Unless you are brand new to the miles game, you know that credit card sign up bonuses are where the ‘money’ is at, so to speak. If you are like most people, you have probably been told that too many credit cards can be a bad thing. Like most rumors, there is some truth to that, but you can certainly sign up for a lot of CC’s without hurting your credit score. In fact, my credit score has gone up 50 or so points this year while adding 12 new CC’s.
I will use myself as a walking example of what your credit ‘could’ look like, even if you have 20 or so CC’s. (go big or go home, right?)
Hold on, before I go too deep, let me run this scenario by you. Some people believe that you can earn a substantial amount of points by just “spending” on a CC. Most cards earn you one point/mile for each dollar spent.
So, by that standard, it would take you $50,000 in credit card transactions to earn enough for, say, two round-trips in the lower 48. How long would it take you to spend $50,000 on a CC? Considering the average US household income is about $53k annually, I’d say it “should” take you quite a while to spend that amount.
I have signed up for over 10 CC’s this year, netting me well over 400,000 points and miles from the sign up bonuses. I will let you do the easy math on how long it would have taken me to “spend” my way to 400,000 in points.
Alright, so the back story is out of the way, let’s talk credit! I won’t be tacky and tell you my score, but it is high enough to be approved for any card. I say that to affirm you that CC’s will not “lower” your score, if managed properly of course. (more on that in a second)
Start by getting your free credit score from CreditKarma.com (seriously, it is 100% free)
As you can see, over a dozen credit cards are not hurting my score. You will want to pace yourself, maybe 1-2 new cards every quarter, to ensure that everything has time to pan out.
One of the best pieces of advice I can give is this:
Don’t close out your old credit cards. A major factor in your credit score calculation is “average age of accounts”. It is important to show accounts that you have kept open and in good standing for some time (2+ years preferably) You DO NOT, I repeat DO NOT, have to use a credit card for it to benefit your credit score. Just having an old card sitting there and open will help your score. You are free to cut the card up, just don’t shut down your oldest cards. This is why I always recommend your first card to be a non-annual fee card, that way you can leave it open for a long long time. The Chase Freedom would be a perfect starter card.
Again, CC’s are not bad. Doing bad things with credit cards is bad! Let’s talk about some credit no-no’s.
— Utilizing a high amount of your credit limit. You should pay your cards down in full each month. Card balance VS your card limit plays a huge role in your overall score.
— Making a late payment. There is no reason why you should make a late payment. Every major bank has the ability to setup automatic payments, even if it is only the minimum amount. Don’t pay late fees and don’t get a ding on your credit score.
— Don’t spend excessively just to meet your minimum spend. CC debit is a real issue. You can pay your bills with any card using Plastiq.com (even your rent or mortgage). Why buy things you don’t need? The whole idea behind the travel/points game is to SAVE money. Remember that when you get your card and start using it.
The best practice when applying for new cards (in mass succession like I do), is to apply for a couple of cards quarterly. Many banks like to see no new card applications in the last 90 days. The key here is to sign up for a couple of cards back-to-back, on the same day. The banks will not be able to see that your credit was run by another bank just minutes ago. If you do this for a few cards on the same day, you will have 90 days to complete all your minimum spend requirements, and then be all set for a new batch of cards when your applications then become 90 days old. When you apply for multiple new cards back-to-back, we call this an app-o-rama. Feel free to look up that term if you want more details on the process.
**Note, if you are going to carry balances or if you currently have trouble paying off credit card debt, DO NOT sign up for travel credit cards. They have very high interest rates to help offset the large sign up bonuses. If you are going to carry balances, you should look at the Chase Slate card, 0% for 15 months on purchases or balance transfer. The Chase Slate card will also let you balance transfer for no fee within the first 60 days.
Have questions? Feel free to reach out via facebook.com/milestothemax