How multiple credit card applications affect your approval

Why you shouldn’t apply for more than one credit card at a time and how you can improve your chances of approval.

According to figures provided by the Australian Securities and Investment Commission (ASIC) and Reserve Bank of Australia (RBA) in June 2015, Australians hold an average 2.18 credit cards per person. While looking for your next credit card, you might think it’s a good idea to cast your net wide by applying for several cards at once. Unfortunately, multiple applications have the opposite effect, and can decrease your chances of getting a new card instead of improving them. This guide explains why, and how you can protect your credit file instead.

How does a credit card application impact my credit file?

Each time you apply for a card, the assessing credit provider makes an enquiry into your credit file. This type of hard pull enquiry is recorded on your credit file as a sort of credit black mark, which can become detrimental to your credit score when clustered. Having multiple enquiries during a short period of time on your credit file will give future credit providers the impression that you’re a higher risk applicant, which would then likely cause them to reject your application.

Fortunately, the number of enquiries recorded on your credit report is only one of several factors considered when a credit provider assesses your application. Lenders also look at your general financial health and your account history for existing customers, as well as the other information on your credit report. See the last section to learn how to keep your credit file pristine.

What if I don’t know which card is right for me?

Rather than applying for several cards at once, you should research and carefully compare your options to be certain that the card you apply for is the right one. Learn how to compare your options with our credit card guide.

How can I keep my credit file in good shape and improve my chances of credit card approval?

Rather than submitting several credit card applications, these are some of the steps you should follow to increase your chances of approval while maintaining a good credit history:

• Make timely repayments. Credit reporting reforms in 2014 resulted in credit reports recording comprehensive credit information. Whereas only negative information was shown previously, your credit report now reflects details of all monthly repayments made over the last two years. This provides even greater incentive to pay your bills on time, because that’s what credit providers want to see.
• Avoid payment defaults. Defaulting on loan payments is clearly a no-go. Not only does it look terrible on your credit report, it could also lead to other more severe legal repercussions.
• Don’t overspend. While splurging isn’t directly recorded on your credit file, it certainly can lead to credit problems. Learning to curb your expenditure will benefit both your credit file and your finances in the long run.
• Check your credit report regularly. Errors can sometimes be made on your credit file, so it’s good practice to request your free yearly credit report and check that this hasn’t happened. If you find something on your file that legitimately doesn’t belong there, contact the reporting agencies and let them know. An investigation will be conducted to rectify the matter.
• Submit one application at a time. Choose the most suitable credit card for your needs, and just apply for that one card. Wait for a response and if your application has been declined, consider applying for the next most suitable card. This will limit unnecessary hard pulls on your credit file.
• Make sure you meet the eligibility requirements. When applying for a credit card, make sure you can tick off the eligibility criteria before you submit your form. Applicants usually need to be at least 18 years old, a permanent Australian resident, have a good credit history and meet a minimum income requirement. You’ll also be asked to provide information about your employment and finances, so make sure you have the necessary documents on hand to simplify the application process.

Learn more about improving your credit score

When it comes to improving your chances of getting a new credit card, a smart strategy is to keep your credit file clean and free from black marks. This may require long-term commitment, but you can achieve it with some discipline in following the suggested tips.