I like to post not only about getting great credit card sign-up bonuses, but I also like to post about what applying for those great cards does to my credit score. I have always found that sort of information very interesting, so I think it is only fair to share my experiences in return. I put the word like in quotation marks, because my credit score always seems to take a larger hit than the standard party line of “2-5 points per application”, so watching the dip in my score is never very fun. However, as you will see in a minute, my score also seems to often rebound very quickly so I guess it all evens out.
First, here is some basic information about my application/credit situation. I currently have five Equifax inquiries, three Experian inquiries, and four TransUnion inquires on my credit report. Inquiries happen each time you apply for credit and they show on your credit report for two years, but seem to have less influence on your score after one year. My Chase Ink Bold application pulled from Equifax for me in Texas, and my Barclays Bank US Airways MasterCard pulled from TransUnion. You can get a good idea of what credit bureau certain banks will pull from by going to creditboards.com. I have open seven new credit card accounts this year, so the average age of my accounts has dropped considerably in the past few months. I have kept my oldest accounts open. My credit utilization percentage is very low. It is typically 1-2% of all available credit. Currently my report shows 6% utilization on one card, and that is the highest utilization on any one card. I did recently have to lose a significant amount of available credit on some of my “everyday use” cards in order to get approved for the Ink Bold, so my utilization may go up some shortly. My score and report currently reflect the most recent inquiries, and do display the new US Airways credit card account, but do not display my lowered credit limits on some of my Chase cards.
There are tons of free, cheap, and expensive ways to keep an eye on your credit report. In addition to getting one free report annually from each credit bureau, I use Credit Karma (free) and Citi IdentityMonitor ($4.95 a month). To get to the discounted $4.95 a month rate for Citi IdentityMonitor, paste this into your browser. identitymonitor.citi.com/index.aspx?source=IMN00291
Both services offer value, but I really like Citi’s IdentityMonitor service because it is affordable and offers all three bureau’s estimated FICO credit scores and credit reports. The credit scores can be refreshed every 30 days. They are just estimates, so keep that in mind. It comes with other benefits as well, but the scores and reports are what I use most frequently. It also sends you email alerts when there is something like a new inquiry on one of your reports.
According to Credit Karma (who admittedly doesn’t use a real FICO score, but the score is based on TransUnion information and it still gives you a good idea of how your score is trending), my credit score right before my most recent two applications was 774. It doesn’t show as 774 on the graph below, because that graph shows you an average score for each month, and my high of 774 happened in early November right before my applications. Just about a month later my score is now 753. That is as drop of 21 points in one month after two applications. Ugh. This sort of thing has happened to me before. Back in August my score with Credit Karma went from 766 to 753 after one application, so I am kind of used to my score taking bigger drops than “normal” with inquiries.
As you can see, my score climbed steadily after the August application dip until recently when I had two more credit card applications. My plan is to again lay off the credit card applications for a few months. Hopefully my score will again climb back up a few notches during that time.
Below are the credit scores that Cit’s IdentityMonitor service gave me today. I would like to be in the excellent category across the board, just as I was a little over a year ago when I obtained the mortgage on my home, but that is the trade-off that I have made by playing the miles and points credit card game. For me it has very much been worth it. I am still getting approved for cards, my credit is still in the good – excellent range, and I am traveling (virtually) for free several times a year with my family. My ego isn’t fed by whether my credit score says good or excellent, so I don’t lose any sleep over the small-ish effect that this had had on my score.
I also know that if I quit obtaining new cards all together that within a year my scores would probably be in the excellent category across the board. At seven new accounts this year, I certainly have obtained more cards that the “Average Joe”, however I am by no means up there with the true credit card churners. You have to decide for yourself what amount of credit activity is right for you. My dad has a limit of probably about one new card per year. My mom now gets about one new card per quarter. I got closer to two new cards per quarter this year. We all have different travel goals and risk tolerances. There are certainly more ways than just new credit card sign-up bonuses to obtain miles and points, but currently sign-up bonuses are one of the quickest and easiest ways. That being the case, it is essential that you keep a close eye on your credit reports and scores in order to make informed decisions about applying (or not applying) for new cards in the future.
If you have decided now is the time to add some new cards to your collection, you can check out some of the top credit card offers for families here. I do receive a commission for approved applications for some of the cards listed. I do not receive any commission or referral bonus for any of the credit monitoring services listed in this post. I just use them and like them.
What services do you use to watch your score? What sort of effect has new card applications and accounts had on your score this year?