Here's How Much My Credit Score Went Up by Not Applying for New Cards
by Lyle Daly | Updated July 21, 2021 - First published on Jan. 28, 2021
Taking a break from credit card applications gave my credit score a big boost.
To raise your credit score, it's recommended that you don't apply for new credit cards too often. That's because each application puts a hard inquiry on your credit file, and each new card will lower the average age of your credit accounts. Those both negatively impact your credit score.
How much of an impact do these factors have, though? Although this varies by consumer, I got a firsthand idea when I spent almost a year not applying for any new credit cards.
How a break from applications affected my credit
I have quite a few credit cards, and occasionally, I've applied for several in a short period of time. Since I've had excellent credit for years, this is one way I take advantage of my credit score to earn more bonuses and maximize rewards.
I also track my FICO® Score, the most widely used type of credit score, with a free tool from Experian. This has allowed me to see how credit card applications have affected my credit over time. I'm going to share what I've learned by providing information from two of my credit reports with that service.
The first report is from Dec. 21, 2018, when I had a FICO® Score of 760. That's a high score, but there were a couple things lowering it. According to that report from Experian, here are the factors used to calculate my FICO® Score, how much weight each one holds in a score, and my rating in each category:
- Payment history (35%): Exceptional
- Amount of debt (30%): Exceptional
- Length of credit history (15%): Fair
- Amount of new credit (10%): Poor
- Credit mix (10%): Exceptional
I didn't do well in two categories because of my recent credit applications and new accounts. At the time of the report, I had nine recent credit inquiries (with recent meaning within the last year). It had also been only a month since I'd opened my most newest credit account.
I didn't apply for anything for the next 10 months. In my Experian credit report from Oct. 31, 2019, I had gone up to a "Good" rating in both length of credit history and amount of new credit inquiries.
My FICO® Score jumped to 787, an increase of 27 points. Given that my rating only changed in those two categories, it stands to reason that they caused most of the improvement.
How often should you apply for new credit cards?
Applying for credit cards frequently can lower your credit score. But if you decide not to apply for new cards at all, you may miss out on valuable credit card offers.
A simple solution is to review the top credit cards yearly and apply if you find one you like. You can still increase your credit score this way. You'll never have more than one recently opened account or hard credit inquiry, so those factors shouldn't stop you from improving your credit. And you won't miss out on new card offers.
There are, however, a few situations where you may want to take a different approach:
- You don't have good credit yet: Unless you absolutely need a new credit card, it's better to wait and focus on increasing your credit score. Each application and new card will slow down your progress.
- You're applying for a loan soon: If you apply for a credit card before your loan application, it could ding your credit and result in a higher interest rate. Aim for at least three to six months without any new credit applications before applying for a loan.
- Your FICO® Score is already 750 or higher: In this case, you have more flexibility to apply for as many cards as you want. Your credit is already very good, so improving it isn't that important. You should still avoid applications if you have a loan application coming up, but other than that, it's up to you how many cards you get. Just be careful about how you use them so that you stay out of credit card debt.
While the age of your credit accounts and recent credit applications aren't the most significant factors in your credit score, they still play a part. In my case, my score shot up just from not applying for new cards. If you're working on your credit, then holding off on any applications can be a smart move.
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