The innocent mistake you can make when applying for a credit card

Hanna Horvath Headshot

By

Hanna Horvath, CFP®

Hanna Horvath, CFP®

CERTIFIED FINANCIAL PLANNER™ & former Managing Editor, Growth

Hanna Horvath is a CERTIFIED FINANCIAL PLANNER™ and former managing editor for growth at Policygenius. She helped produce the Easy Money newsletter. She passed her exam to become a CERTIFIED FINANCIAL PLANNER™ in November 2020.

Hanna's work has appeared in NBC News, Business Insider and Inc. Magazine. She is regularly quoted in top media outlets, including CNBC, Best Company and HerMoney. She has also appeared on the Money Moolala podcast and All's Fair podcast.

Prior to Policygenius, Hanna wrote for KNBC in Los Angeles and WNBC in New York. When she isn't writing, she's (often) running, (usually) cooking and (sometimes) doing photography.

Published January 25, 2019|2 min read

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Getting a credit card is an important financial step. It can help you build credit, which can affect insurance premiums and loan approvals. It can also create debt if you aren’t careful.

Applying for a credit card is relatively easy — just a few clicks and you’re done. But you can still make mistakes.

"A lot of the mistakes people make when applying for credit cards are remarkably innocent,” said Beverly Harzog, a credit card expert at U.S. News World & Report.

A common credit card mistake

One of the biggest mistakes you can make is applying to multiple cards at once, Harzog said. You might think applying for a bunch of cards increases your chances of at least one of the companies approving your request. But it can hurt you.

Harzog said every credit card application you make triggers a hard credit inquiry, which may cause your credit score to take a slight hit, typically less than five points. If you apply for multiple cards, those hits add up.

“If you apply for five cards in a short time frame, you could be looking at up 25 points in damage,” she said. “If you have too many inquiries close together it looks like you’re desperate to get a card and you’re running out of time.”

Harzog said many people think that if you have a lot of credit cards, it will lead to a high credit score. That’s not always the case. Multiple cards can earn a high score as long as you acquire them over a long period of time and pay off monthly purchases in full to avoid interest.

Tips for applying for a credit card

First, Harzog recommends taking a look at your lifestyle and spending patterns before getting a card. Certain cards offer rewards for travel, gas, groceries and more. Choose the card with rewards that fit your needs.

For example, if you’re a frequent traveler, an airline-branded or general travel rewards card may be best for you. (Here’s some tips on getting the best bang for your buck using travel rewards.)

“Match your lifestyle to the right type of card,” Harzog said. “You can really get specific as you want. But make sure you’re applying for only a couple at a time.”

Next, make sure you read the fine print before you click “apply." Cards can have annual fees and high interest rates. Don’t wait until your bill arrives to find out about them. Also, check for the minimum monthly payments and introductory offers.

If you do end up getting rejected, read the rejection letter closely. Credit card companies often provide the specific reason you were denied and provide tips on how to become a better candidate. Harzog said rejection is often tied to your current credit score.

If you have a low score, there are some easy ways to raise your credit in a short time. Here’s a guide to raising your credit in 30 days or less.

What credit mistakes have you made? Tell us in the comments.

Image: BartekSzewczyk