Emily and I don’t have plans for a big loan in the next 2 years (equity, house, student, etc.) so we regularly apply for credit cards to build up a mile and point balance.
However, if you are applying for a big loan in the next 2 years, I recommend no credit card applications to ensure that you’re doing everything possible to get your loan approved at the lowest possible rate.
In general, applying for credit cards reduces your credit score by 3 to 8 points per application (your specific situation may be different), but banks look at other factors such as how often you’ve applied for credit recently etc. when they evaluate big loans.
Much better in my opinion, to get that big loan first, and then apply for credit cards.
With that out of the way, a few weeks ago I applied for 6 credit cards which will get me 305,000 miles and points!
1. Citi AAdvantage 75,000 mile personal Visa card
2. Citi AAdvantage 75,000 mile personal Amex card
3. SPG 30,000 point Amex
4. Bank of America 35,000 mile Hawaiian Air Visa 5. Bank of America 40,000 mile Alaska Air Visa 6. Chase 50,000 point Southwest Airline card
Actually, I should get 340,000 miles and points, because I will be converting 35,000 Hawaiian Air miles to 70,000 Hilton points!
I’ve been approved for all of the cards except the SPG card, because American Express wants to see my tax returns.
The 2 Citi cards were approved instantly online, but I had a tough time convincing the Chase reconsideration analyst to approve my Chase Southwest application.
I call the Bank Of America reconsideration line since my application required further processing to approve the Alaska Air and Hawaiian Air cards, but that went very smoothly.
Card Selection Criteria
I apply for 4 to 5 cards every 90 to 100 days. Here is the criteria I use to apply for cards, but I realize that folks with different goals might use different criteria.
1. Highest Bonus. In general, I always try to apply for the cards with the highest bonus first, even if I have no immediate use for the points. I know that I’ll find a use for the miles and points later.
I applied for the 2 personal AAdvantage cards because it was more than 18 months since I was last approved for them and they have the highest bonus currently available.
These are also the best credit cards, in my opinion, for folks new to miles and points (who want to apply for only 1 or 2 cards) because you can apply for both the Visa and Amex at the same time using the 2-browser trick and get 150,000 AAdvantage miles.
150,000 AAdvantage miles will let me have MUCH more Big Travel with Small Money than either the 50,000 points from the Chase Sapphire Preferred or the 30,000 points from the SPG American Express which are often touted as the best mile and points credit cards.
For example, 150,000 AA miles will get me 2.5 coach trips to Europe, while I could barely get 1 coach trip to Europe with the 50,000 Chase Sapphire points or 30,000 SPG points.
2. Limited Time Offers. I also apply for a few cards with limited time bonus offers. For example, the Chase Southwest (no longer available) was offering 50,000 points as a sign up bonus instead of the regular 25,000 points.
I would NOT apply for a Chase credit card with only a 25,000 point signup since Chase is very sensitive to the number of credit card applications you make, and 25,000 points is not a sufficient incentive for me.
The American Express SPG card is offering 30,000 SPG points after spending $4,500 within 3 months which is much better than the regular requirement to spend $15,000 within 6 months.
3. Credit Inquiries from different credit bureaus. In general, I apply for credit cards from different banks so that I don’t have credit inquiries hitting only 1 credit bureau.
I want to limit the number of inquiries on each of the credit bureaus, because banks don’t like seeing too many inquiries (especially in the last 6 to 12 months) on your credit report.
Equifax, Experian, and TransUnion are the 3 main credit bureaus in the US. Banks will usually request a copy of your credit bureau from at least 1 (sometimes more) of these credit bureaus. The exact credit bureau used depends on where you live and which bank you’ve applied for credit from.
In my case, Bank of America used my Equifax credit report, Chase and Citi used my Experian credit report, and American Express hasn’t yet pulled my credit score.
4. Minimum spend requirement. I don’t usually worry about this, because there are plenty of ways to meet minimum spend requirements.
But I do some rough calculations before to see if the minimum spending is manageable.
Credit Score Impact
They are not official FICO credit scores which lenders usually use, but substitute scores or “FAKO” scores.
My score dropped from 749 in July (before applying) to 738 in August.
In case you’re wondering why my score dipped from Aug to Oct 2010, it is because I received a very lucrative balance transfer option that I maxed out.
It was very lucrative.
Credit Karma is a proxy (FAKO) of my TransUnion FICO score.
My score increased from 710 in July (before applying) to 738 in August.
Credit Sesame gives me a proxy (FAKO) of my Experian FICO score.
Many of the millions of miles which Emily and I use for Big Travel with Small Money have come from credit card sign-up bonuses.
This is a great way to earn lots of miles and points, but you HAVE to be careful.
Don’t apply for credit cards if you can’t pay off the entire balance monthly. You’ll likely be paying more in interest than the value of the miles and points. And don’t apply for credit cards if you will be applying for a big loan in the next 2 years.
What criteria do you use when you apply for credit cards? How many cards do you apply for at a time?
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Disclosure: You should know that I recently applied for the credit cards in the post. However, I don’t get any referral bonus or commission from anyone for this post or for the links to the credit cards in this post.