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How multiple credit card applications can affect you

You can have more than one credit card, but applying for a few in a short amount of time could hurt your credit score. Here's why.

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 can 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.

Expert commentary: How the number of credit cards you have can affect your chance of approval

Tristan Taylor, Experian's general manager of credit services, says that credit card providers are required to lend responsibly, and a borrower having multiple credit cards could be a red flag.

"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."

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

Response
134.41%
221.56%
021.2%
310.78%
44.49%
53.95%
7 or more2.88%
60.72%
Source: Finder survey by Pure Profile of 1113 Australians, December 2023

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.

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.

What is comprehensive credit reporting?

Changes to the way your credit report looks could make it better or worse for you if you have multiple credit cards.

Comprehensive credit reporting means banks and lenders can now see more of your credit history. In the past, they mainly saw your bad credit events, such as defaults. Now, your credit report will also show positive credit events.

So, if you are managing your multiple credit card repayments each month, this will actually work in your favour.

However, if you are missing repayments, particularly across multiple cards, a poor credit history is more visible.

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.

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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One Response

    Default Gravatar
    AnnaOctober 18, 2011

    i have one inquiry shown in my credit file how much will effect my credit score?

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