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When most people first hear about credit card churning (applying for multiple rewards earning credit cards approximately every 3 months) their reaction is usually something along the lines of “Won’t that hurt/ruin my credit!!”. The reality is that for some folks it can temporarily hurt credit scores due to the increased number of inquiries and the decreased average age of account. Prior to churning cards my credit score was around 800 or so – often slightly above 800 (850 is the maximum FICO score). However, when I use the online FICO score estimate services my score now is often around 730-760, depending on whether or not I recently did a churn. While churning cards actually increases some folks credit scores, I thought I wasn’t quite as lucky.
My hypothesis was always that since my credit history is relatively short (compared to those in their 50’s and 60’s) that churning had a larger effect on me than it would on some others. I didn’t mind since my score would always quickly rebound to over 750, and that was good enough for me. Note: if I were planning on getting a mortgage in the next year or so I would not be applying for new credit cards the way that I am now.
However, I have not received my actual credit score in a while, so I was just trusting that the online estimators were in the right ballpark. As I was gearing up for this credit card churn, my online estimate for my Experian credit score was 766. However, it turns out, the situation was better than I hoped. After my most recent credit card churn, I received a letter from Bank of America congratulating me on my new credit card. The letter also included my Experian credit score.
To my surprise, it was 804! That is roughly what it was before I churned a single card. So, I have essentially now received hundreds of thousands of miles and points from credit card sign-ups without having my credit score drop at all. Or at least I should say I am now confident that my Experian score hasn’t dropped – though it is one of the bureaus that is pulled more frequently for me, so I am pretty confident my other scores wouldn’t be substantially different. Keep in mind that I am not a heavy credit card churner as I typically obtain between 1-3 credit cards roughly every 91 days as opposed to the 5-6 that some folks do, but this was still great news for this credit card churner.
I very much agree with the Frugal Travel Guy’s motto that “your credit is your most valuable asset”, and I also agree that as long as you make all of your payments on time, and use your credit responsibly, that obtaining rewards credit cards on a regular basis isn’t going to come anywhere close to ruining your credit. As you can see, my official credit score of 804 is far from ruined. Of course, this was just my own personal experience and not a guarantee of how anyone else’s score will turn out, but hopefully my experience isn’t dramatically different from others in a similar situation. Coming up later today I will give a rundown of how my most recent credit card churn turned out. Here’s to (hopefully) many more years of miles and points from credit card sign-ups!
I am curious to know how some of your credit scores are looking after churning for a while. Also, how have your official FICO scores compared to some of the online estimates you get from sites like Credit Karma, Citi Identity Monitor, etc.?