Points and Miles Beginner’s Guide

With your first credit card in hand and an understanding of how the process works, it’s time to apply for more cards. This is the quickest way to boost your total points balance. If you’re new to the points game, I’d continue slowly. As you gain experience, you could apply for cards much more quickly but you should remember a few things.

Keep An Eye on Your Credit Score

Each time you apply for a new credit card, the bank makes a credit inquiry. New credit makes up just 10% of your FICO score. As a result, a new inquiry is likely to reduce your score by only three to five points. Plus this drop is temporary and its effect will drop off your score in three to six months.

Maintain Good Relationships with the Banks

Banks can view too many credit applications in a short time as a red flag. To minimize that chance, apply for cards from different banks. Many banks only pull credit from one of the three credit bureaus, so applying for cards from different banks will limit the number of inquiries into your credit.

To make sure banks don’t see you as a credit risk, remember to stay organized and always pay your bills on time. Interest and fees can quickly wipe out any benefits gained from a credit card sign up bonus, so you have to pay your cards in full each month.

If you decide to cancel a card after receiving the sign-up bonus, wait for 6-8 months to do so.

When Should I Sign Up for New Cards?

A great strategy is to apply for a new card only when you feel comfortable about meeting the current card’s sign-up bonus. This means you might be able to apply for a new card every couple of months.

The bottom line is that it’s important to be careful. You need to keep your credit score in good order and maintain good relationships with the banks. This is the only way to ensure that you’ll continue to be viewed as low risk when applying for more credit cards. Also note that if you plan to take out a major loan (mortgage, student loan, auto loan) in the next 2 years, you probably should think twice about proceeding.