Credit Score Update | How Multiple Credit Card Applications Impact Your Score

One of the biggest reasons people hesitate to use credit cards to earn free travel is because they want to vigilantly protect their credit score.

For that reason, people ask how multiple credit card applications will impact their credit score.

When I get an update on my FICO score, I’ve been updating the activity here so you can track my experiences against your own.

I’ve mentioned before that I use Credit Sesame and Credit Karma to help generally track what is happening to my credit score.  With each of those programs, I can get a free credit score check every 30 days.  However, 90% of lending institutions use a FICO score, so I have pay to get a quarterly update of my FICO Score.

April 2011 = 786

July 2011= 751 (lost 35 points) – I blogged about that here.

October 2011 = 772 (gained 21 points)

In this six month period, I’ve seen a 12 point drop.  This year, I’ve applied for nine credit cards.  My score has dropped 12 points – not a big deal!

I mentioned when my score dropped from 786 to 751 that I wasn’t concerned.  The reason was because I had some unusual credit activity that were more to blame than the number of applications.

Here are a few important things to keep in mind about your credit score and multiple credit card applications:

  1. It is possible to apply for multiple credit cards each year and still be in the top 79th percentile for your credit score.  Lesson: Applying for multiple credit card affects, but doesn’t destroy your credit.
  2. If you are applying for a loan soon, more caution is advised.  Whenever possible, I don’t do loans.  I have no auto loan and only a small house loan.  For me, the loan equation is not important.
  3. Loans are granted by a scale, not a number.  Just remember that as long as your score is still in the right range, you’ll be eligible for the best interest rate.  Every drop in your score doesn’t impact your loan rate.
  4. Canceling cards (because of less available credit) and having big spending months will likely impact your credit score, but that is more likely to be temporary.

All in all, I’d happily exchange my thousands of dollars worth of free travel for a drop of a few credit points.

Comments

  1. says

    Craig, thanks for the tip on Credit Sesame! I had no idea what my score is, and while I’m a little skeeved that all I did was give them my SSN and now they know ALL of my debt, I’m pleased with my score. “Excellent” isn’t bad at all! :)

    I’ll keep an eye on the cards for the bonuses now. It’ll make it easier to get my brother in law up from Paraguay next year.

    -j

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