Applying for Multiple Credit Cards: Anyone REALLY Know the Rules?
 

4 in 14 (cards in days).

High limits, low balances.
High limits, high balances.

Cancel unused cards.
Don't cancel unused cards!


A lot of theories and conflicting information.

Does anyone really know the optimal way to apply for multiple credit cards?

This subject has never been more important, what with all the huge signup bonuses around -- 50, 100,000 miles.

I've got decent credit, but have been turned down lately for "too many apps".
I lost out on the great BA 100K deal.

I'd like to get things straight before the next great offer.

Any help?

4 in 14 is way to much. Once you get denied once give it a rest for a few months. Also If you are requesting various cards to the same issuer they may have a problem, for example BA, Continental, United are all Chase cards. Some people try to lower their credit line to get a new card with the same issuer.

with every denial you received, you sould be able to have a free copy of the credit report pulled by the individual issuing bank for free. You need to know which credit agency the banks got credit report from and how many hard pulls you have in the report. You might want to apply for the card with potential hard pull from the same credit agency in six months. It is way too frequent to apply for 4 cards in 14 days.

what about 3 cards in 4 months?
I have decent credit scores, recently addicted to the game of racking up air miles LOL. I have applied for BA chase, Citi AA and am thinking of getting Amex spg. I hope I am not crazy..

Shouldn't be a problem if you have the income to carry it and keep your utilization low.

Mike

In the past 9 months, in the following order:

1) Applied for Amex Gold Premier, approved
2) Applied for Citi AAdvantage MC, approved
3) Applied for SPG Amex, approved
4) Applied for PenFed Cashback Visa, approved
5) Applied for HawaiianMiles Visa, DENIED

I also canceled my old Citi Platinum Select (had used for BT 2x) that was no longer needed and only had a $1,600 CL.

As soon as I was denied for the HawaiianMiles card, stopped any new applications, and dont plan to start up again until late this year or early 2011.

There are way too many variables for anyone to definitively say if and when any card will be approved or denied. That being said, I've found the 2 major deciding factors for me have been 1)Quality and length of credit history and 2)Percentage of total available credit being used. Actually, make that 3: DEBT, over and above credit card debt, would be a big one too. For me, income must be a very low factor as I've never claimed much more than $30,000/yr and still have yet to be denied a card. (14 for 14 within the last 20 months). The fact that I have zero debt probably, or evidently, offsets the low income.
But like others have said, you need to have a long-term plan if you're going to do this successfully. Spread the banks and types of cards around and don't try to load up in one area too quickly. Patience is the key. (Although 14 cards in 20 months may not qualify as patient for many out there ;).

I'm unclear on "percentage of total available credit being used"
 

I'm unclear on exactly what "percentage of total available credit being used" means.

Does it mean, for example, if I have a $16,000 credit line on a given card but never run a balance over $1,000 at any time, my "percentage of total available credit being used" would be 6.25% at most ($1,000 out of $16,000)?

If so, would it be better (for purposes of getting other credit cards) to request that my credit line be reduced - from $16,000 down to $3,000 or so?

Your example is correct. That would be 6.25% credit use. But, where your credit score is concerned, you definitely wouldn't want to lower your CL if you are carrying balances. Because, just as in this case, if you were to lower your CL from the 16,000 to 3,000, carrying the same $1,600 balance, your credit use percentage would then dramatically jump from 6.25 to over 50%. In general, the larger percentage you're carrying of your total available credit line, the more negative it reflects on your credit score.
So the lower percentage the better.
The only reason I can see where you'd voluntarily lower a credit limit is if you are bargaining with a credit card issuer and they assure you of approval if you lower a CL on another card. Then go for it. But I definitely wouldn't just voluntarily request a lowered CL in hopes that might increase future apps. Wait until they tell you that. But even better, try not to carry much, if any balance at all if possible. In my experience, they seem to like that a lot.

Oh, and one more important thing: try never to cancel a card. Especially if the card has a long and clean history. I made the mistake of believing the old "too many cards is bad for your credit" adage and canceled a couple of old cards I never used but then came to understand I just shot myself in the foot by losing a nice chunk of two of the most important things you can have in your credit report: History and Quality. It doesn't all drop off your report immediately upon cancellation of course but still, I could have had that nice history safely there for a lot longer.
Now the only reasons I will cancel a card is if I don't want to pay an exorbitant fee (which usually means there isn't even a year of history to lose from the card anyway) or if a credit card issuer tells me to close one in order to get another one I want or I know beforehand that that's going to be the case. Otherwise I keep all the good history I can for as long as I can. I'll even use an oldy, moldy card once in a while just in case the credit card issuer might get the idea of closing a card on their own due to it not being used in the last 10 years.

You don't want to cancel cards you've had for years, but canceling "young" cards can be to your advantage. Total available credit is one part of your credit rating, and having too much can work against you. Of course, you can always request lower credit limits to try to keep the advantage of both.

One note on % of total credit utilized: Even if you pay your bill each and every month, the statement balance is what generally gets reported.

I've heard this before but still not sure what it exactly means. Are you saying if I spend $10,000 each month my report will somehow still show me carrying a balance of $10,000 regardless of the month's closing balance showing $0.00 due to the early payments? Not sure how that would work. It seems like a "balance", by definition, would be the balance of your charges that are not paid during that month and carry over to the next month and is subject to interest. None of my charges are ever carried over and therefore never subject to interest and therefore are never technically a "balance". But you're saying the credit report makes no distinction between paying off a $10,000 charge each month and making a small payment every month on a $10,000 balance? You would think that would be a pretty critical financial distinction they would want to make.

+ on this. It's the only reason why I continue to carry my non-miles first credit card. Also, if you DO cancel a credit card, I understand it's wise to ask the bank to make sure that it's labeled as "client closed" and not bank-ordered closed.

Whether a balance shows or not is a function of when the issuing bank does reporting. In theory it should all equal out but it does not. In fact as a general rule the balance reported is likely to be the balance before you pay your payment, so even if you pay in full every month balances will still report. That usually makes little difference because the payment histories do show up also. The easiest way to understand all this is to periodically read your credit reports from freecreditreport.com or some such and study them.

Whatever anyone says frequent applications for new credit do make a major difference for most issuers. A decent rule is to apply for a new card not more than once every six months, but many people do more and get away with it. The problem for them is what they do if they actually really do need credit sometime and have lots of new credit in their files. It's probably short-sighted to chase miles with new cards as a regular habit.