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If you are shopping around for credit products, you might find that it makes sense to apply for multiple credit cards. Maybe you’re thinking of entering the Chase ecosystem and taking advantage of the synergies of holding a Chase Freedom Unlimited® combined with a Chase Sapphire Preferred® Card. Or perhaps you are starting to travel for work and are considering a hotel co-branded credit card, an airline credit card and a premium travel card that offers lounge access.
In every case, is applying for multiple cards at the same time a good idea? Are there advantages to doing this? How will it affect your credit score? Read on to find out.
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What Happens When You Apply
Credit card applications usually follow a similar process of validation and (hopefully) approval. When you submit an application, you’ll be asked for identifying information like your address, date of birth and Social Security number. Once you’ve filled out your application, it will go through a few stages :.
First, a credit card issuer will check your application against their internal rules. Some banks have rules around the number of applications they will approve you for in a given timeframe, or even how many credit cards you are allowed to have opened in the previous 24 months. When you apply online for an American Express card, the issuer will check your eligibility for a card’s welcome bonus and notify you with a popup if you are ineligible for the bonus before processing your application. Often, banks will check your application against their internal rules before processing your application.
Once your application passes a bank’s initial checks, the credit card issuer will pull one or more of your credit reports. The three main credit reporting agencies, Experian, Equifax and Transunion, all maintain separate credit profiles and generate their own scores for you based on their own algorithms and other proprietary data. Typically banks will only check one of these reports as part of your application process.
Generally, every credit report will contain the same information about your accounts and payment histories, but one difference is that each credit bureau maintains a separate list of who requested that specific credit report. When a bank pulls your credit report for the purposes of processing a credit application, your credit report will show a credit inquiry from that bank.
Finally, the credit card issuer will make a determination about whether to grant you a new credit card and how much credit to extend based on a combination of your credit score, how much credit they have already extended to you and your existing history with that bank . Sometimes you’ll receive an instant approval. Sometimes your application requires further review and you will receive the bank’s decision within a few days to weeks.
Related: How To Choose The Best Credit Card Pairings To Maximize Your Earnings
Some Credit Issuers Combine Credit Pulls
One advantage to applying to multiple cards at the same time is that some credit-issuing banks will combine your credit report inquiries into a single inquiry. If you are looking to add more than one credit card from a bank within a short period of time, it can sometimes make sense to submit multiple applications on the same day. American Express, Chase and Wells Fargo have been known to combine multiple applications into one credit report inquiry. Notes that inquiries are only combined by bank; applications for credit cards from different banks will always generate multiple inquiries.
Check Your Pre-Qualification Status or Get Pre-Approved
Some banks allow you to check to see if you are pre-qualified or pre-approved for credit cards before submitting an application. If you are unsure of whether you will have a good chance of getting approved for a specific card, the bank issuing that card may offer you a chance to either get pre-qualified or pre-approved with no impact to your credit score.
American Express allows you to check for pre-qualified offers and Capital One allows prospective new cardmembers to be pre-approved for certain cards. Chase often pre-qualifies existing cardmembers for new products. To find your Chase offers, navigate to the “Offers for You” menu after logging into your account on Chase.com. You can often get pre-qualified for credit cards by visiting a branch bank in-person.
Pre-qualification is not a guarantee that you will be approved for a given credit card, but it can give you a pretty good idea of whether you’ll be approved once you submit your application.
Understanding the Impact of Multiple Credit Inquiries on Your Credit
Applying for a credit card will generate a hard inquiry on your credit report and the number of these inquiries on your report is a factor in calculating your credit score. This drop is likely to be only a few points, but having a large number of recent inquiries on your report could signal to banks that you are a credit risk.
Unless you are applying for a massive number of credit cards, you shouldn’t worry too much about this drop. In the long term, applying for and using a credit card responsibly will likely increase your credit score, as you will build on-time payment history and increase the total amount of credit you have available.
However, if you plan to apply for a mortgage or a car loan in the near future, you might want to think twice about applying for a new credit card. If a small change to your score results in an increased interest rate, the rewards you get from your new credit card likely won’t be worth the increased interest you pay.
Beware Adverse Action
One often overlooked risk of applying for a large number of credit cards within a short timeframe is the risk to your existing bank relationships. Some banks are sensitive to existing cardmembers submitting a large number of applications for credit or increasing the amount of credit they have too quickly. If a bank determines that you are at risk of a credit default or breakaway fraud, they can quickly shut down all of your accounts. Many banks will even take away any reward points that you have accumulated if they shut down your accounts.
It’s likely a bank will not blink at someone submitting two credit card applications at the same time, especially if it is with another bank, but you might want to think twice before applying for five cards in one day.
Related: The Best Points-Boosting Credit Card Groupings for Under $ 100 Per Year
Find The Best Credit Cards For 2022
No single credit card is the best option for every family, every purchase or every budget. We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.
If you are shopping for credit and find a few credit cards that you’d like to open, it can make sense to submit your applications on the same day. If you are planning on applying for multiple credit cards within a short timeframe, submitting your applications to the same bank on the same day might get your credit inquiries combined.
Just be aware that some banks are sensitive to credit reports showing lots of inquiries and that the impact to your credit score might be more significant if you do not have a long-established credit history.