That Credit Card Application Did What to My Credit Score??

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We all know that the huge hauls of 50,000, 75,000, and 100,000 miles are typically only to be had by credit card sign-up bonuses.  Unless of course you happen to get a purchase that amounts to 83,871 American Airlines Aadvantage miles for a $5.00 Verizon Wireless phone accessory honored.  🙂  In addition to the huge sign-up bonuses, rewards credit cards also help our family bring in lots of points just by everyday use.  There are dozens and dozens of rewards credit cards out there that tempt my family (and many others out there) to sign-up in order to get the huge sign-up bonuses and benefits that come with them.  It is a careful balance to take advantage of several of those credit card sign-up bonus deals each year in order for my family to be able to “afford” to travel, and yet still protect our credit rating.

There is no question that applying for multiple credit cards in a short period of time will likely hurt your credit score.  Yes, increasing the amount of credit you have, and thus likely decreasing the percentage of your credit utilization, may help your credit score in some situations.  However, in the long run, “churning” credit cards will have some negative effect on your credit score.  I am not a credit score expert by any stretch, but I do know the importance of your credit report and credit score.  Your credit score is important if you want to be able to take advantage of multiple credit card offers each year, but of course it is also important to many other aspects of life as well, which I am sure you already knew!

When I first started to apply for credit cards for the sole purpose of gaining miles and points, I knew that it would negatively effect my credit score, but I didn’t have a good grasp on how significantly it would effect my score.  Frankly, as long as I was getting approved for cards I’m not sure that I really cared!  To an extent that is still true, but I think it is important to have a better understanding of exactly how it is affecting your credit situation.  When I applied for our second mortgage about a year ago (darn you bad market for being so crummy that we can’t sell our first house, so now we have mortgages on two houses!!), my credit scores from the three credit reporting agencies of TransUnion, Experian, and Equifax were in the low 800’s and very high 700’s.  Since that time I have obtained a second home/mortgage, bought a new car, and opened 6 or 7 new rewards credit cards.

My credit scores with the three reporting agencies have dropped about 50 points in the last year as a result of those events.  I have not been late on a single payment, my debt to credit ratio is very low, and I have kept my oldest accounts open and in good standing.  Of course, it is impossible to know what amount of that credit score drop is solely from the new credit cards and what proportion is from the mortgage and new car.

I wanted a concrete example of what a single credit card application would do to my score, so I saved my score from right before I applied for the super American Express Starwood Preferred Guest 30,000 point offer, and compared it to my credit score a few days after I applied for that card.  Here is what I found:

Pre-Starwood Credit Card Application:

I used and on free and/or cheap trials in order to see where my credit score stood. There are tons of different companies that offer free or reduced cost credit scores.  You can get your credit report from each of the three bureaus for free once a year from – but your credit score is something that is a little bit harder to obtain for free.  Though it can be done!

I’m not sure if I was surprised to learn that my credit scores had dropped about 50 points in the last year or not.  I know I wasn’t thrilled about it, but I also wasn’t too upset.  I knew it would be lower than it was a year ago, and I also have no large financing needs coming up, such as a mortgage.  If I did, I would not be applying for credit cards in anywhere near the quantity that I am.  I know that I apply for nowhere near the number of card that true “churners” do!

I laughed a bit to see the “negative factors” influencing my score on the super official looking credit “scale”.  New accounts, you think?!

Again, this little chart made me laugh.  Amount of new credit = NOT GOOD!

Of course, this information did not dissuade me from applying for the Starwood card, but it did at least make me think about whether or not it is worth it first.

Post-Starwood Credit Card Application:

Two or three days after my Amex Starwood Credit Card application, I checked my TransUnion score again on Credit Karma and found this as the result.

If you remember above, my TransUnion score was 766 just prior to the Starwood application, and is now 753.  For those bad at math, that is a 13 point drop in less than a week.  Ugh!  The only thing that really changed during that time was the Starwood Amex application.  Of course, not every application drops a score in this manner.  There are a large number of factors that influence credit scores.  I have a theory that my scores are dropping more right now as my average account age is now less than 5 years due to all of the recent applications.  If I were older and thus had a longer credit history, I’m not sure the effect would be this large.  Of course, as a reader pointed out, the inquiry is likely the only thing that was on my application that quickly.  The actual account itself usually takes much longer to show up.


I have no intent to stop applying for credit cards, but I am going to be very cautious about what offers to apply for.  My credit score is just about out of the “excellent” category.  I don’t mind fluctuation within the excellent credit category (kind of like some weight fluctuation, but you fit into the same jeans!), but I am not thrilled about changing categories.  I had already planned to cool it on applications for the rest of the year, but now that is really the case.  I plan to have one more application between now and the end of the year, but otherwise I am just going to let time work its magic.  As they say, time heals all wounds.  🙂  That is true with credit scores, too!

I certainly don’t intend for this info to scare you away from applying for rewards credit cards, but I do highly recommend that you become informed about your credit score and keep an eye on it from time to time.  I think that the Frugal Travel Guy says it best when he states, “Your credit is your most important asset.”    I couldn’t agree more.  With that being said, here was the outcome of the American Express Starwood credit card application……………

Woohoo!  Instant approvals always feel nice.

