Timing Is Everything: When To Get Another Credit Card
Applying for a credit card affects your credit score, so timing is essential. We’ll discuss when to get another credit card.
Applying for a credit card is easy, but it does impact your credit score. Opening multiple credit cards in quick succession is a red flag to potential creditors. We’ll discuss if having more than one credit card to build credit is a good strategy, how many credit cards you should have when to get another credit card, and if you were denied a credit card, how long to wait before applying again.
How credit cards impact your credit score
Credit cards can help you build credit, and they can help or hurt your credit score. If you have a thin credit file, opening a credit card can help you build credit. Credit cards can improve your credit score if you keep utilization low (under 30%) and pay your bills on time each month.
Applying for a credit card does temporarily drop your credit score by a few points. Each time you apply for credit or a loan, the potential creditor pulls your credit history to determine if you’re a reasonable risk. This is known as a hard credit pull. When you check your own credit, it’s a soft pull and does not impact your score.
Running up high balances on your credit cards, missing, or making late payments hurts your credit score. Late payments are especially damaging. Payment history accounts for 35% of your credit score!
How many credit cards should you have?
Having more than one credit card can help build or improve your credit score. Multiple cards can lower your utilization and show more on-time payments on your credit report (if you make the payments on time).
There is no ideal answer for how many credit cards you should have. The more you have, the more temptation to overspend there can be for some people, and more cards means more payment due dates to keep track of.
A good travel rewards credit card is great if you travel frequently. A cash-back card is an excellent way to make purchases a little cheaper. If you are a business owner, a business credit card solely used for business expenses is a good way to keep personal and business spending separate, which is important when doing your taxes.
Applying for several cards at once can be a red flag to potential creditors. It can signify that you’re having a cash flow problem and need credit cards to pay your living expenses.
How long to wait to apply for a credit card after being denied
When you are denied a credit card, the issuer will send you a letter stating why your application was rejected. Typically it’s because your credit score was too low. Not all credit cards have the same credit score requirements for approval, and most state their required minimum score on their websites.
If you had a specific reason for wanting the card that rejected you, look up their minimum score and start working on improving your score. Once you meet the minimum, you can apply again. Or you can find a similar card with a lower requirement and apply for it.
Upwardli can help
It can be challenging for new immigrants to find credit cards and other financial products that understand their unique situations. Upwardli can help you find those providers who specialize in assisting immigrants to build their financial lives in America.
