One of the most common questions I get asked is, “Won’t opening a bunch of new credit cards hurt my credit score?” The short answer is: not necessarily. In fact, when managed responsibly, opening new credit cards can actually help your credit score over time. More on that in a minute…
Before I explain, it’s important to note that you don’t have to open as many credit cards as some people do in order to benefit from this hobby. For instance, my husband and I typically open 4-5 new cards each year to earn welcome bonuses. This strategy allows us to enjoy 2-3 trips annually where points cover the majority of our flights and lodging. However, if your goal is simply to fund one family vacation, a single substantial welcome bonus can go a long way with reducing your costs.
But as someone who has steadily been opening new cards every 90 days for the last 7 years, here are a few tips to help keep your credit score in a healthy place.
Understanding the Impact on Your Credit Score
When you apply for a new credit card, the card issuer performs a hard inquiry on your credit report, which can cause your score to dip slightly (usually by 5-10 points). However, this is temporary. Over time, opening a new card can improve your score by increasing your total available credit, which lowers your credit utilization ratio—a major factor in your credit score. Additionally, diversifying your credit types can be beneficial if you’re aiming for a strong score.
The key is to be strategic and responsible when opening and managing credit cards. Here are three tips to keep your credit score high while using credit cards to earn points and miles:
1. Keep Your Credit Utilization Low
Your credit utilization ratio—the amount of credit you use compared to your total credit limit—should stay below 30% for the best impact on your score. For example, if your total credit limit across all cards is $10,000, aim to keep your balances under $3,000. Lower is even better!
2. Pay Your Balances in Full Every Month
Carrying a balance doesn’t just cost you in interest; it can also hurt your credit score if it raises your utilization. To avoid this, pay off your statement balance in full each month. This also ensures you’re not spending more than you can afford—a key to financial health.
Tip: Use a budgeting tool like YNAB (You Need A Budget) to ensure you always have enough money set aside to pay off your credit cards each month. Then set up auto-pay on each of your cards so that you never miss a payment. Try YNAB free for a month using this link.
3. Space Out Your Applications
Avoid opening multiple credit cards in a short period of time. Each hard inquiry lowers your score slightly, and too many applications during a small window of time can signal risk to lenders. A good rule of thumb is to wait at least 90 days between applications.
Tip: Use the Travel Freely App to keep track of when you last opened a credit card and when it’s time to open a new one! Find out why this is one of my must have tools for being successful in this hobby!
4. Mix in Business Credit Cards
If you’re eligible, consider applying for business credit cards. These cards often don’t report to your personal credit report (unless you default), which means they won’t impact your credit utilization or appear as new accounts on your personal credit. This can help you earn rewards without affecting your personal credit score.
Tip: Even if you think you don’t qualify for a business card, you probably do! Even a small side hustle like reselling things on Facebook Marketplace could qualify you. Check out this post to learn more.
Final Thoughts
Opening credit cards doesn’t have to hurt your credit score. In fact, it can help you build credit while unlocking amazing travel rewards. The key is to stay mindful of how you’re managing your accounts. Follow these tips, and you’ll be on your way to great credit and even better adventures!
Not sure where to start? Read about the first 7 cards I think everyone should open here!
Tip: Start with the Chase Sapphire Preferred! It’s my favorite card for a lot of reasons and I will always have one in my wallet.
More on Our Families Free Travels!
Family vacations were a near impossibility for us not that long ago. But about 7 years ago we discovered credit card points and miles and now traveling several times a year is the norm for us! If you want to learn more about how our family travels for next to nothing, I would love for you to check out my Quick Start Guide to Traveling with Points and Miles. It is a hobby that has forever changed our lives and given us the opportunity to see the world!
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- Points and Miles for Beginners: How to Take Your Family on Vacation for Free
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- How to Survive Airport Security With Kids
- How to Stay at the Hyatt Regency Grand Reserve in Puerto Rico for free!
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