What effect has applying for rewards credit cards had on your score?  Do you check your score?  What services do you use to keep an eye on your score?  I’d love to hear other experiences!  As always, thanks for sharing!


The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.



    • Good catch, I updated the post accordingly. That is actually who I use as well. The “catchy” music from the Free Credit Report commercial must have infiltrated my mind!

  1. That a is a big drop. Crazy! Reminds me that I should check mine too this week since I just applied for the AMEX Gold.
    Thanks for the reminder. I do use these sites and they work great!

    • It is a big drop. I have no clue exactly what caused it, I just know that it happened. Always good to know what is going on with your score!

  2. 1. 13 points is a huge drop from just one application. “Experts” say that 3 to 5 points per application is typical. Did your ratio of outstanding credit to available credit also change?
    2. Am I correct in assuming that your TransUnion score is a “FAKO” score — NOT a FICO score?

    • It is a huge drop. There were no other substantial changes at all in my credit history or credit utilization. None of my cards are anywhere near 50%…..most are somewhere between 0-15% at most. I checked both my “FAKO” and FICO scores before the new app and with TransUnion they were identical scores of 766. After the app I have only checked the “FAKO” score via the free service available at Credit Karma. They were identical scores before, but I can’t swear exactly what they are right now as I haven’t had time to mess with trying to get another free look at my actual FICO score. 😉
      For anyone saying WTF is FAKO, it is basically any score other than a true FICO score. Credit Karma and many of the monitoring services are providing some type of “FAKO” score. Here is what Credit Karma’s website says about their scoring system: Credit Karma provides users with their TransRisk New Account Score, VantageScore, and Auto Insurance Score as supplied by TransUnion.
      The TransRisk score is calculated by TransUnion using their proprietary scoring model and is the original credit score provided on Credit Karma.

  3. I’m an analyst and look at credit bureaus frequently. I would be surprised if the newest credit card even showed up on your bureau yet, it typically takes 30-60 days for new accounts to cycle. The drop is likely due to the new inquiry and the number of inquires that have taken place this year (9 or 10) as well as the new accounts. The new mortgage and car likely affected the score the most, but each card you add at this point will affect your score more and more until they get some history behind them. Make sure you don’t utilize more than 50% of any card, as this will cause a big decrease.

    • Good insight – I don’t know what exactly caused the drop. I just know the only thing that changed in that week’s time was the Amex application. Thanks for the tip about credit utilization. I thankfully never come close to 50% on any card. I think my overall utilization of all cards averaged together is 5% of less and no one card is usually ever above about 30%.

  4. Keep in mind that AMEX is unique in that they report your account opening date as the date for your longest held AMEX account. So for example, my first AMEX account was opened in 2005 and in the past year I have opened up 4 new AMEX cards and all of the cards list the “Member Since” date as 2005 not 2010/2011.

    This is a major benefit to us as consumers because it helps with the average account and individual account age that you rightly addressed in your post

    • Great point. That is a huge benefit to Amex in most cases! For me, both of my Amex cards were opened this year, so it won’t help me yet. Still can be a huge positive if I open new Amex accounts in future years! Thanks for sharing.

  5. Hmmm, thanks as always for the info. I hadn’t really thought about the actual effect of the credit score…and I have recently made applications for 4 new credit cards…3 so far were approved and one is still pending “determination”. I think I will cool it for awhile. I hadn’t applied for any new cc’s for many years until I got bit by these danged Point Bugs…Thanks MP Your info and my DD have infected me!! LOL.

  6. Nice information. Can i ask you, how do you check your other credit scores for free? I use creditkarma too, is there any other recommended website for non transunion scores?

    Another question i had – we know that the credit score goes down when a new rewards CC is opened, but what happens when you close that card in say 11 months from now (to avoid the yearly fee)? Does it take another hit then? does every account opening event hit the credit score twice?

  7. @CindyT, congrats on your 3 approvals. Hopefully you will be able to get the fourth one through. If not, Million Mile Secrets has a great post up today about ways to get applications approved through calling the “reconsideration” line.
    @DGuy, myFICO can give you Equifax via a free 10 day trial. I used this and it was super easy to cancel online during the trial period so that you don’t get billed. can provide you with Experian via their free seven day trial. I have not yet done this trial, so I can’t speak to how easy it is to cancel that one.
    Since getting rewards cards in the manner that I do now I have not cancelled one, so I can’t speak from personal experience. I have read/been told that closing accounts does have a small negative effect on your score. This is especially true if losing that available credit makes your debt/credit ration substantially worse. I guess there is no such thing as a “free” mile!

  8. Many folks tend to think of credit scores as similar to an SAT score, or a letter grade.

    But credit scores are more like a pass/fail system. In other words, as long as you have a 720 FICO or higher, you will generally pass.

    Anything above a 720 is generally “wasted” score, that you could be earning more miles and points with, through more applications. A 720 FICO will even qualify you for the lowest rate on most mortgages. A 680 FICO is all you need to “pass” with most creditors.

  9. Unfortunately, my credit score is in the low 600s but I am working on it. Hopefully by summer next year I might have it back up to 700s to take advantage of those credit card offers. Until then, its butt in seat times! 🙂

  10. I had the Starwoods Amex a few years back and canceled late in 2011. How long from time I applied on SPG Amex would I need to wait before getting that sign-up bonus again?

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