Don’t Let a Big Sign-Up Bonus Get in the Way of Your Dreams!

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Points & miles enthusiasts know it’s possible to maintain a high credit score while applying for lots of credit cardsBut how will those applications affect your dreams of owning a home?

Dont Let A Big Sign Up Bonus Get In The Way Of Your Dreams
Getting Ready to Buy a New Home? Then You Might Want to Avoid Signing-Up for New Credit Cards

Million Mile Secret Agent Trent asked:

I am closing on a house in 2 weeks.  I’ve got a lot of purchases coming up, so I’d like to maximize that with a new card, and sign-up bonus.

I know applying for a personal card is a no-no during the mortgage process.  But I couldn’t find anything about a business card.  I’d like to get a Southwest Rapid Rewards® Premier Business Credit Card to work toward a Southwest Companion Pass.

But I don’t want to impact the mortgage closing process.  Any thoughts or advice?

This is an important consideration for anyone looking to get a mortgage, Trent!  I recommend not applying for any credit cards 2 years before applying for a large loan.

But what about small business credit cards?  Will the mortgage company care if Trent applies for a business credit card before closing?

Folks like small business credit cards.  They make it easier to separate personal and business expenses.  And you’ll earn Big Travel with Small Money at the same time!

Lots of folks qualify for a business credit card and don’t even know it!

How Small Business Credit Card Applications Work

Most, but not all, small business credit card accounts will NOT show up on your personal credit report.  Business credit card accounts from these banks will NOT show up on your personal credit report:

  • American Express
  • Bank of America
  • Chase
  • Citibank
  • Wells Fargo

Team member Jasmin is taking advantage of this to get under the Chase “5/24” limit by only applying for business cards from those banks.

But when you apply for a small business credit card, you will get a credit pull on your personal credit report.  This will happen even if you have an EIN (Employer Identification Number) for your business.  Because you are guaranteeing your business line of credit with your personal assets and income. 

Even If the Account Doesn’t Appear on Your Credit Report, the Banks WILL Still Care!

Team member Harlan recently bought a house.  Two weeks before closing, he applied for a Citi Prestige card.  He got a call almost instantly to ask why!

He explained he wanted to use the card for a vacation to the Bahamas.  Then the mortgage company made him write a letter to them explaining his reasons, and sign it!

Dont Let A Big Sign Up Bonus Get In The Way Of Your Dreams
When You Apply for a Mortgage, Banks Will Monitor Every Facet of Your Credit Score

When banks see you apply for new credit they think:

More Credit = More Bills to Pay = Less Likely to Pay the Mortgage

Banks don’t understand that as a miles & points enthusiast, you are paying off your balance every month. 😉

So unless the bonus you want is expiring before your mortgage closes, I would wait.  And even then, I suggest only doing what you are comfortable with.

Not being able to close on your future home is NOT worth a lucrative sign-up bonus.  Even if it is for the best deal in travel!

Bottom Line

If you plan on taking out a large loan (car, mortgage, student loan, etc.) in the next 2 years, I recommend NOT applying for any credit cards.

Some small business credit cards won’t show up on your personal credit report.  But you will still get a credit pull when you apply.

So if you’re applying for a mortgage, it’s best to wait to submit your application until after closing.  Because no credit card bonus is worth losing out on a home!

Thanks for the question, Trent!  And good luck on your closing. 🙂

Million Mile Secrets features a team of points and miles experts who have traveled to over 80 countries and have used 60+ credit cards responsibly to accumulate loyalty points and travel the world on the cheap! The Million Mile Secrets team has been featured on The Points Guy, TIME, Yahoo Finance and many other leading points & miles media outlets.

Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)

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