, you keep your credit separate from your spouse’s at least until your spouse’s credit record improves. It is also recommended that you and your spouse sit down and review your credit reports and scores annually.

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Gas Cards and Bad Credit: How They Help, How They Can Hurt

If you have poor or no credit but still want a credit card that earns you solid rewards on gas spending, your options will likely be limited to a bad-credit credit card or a gas station card.

While these cards tend to offer fewer rewards, higher interest rates, and annual fees than traditional cards do, they may still be a wise choice, as they can help you rebuild your credit while earning some cash back on fuel purchases.

What is a gas rewards credit card?

A gas credit card rewards you for every purchase you make at the pump. For example, a company may offer a 2% cash-back bonus every time you swipe the card to pay for gas, so by spending $200 a month at the pump, your savings would equal $4. If you commute for work or travel a lot, a gas rewards card can make a whole lot of sense.

A gas credit card from an actual gas station is a little different. BP, Exxon and Shell all offer their own gas cards, but to get rewards, you are limited to using the cards at their stations. In addition, the interest rate charged on these cards tends to be higher than for regular credit cards, and you can often get the same rewards or better with more flexibility by using a regular gas credit card.

Choosing a gas credit card for bad credit

You have to be careful when looking at gas credit cards’ annual percentage rate (APR).

For example, say a card comes with unlimited 1% cash back gas rewards and no limit to the rewards you can earn, and you can qualify with limited or bad credit. However, the card also comes with a $99 annual fee and an APR between 17.9% and 23.9%, depending on your creditworthiness.

In this case, getting the card might only make sense if you expect to spend enough on gas to outweigh the annual fee. For this to happen, you’d have to spend a whopping $10,000 a year on gas ($100 in rewards at 1%). In addition, you really can’t carry a balance on the card, as the interest costs would outweigh any of the rewards you receive.

Another thing to keep in mind: Some gas stations charge more if you use a credit card instead of cash at the pump. Even if the difference is a mere five cents per gallon, the additional cost will likely still outweigh any rewards you receive from you gas credit card. So try to fill up at a station that offers gas for the same price, cash or credit, as long as it’s a reasonable price compared to other stations.

Why a bad-credit credit card can make sense

If you have poor credit or no credit history at all, it may still be worth signing up for a gas credit card for poor credit, even if the card comes with high interest costs and fees.

By signing up for such a card, using it and paying it off on time each month and maintaining a low balance on the card, you can improve your FICO credit score, since your payment history is sent to the major credit bureaus.

Credit cards also come with numerous fraud and security features that debit cards don’t offer, which makes them safer to use at the pump. For example, credit cards offer zero fraud liability for unauthorized transactions, which means you won’t be held responsible for any unauthorized or fraudulent transactions.

Finally, keep in mind that you only get charged interest on your card if you carry a balance. So the 20% APR you read about will actually be 0% if you pay off your balance in full each month.

Bad-credit credit cards hurt you if you carry a high balance, but you can avoid paying any interest and improve your FICO credit score by paying off the balance in full each month, while also earning some decent rewards for your gas spending.

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5 Benefits of Good Credit

There’s no way around it: Having good credit is important. We hear as much from parents, colleagues and, sometimes, complete strangers. A stellar credit history shows potential lenders that you’re likely to repay loans in full and on time, which can help you lock in better rates on car loans, mortgages and other financial products. What’s more, it’s worth noting that the advantages of strong credit extend far beyond receiving good rates on loans. Here’s a closer look at the benefits of good credit.

Qualify for excellent credit card deals

A strong credit history will help you qualify for the best credit cards, which include low interest rates, rewards and cash back. As well as helping you save money while providing you with a wide range of perks, these factors will encourage you to keep using your credit card, which will boost your credit score if you continue to make payments when they’re due.

Improve chances of landing an apartment

Much like a potential lender, your landlord will want to determine your financial trustworthiness by taking a look at your credit score. This gives him or her better insight into how likely it is that you’re going to pay your rent on time every month. If that three-digit number is too low for your landlord’s liking, procuring your dream apartment may become difficult. Even if you’re able to get an apartment with a bad credit score, your landlord may increase the security deposit or request a co-signer on the lease.

Receive better car insurance rates

In order to predict potential losses on customers, some car insurance companies factor in credit scores when determining the price of monthly premiums. The better your credit score, the better your shot of receiving a reasonable deal. You may be turned down altogether if your credit score is too low.

Lock in utility services

Before taking you on as a customer, a utility company might look at your credit report to get a better sense of your payment history. If your credit history isn’t up to snuff, the utility company may require you to pay a deposit or ask for a so-called letter of guarantee in which a friend or family member agrees to pay your bill if you fail to.

Get a job

Though they have to get your permission beforehand, some employers will request to see your credit report as part of your job application. Red flags like past bankruptcies or frequent late payments may make them reluctant to extend you a job offer, as they may worry that these financial struggles will distract you from the demands of the job.

Because the effects of good credit can be felt in so many parts of your life, it’s important to do what you can to boost your credit score. Paying your credit card bills in full and on time is a great place to start, and will set you up for success as you apply for jobs, apartments and insurance coverage.

---

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