An application for a new credit card can improve your financial health, but when to submit it depends on a variety of factors – for instance, some banks impose application restrictions.
Chase may deny your application for a credit card if you’ve opened five cards with them within 24 months.
The Time of Year
The ideal time and place for you to apply for a credit card will differ for everyone, but here are a few general guidelines that may assist. It is often wise to spread out applications in order to avoid applying for too many cards at once – which could damage your credit scores – and evaluate whether each card fits with your spending habits, earnings opportunities and available credit.
Credit card applications involve conducting hard inquiries that can temporarily lower your score. As such, it’s wise to wait at least six months between credit card applications in order to allow time for your score to rebound and improve from its initial decline after an inquiry has taken place.
Timing-wise, late autumn can be a good time to apply for a credit card if holiday shopping will be in abundance. Many credit cards offer sign-up bonuses if certain spending requirements are met within the first few months after opening one.
If you are planning on applying for a mortgage or personal loan soon, applying for credit cards could create complications that would hinder their application and lead to either higher rates or poorer terms.
Credit card issuers don’t often publicly acknowledge restrictions on how often people can apply for new credit cards, but this doesn’t mean these restrictions don’t exist; social media users and credit card enthusiasts often gain insight into them from firsthand experiences with acceptances and rejections of credit cards issued from various companies.
If you’re uncertain when or if now is the right time to apply for a credit card, opening a free NerdWallet account is an excellent way to start. NerdWallet will assess your credit and offer personalized recommendations on which offers will suit best; plus you’ll gain insight into your score as well as tips to increase approval chances.
Your Credit Score
One of the primary factors in calculating your credit score is your length of history, and opening a new card can have an immediate effect. Credit scoring elves consider how long accounts have been open as well as their average age; adding one may reduce this average age significantly, potentially hurting scores depending on how it’s managed in future.
However, if you shop responsibly and keep your utilization low, your credit score should only decline temporarily. Furthermore, switching cards with higher limits may even help decrease utilization ratio and boost your score further.
When applying for a credit card, creditors review your credit reports to asses how risky of a borrower you are. This process, known as hard inquiry, temporarily lowers your score regardless of whether or not you’re approved – although its effects remain on your report for up to two years after such inquiries have taken place; scores will recover more quickly by restricting them to no more than twice annually.
Credit card companies also take into account your total debt level and how much of your available credit you’ve used; these figures make up 30 percent of FIco scores, so keeping these levels high helps build them further. In addition, opening new credit cards could help increase both their total number of accounts as well as their average age; another factor influencing your score.
Credit card experts agree that opening a credit card can be beneficial for your scores as long as it’s used responsibly and paid on time each month. But the key is knowing when it’s a good idea to apply and which kind of card best meets your lifestyle and goals so you can narrow down the options for opening one and avoid having adverse impacts on your scores.
Your Goals
An effective financial tool, credit cards are powerful financial tools when used properly and it’s essential that they fit seamlessly into your lifestyle. Finding the appropriate card can help you earn cash back, transfer balances and take full advantage of rewards and benefits to maximize credit scores and benefits.
Based on your goals, the optimal time to apply for a credit card may differ depending on when it will serve its purpose best. For instance, if you intend on making a large purchase that takes advantage of sign-up bonuses it might be smart to apply early so as to meet minimum spending requirements of any sign-up bonuses that might come your way – this may be particularly helpful around holidays when many cards offer generous signing-up bonuses that can easily be fulfilled through shopping.
If you’re trying to establish or rebuild your credit, it may be wise to hold off applying for new cards until your existing ones have been paid off. Each credit application makes a hard inquiry on your report that can cause your score to decrease while increasing the risk that you’ll be rejected; this is particularly important when managing multiple cards simultaneously.
When applying for a credit card to help reduce debt, it may be prudent to do so well before the payment due date in order to prevent late fees or interest charges from accruing. Furthermore, it would be prudent to wait before applying so as not to interfere with mortgage processes.
Applying for a credit card will vary from person to person; it is essential that all relevant factors are taken into account before making your decision on whether or not to apply. A good credit card should enhance both your financial standing and add value to life; if you feel uncertain if you can handle additional responsibilities with more cards in your arsenal or already own too many existing credit cards it might be prudent to wait a bit until circumstances improve before applying again.
Your Lifestyle
Whatever your current credit situation may be, lifestyle considerations can impact when is the optimal time to apply for new cards. For instance, if you plan on buying a home soon after closing on it would likely be best as applying for credit cards can damage your score and thus complicate mortgage application processes.
Credit card issuers also impose their own regulations regarding how often you can apply for their cards, but these rules are usually only revealed through experience or hearing directly from customers and enthusiasts. Bank of America reportedly only approves credit card applications from customers who haven’t applied for three of its cards within two months and four within 24 months; otherwise they won’t even consider your application!
As part of its underwriting process, when applying for a credit card the lender conducts a hard credit inquiry that can have a devastating impact on your score if too many applications come in at once. Experts advise waiting several months between applications in order to reduce this impact on your score.
Your monthly credit usage affects your utilization ratio, one of the key determinants in calculating your credit score. Therefore, spreading purchases across multiple cards may help keep utilization low and improve your score.
Age also plays an integral part of your credit score, meaning closing old accounts may bring about negative repercussions even if you continue paying the monthly balances on them. As such, personal finance experts advise keeping older accounts open even if they’re no longer used.
Credit cards can be an indispensable financial tool, but not everyone needs one. Before applying for one, make sure that its benefits will outweigh any negative repercussions for both your credit and finances. By following these tips you can decide when is best time for you to apply based on your unique financial circumstances and goals.
