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Today I got an email from a reader that I wanted to share and answer here so that others can also see the response (and hopefully add to my answer!).
I am a diligent reader of your blog and I was wondering if you could help me out with my current situation. I got into the miles and points game back in October of last year. I had two longstanding cards before I was turned on to your blog (Chase Freedom and Amex Blue Cash). From October 2011 to January 1st, I applied for a total of 7 credit cards and was approved for all of them. 2 Citi AA personal cards and Citi AA business, 1 US Airways Barclays card, 1 Chase Ink Bold, and 2 Chase Southwest cards. Unfortunately, I did not apply for all of these on the same day (I didn’t even have a with the Citi business card).
Since then, I’ve read much about the importance of spreading out “churning dates,” preferably every 3-4 months, so that inquiries will systematically fall off your record. After processing a lot of tips and information, I set my next “churning date” for March 1st. I applied for the Chase Sapphire Preferred Card, the new Chase Ink Bold, the Citi Thank You Premier, and another US Airways Barclays card (read that it was churn-able). Unlike my previous experiences, I was not instantly approved for any of my applications. I called and found out I was denied 3 out of 4 times and all for the same reason, too many inquiries in the last couple months. I tried going to credit boards to see which credit bureau each bank pulled from but the information was either dated or it wasn’t there at all.
A couple reps told me that I had too many inquiries in the past 6 months and listed each one specifically! Did I not wait long enough? How do other people churn 4x a year and apply for 6-7 cards each churn? Now that I have 3 denials, what will happen to my credit score? Will it just take a hit from the hard pulls or will it end up taking a bigger hit due to the fact that my apps were declined? How long should I wait before I churn again? And lastly, do you use any other method of credit card monitoring besides karma and sesame? If so, does it show you which credit bureaus banks have pulled from? Thank you for all of your help!
While this blog is not a blog about credit cards specifically, the use of rewards credit card is a big part of earning miles and points, so I know these are issues that many readers face. I also want to point out that I am not a financial expert, credit expert, or anything of that nature. That said, I do have some general tips and personal experiences that I feel may help in this case.
First, congrats on all the great cards you were able to get. You picked up hundreds of thousands of miles and points in just a few months! However, you seem to have now hit a wall. Assuming that your credit is solid other than all the recent inquiries, your main problem sounds like it was too much, too quickly. Your email mentioned that you read you should churn every 3-4 months, but it sound like you only waited from January 1st until March 1st to apply for additional cards after getting seven in the previous couple months. That was likely not long enough, and your applications were being viewed as too recent.
Secondly, six to seven cards per churn is very aggressive. Some people certainly do that many successfully, but many of those people have fairly lengthy and strong credit histories. I don’t know the length of your credit history, but if it is a shorter credit history, then take that into account. I personally am far more conservative and only do one or two every three to four months. My advice would be to take a nice break from applying for cards. Three to four months would be the minimum I would wait, but honestly I would wait even a bit longer (perhaps closer to six months) since you just received three denials. The denials themselves will hurt your credit in the sense that they will show as inquiries, but you won’t have the benefits of the additional available credit and/or lower credit utilization score that would come if the application had been approved. That many denials is a strong sign that it is time for a nice breather.
In addition to taking a break from applications, obviously make sure that you are paying all the bills on time and that you are keeping an eye on your overall credit utilization. After you sit out of the application game for a minimum of several months, I would stick to a three to four month churn cycle and be a bit more conservative on the number of applications during each churn for a while.
I do monitor my credit with Citi IdentityMonitor ($4.95 a month) in addition to the free services you mentioned. 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 You can access your credit reports through that service, or you can get one from each bureau free annually from AnnualCreditReport.com. The inquiries will display on the respective credit reports. It will be helpful for you to monitor your credit score over the next few months and (hopefully) see it start to increase as the inquiries age.
Miles and points collecting is a life-long game, so be patient and strategic. I know it isn’t very fun to sit and wait on the sidelines instead of applying for new great sign-up bonuses, but miles and points aren’t worth messing up your credit over. More good deals will come along a few months down the road when you are in a better situation to take advantage of them.
Hopefully that helps some give you some direction on what to do next. If other long-term credit card churners want to weigh in with tips and trips to help out this reader, please do!