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Every time you apply for a credit card, it's listed on your credit report as an enquiry. If you apply for a few credit cards at once, it can cause your credit score to drop – especially if some applications are denied.
So, how many credit cards is too many? Technically there's no limit to the number of credit cards you can have. And Finder's Consumer Sentiment Tracker shows that around a quarter of Australians with credit cards have more than one. But this can affect your credit score too. You can use this guide to learn how credit card applications impact your credit score and how to improve your chances of approval when you apply for a credit product.
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When you apply for a credit card (or a loan, mortgage or another line of credit) it's considered a hard enquiry and will remain on your credit report for five years whether you're approved or declined. As mentioned above, too many credit inquiries in a short period of time can hurt your credit score and send red flags to financial institutions assessing your risk as a borrower.
Having multiple credit card accounts open at once isn't necessarily a good or bad thing. The impact it has on your credit score will depend on your combined credit limit and repayment history. If you have multiple credit cards (for example, one that you're using to pay off a balance transfer and one to earn points on purchases) and you're making regular repayments, this could help your credit score. However, if you have multiple credit cards with high credit limits, are missing repayments and collecting interest, this will hurt your credit score.
Instead of applying for multiple credit cards at once, you should only apply for one at a time. If your application is rejected, wait a few months before you apply for the next one and make sure to check your credit score before you do.
Rather than applying for a few different credit cards, you should research and carefully compare your options to be certain that the card you apply for is the right one. As well as the card's fees and features, make sure that you meet the eligibility criteria before you apply. You can start comparing credit cards and learn what factors you should consider on Finder.
As well as avoiding multiple credit card applications, here are some habits to pick up to improve your credit report and chances of approval in the future:
Want to pick up more tips for a healthy credit history? Check out Finder's guide to improving your credit score for more information.
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i have one inquiry shown in my credit file how much will effect my credit score?