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How long to wait after denied credit application?
May 31, 2009 11:09 AM   Subscribe

How long should I wait before making another credit card application? I was denied for a specific card I'd like (Amazon.com card through Chase) in February for "too many credit applications." Can I apply again for it now?

My history: I'm 18. I have a bit over three years of good history that show up in my credit report--I was a secondary account holder on my parents' credit card for a few years in high school and they've never missed a payment. I turned 18 in September, got my own credit card that very week and have used it and paid it off regularly (paying off full balances anywhere from $400 to $900 each month). I've used random "free credit score" services and found out two bureaus have my scores around 670 and 710.
posted by jgunsch to Work & Money (12 answers total) 1 user marked this as a favorite
 
Yeah, sorry to sound like I'm talking down to you, but you don't need a pile of credit cards at 18, or really at any age. Your score is good. Take your time and build a solid history. Lending institutions look at more detailed reports than what consumers see on their reports.

If you're after that specific card for some kind of cashback/incentive program then that is a valid consideration. Give it six months for all the inquiries to be cleared.

In any case, keep monitoring your credit files, keep paying off any balances you have, and above all beware the debt monster that tends to invade American youth.
posted by Burhanistan at 11:39 AM on May 31, 2009 [2 favorites]


Just a note to be careful of "free credit scores" since they often sign you up to for costly credit monitoring services.
posted by ALongDecember at 11:50 AM on May 31, 2009


I don't know anything about getting denied for a credit card due to "too many credit applications," but using random "free credit score" services is not a good idea and may be what is causing the problem. What sites did you use?

And for the future, the only official site for getting credit reports is at (the unfortunately poorly advertised) Annual Credit Report.
posted by The Devil Tesla at 12:00 PM on May 31, 2009


What do you want another credit card for?

If you want more available credit, call your current card and ask for a raise.

If you want one for the perks... well be very wary. Perks often disintegrate in the fine print. Read it carefully and understand it.

And get your free credit report from the link that The Devil Tesla provided. If everything is cool on it then go ahead an reapply.

Keep in mind that the economy just went straight to hell because people used credit like cocaine, so companies aren't opening new accounts in general. It's not you.
posted by Ookseer at 12:17 PM on May 31, 2009


If you apply online, you have to wait 6 months from the date you were denied (according to this, for what it's worth, but I assume this is taken from the text on the online application page). So, you can reapply in August.

I agree with the pile-on that credit cards are generally no good. However, if you always pay off the balance in full every month without fail, then there's no harm. Although, it may hurt you down the road to have so much credit line available (whether you are using it or not) if you want to borrow a larger sum of money (like, a car). In those cases, they look at how much debt you could have.
posted by Houstonian at 12:24 PM on May 31, 2009


As The Devil Tesla mentions, getting credit reports done often is not a good thing. At most, it should be once a year, the way I understand it. If you have multiple reports done, it will actually weaken your credit score. That may be part of the problem.
posted by firei at 1:03 PM on May 31, 2009


If you want to keep tabs on your score, that's great. You can sign up for pretty cheap to a legitimate credit monitoring service where you can check your score monthly. I believe MyFICO is a pretty good/affordable one.
posted by ishotjr at 1:05 PM on May 31, 2009 [1 favorite]


Stop doing the "random" credit report checks. If they look like they're coming from all over, it's going to suggest a lot of credit inquiries, and that will make any creditor leery of you even if this weren't the worst credit market in about two generations.

I would strongly consider what you want this extra credit card for. The standard advice is that everyone should have three cards: a credit card (VISA or Mastercard), a gas card, and a department store card. That will give you points in the three areas that the credit score looks at (aside from bank loans and such) and if you are paying them all off monthly you will have an even higher FICO.

Then again, there is this devil's advocate advice: it's possible that in addition to your relatively short credit history and your youth, which together are the main factors working against you (in any credit environment), by paying off the balances you aren't making your card issuer as happy as if you were running a balance and paying finance charges. After all, that's where they make the most money.

It has been suggested sometimes that switching to running a steady, manageable balance for a short time can improve your score.

But you really do have a decent score. It probably just is this market. A couple of years ago, the only necessity was respiration; now even people with good credit are getting denied or having existing lines reduced. It's just timing.

