How multiple credit card applications can affect you

Every time you apply for a credit card, it's added to your credit report as an enquiry. If you apply for a few credit cards in a short amount of time, it can lower your credit score.

But it is still possible to have more than one credit card. In fact, Finder research shows that around a quarter of Australians with credit cards have more than one. And thinking about your credit score, when you last applied and how you'll manage the card are some of the factors that can help influence the outcome.

How multiple credit card applications impact your credit score

When you apply for a credit card, it's considered a "hard enquiry" that's listed on your credit report for 5 years. A single hard credit enquiry may only have a small impact on your credit score, but this adds up with each application. As well as affecting your credit score, having several hard enquiries over a few months is typically viewed as a red flag when lenders assess your risk as a borrower.

How do credit cards actually affect your credit score?

Your credit score is affected by several factors that relate to your financial behaviour:

• The type of lender you've applied to
• How well you've kept up with your repayments
• The credit limits of each product
• The type of product you have applied for
• The number of credit applications you make
• Any negative events, such as defaults, judgements or bankruptcies

If you have one credit card and you repay each month, this may actually improve your credit score. However, multiple credit limits and missed repayments will result in a poorer score.

Even though you may have multiple credit cards, and you may be up to date with all of your payments, your combined credit limit (the total credit limit across all of your credit cards) may be factored into servicing calculators. These, along with other measures, are used to determine how much debt you can actually manage and subsequently, whether or not to approve you for other credit you apply for such as a home loan. This could result in a lower loan amount or even a declined loan application.

— Tristan Taylor, General Manager, Credit Services at Experian Australia & New Zealand

Finder survey: How many times do Australians typically apply for a credit card?

Is it okay to apply for multiple credit cards in one day?

It depends on what your intentions are. If you are applying for two cards because you genuinely want to open two credit card accounts and you are confident you can service the debt on both cards (i.e. you're likely to be approved), you can apply for them both at the same time. This might be suitable if you want to open two cards: one to pay all of your bills, and one for everyday spending.

However, if you are applying for two cards at once because you're hoping to 'game the system' and be approved for both cards – and because the cards are not yet on your credit file, you think you'll have a better chance of being approved – then you're entering a grey area. Technically, if one card is approved before the other card, you should inform the provider of the second card of your new debt so they can accurately assess your application.

With data matching these days, there's also a good chance they'll pick up on both applications when reviewing your application anyway. Som you might be best off applying for the cards separately – say, a month apart – so you can submit a complete and accurate application for each card.

Still not convinced?

There are a few more reasons to put some breathing space between your applications, according to credit reporting agency Experian, who say applying for and opening multiple credit cards during a short period can:

• Cause multiple hard inquiries: Each application is likely to land a hard inquiry on your account, which can hurt your credit scores. Hard inquiries can stay on your credit reports for up to 2 years, even if the credit card issuer doesn't approve your application (though Experian says they won't affect your credit score after 12 months).
• Decrease the 'average age' of your accounts: Every new credit card you get, along with all other types of credit and debt, contributes towards the 'average age' of all the accounts in your credit report. Lots of new cards can lower your average. Generally, a higher average age of accounts can contribute more positively to your credit scores.
• Encourage you to overspend: It might be hard to meet the minimum spending requirement you might be trying to hit to qualify for rewards and frequent flyer points if you open several new cards at once with the intent of earning the intro bonuses.
• Impact future credit card applications: Card issuers may be more inclined to deny applications if you've opened too many cards recently.

How many credit cards can I have?

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.

I see many clients who have multiple credit card applications along with buy now pay later (BNPL) and this has reduced their credit score. I completely get the benefits of obtaining frequent flyer points moving from one provider to another, however just consider how much this could reduce your score if you do it too frequently. Once a year shouldn't raise too many red flags, but multiple applications a year can have an impact.

— Raj Ladher, Australian Mortgage & Finance Broker at Equilibria Finance'

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

• Check your credit report. Keep an eye on your credit report to understand what areas you need to improve. You can get your free credit report through Finder, where you'll receive notifications if anything changes.
• Close unnecessary accounts. Your credit report will list all accounts attached to your name, but you may find some of them are old. For example, if you shared an electricity account with an old housemate or you've paid off a credit card and forgotten about it in a drawer. These will still impact your credit report, so go through and close them.
• Pay off as much as you can. If you can repay any debt in full and then close the account, that will go a long way towards improving your credit score. Even if you can't, pay as much off as you can each month.
• Don't apply for new credit too soon. If you're uncertain that you would be approved for credit, don't apply. Adding in additional hard enquiries will only make things worse.
• Don't overspend. Stop using your credit card for purchases you can't afford. Using your credit card can help rebuild your credit score, but not if you can't afford to make the repayments.
• Keep up with repayments. If you've missed any repayments, pay them as soon as possible. Then, make sure you stay on top of any future repayments. Repayment information is kept on your report for 2 years, and defaults are kept for 5 years.

Tips to manage multiple credit cards

• Research fees. Before you apply for credit cards, take a look at how much they each charge in fees. You don't want to spend hundreds of extra dollars on fees.
• Choose manageable credit limits. You don't need to apply for the maximum limit available. Apply for no more than you need and can manage.
• Set yourself reminders. Book in a recurring calendar appointment where you will be reminded each month to make your credit card repayments. It's also a good idea to make your repayments for all of your cards at the same time.
• Turn on updates. Use mobile banking to receive notifications and stay up to date with your balances and repayments.
• Consolidate. If you find that the number of credit cards you have is not manageable, consolidate your debt into fewer cards.
• Use the Finder app. In the Finder app, you can connect all of your accounts and see all of the balances and track your spending in one place.

Written by

Rebecca Pike

Senior writer

Rebecca Pike is Finder's senior writer for money. She joined Finder after almost four years writing for business publications in the mortgage and finance industry, including three years as editor of Mortgage Professional Australia. She regularly appears as a money expert on programs like Sunrise and Today, as well as across radio and newspapers. She also holds ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products. See full bio

Rebecca's expertise

Rebecca has written 184 Finder guides across topics including:

• Home loans
• Cost of living
• Budgeting

Co-written by

Amy Bradney-George

Editor

Amy Bradney-George was the senior writer for credit cards at Finder, and editorial lead for Finder Green. She has over 16 years of editorial experience and has been featured in publications including ABC News, Money Magazine and The Sydney Morning Herald. See full bio

Amy's expertise

Amy has written 588 Finder guides across topics including:

• Credit cards
• Frequent flyer
• Credit score
• BNPL
• Money management
• Sustainability