Mainly, though, since you aren't clear about the why, we may suspect that you are simply being drawn into the credit trap and assume that more cards is better.
posted by dhartung at 1:59 PM on May 31, 2009


It sounds like one application (the one from last September) is "too many" for your credit profile. Usually they look at the past six months. So, six months from February would be August. I would say wait until September since you don't know how they count the months (might be full months) before you try again.

Also, checking your own credit report/score does NOT count as a credit application.
posted by rabbitrabbit at 4:54 PM on May 31, 2009


If you have multiple reports done, it will actually weaken your credit score. That may be part of the problem.
...
Stop doing the "random" credit report checks. If they look like they're coming from all over, it's going to suggest a lot of credit inquiries, and that will make any creditor leery of you even if this weren't the worst credit market in about two generations.
...
The standard advice is that everyone should have three cards: a credit card (VISA or Mastercard), a gas card, and a department store card. That will give you points in the three areas that the credit score looks at (aside from bank loans and such)
...
It has been suggested sometimes that switching to running a steady, manageable balance for a short time can improve your score.

As far as I know none of the above quoted claims are true. The credit score calculation is done using a secret proprietary method, but to a large extent the factors that go into the score are publicly known (see the Wikipedia entry for details). Checking your own credit report, whether through the official government-mandated yearly free reports or any other provider, are by definition soft pulls that do not affect your score at all. I've never heard of the credit/gas/department store theory, your credit score does differentiate between things like credit cards and student loans, but it should not make any difference what kind of credit cards they are. And never carry a balance, it will actually hurt your score because your debt to credit ratio will go up, the idea that it helps is a myth.

Anyway for your specific situation: congratulations on being responsible about paying off your card every month, and on your already good score. As others have said, there's probably not too much of a benefit for you to get another card anyway, but on the other hand it will help down the line in calculating your average account age. If you do get another card make sure you keep the old one open, and never get a card with a annual fee, because leaving an account open while not actually using it will help your score over time. Your previous hard pulls will still affect your score until six months afterward, so you may want to wait six months before you do another one. Or you could take a risk and apply for a different card that has a better chance of being accepted.
posted by burnmp3s at 6:10 PM on May 31, 2009


On preview, sorry this is so long!

"Random free credit score services" are not going to help give you an accurate picture of your score. What these services do is provide you with a sample score based on their own proprietary scoring methods which often produce vastly different scores than the 'true' score, which comes from a single source: FairIsaac, or your FICO score. If you read the fine print on these other services you will note that they (should) ultimately state that the scores you are getting are not true 'FICO' scores, which is the only actual score that 99% of creditors use to determine creditworthiness. As recommended earlier, myFico.com is your best option. This is the only site I am aware of that is authorized to provide you with your true FICO score as creditors see it - it is run, AFAIK, by FairIsaac in conjunction with Equifax, I believe. I got wildly differing results - over 100 points difference... between these 'free' services and my real FICO score. Yes, you will have to pay for myFico... but it's not outrageous, and it's the only way to be sure.

Having said that: Most times, approval or denial is based on your score, potentially with other personal factors (income, etc.) figured in. When a creditor pulls your score, in my experience the score comes back with up to three reason codes which generally give an indication of what factors are hurting your score most. The reason of "too many applications" could mean two things:

First, it was simply the first reason that appeared in that 'list'. One application since September, however, shouldn't be a big red flag; it may be that your score is simply too low for a variety of reasons (which in your case would likely be be limited credit history and/or diversity) and it just picked that one reason to show you.

The second possibility, however unlikely, is identity theft. When subscribing to these services, did you look at your actual credit report itself, or just your score? If the latter, the first thing I would do is get a copy of my actual report and ensure that everything you see in the "recent inquiries" section is something you remember doing, applying for, etc. just to be sure someone out there isn't feverishly trying to apply for credit under your name.

burnmp3s has good info on the soft/vs hard inquiries. Pulling your own score or report does NOT count against you. The only things that count against you are those inquiries where you specifically are initiating a request for credit. Too many of them will have a negative effect - I've heard limiting yourself to no more than 1 every 12 months is your best bet if you can, though apparently there is logic to account / allow for loan shopping on mortgages / auto loans so having 4 mortgage inquiries within a week doesn't hurt you like it would if they were all credit cards. Inquiries have an impact on your score for 2 years, although it is true that after 6-12 months their effect diminishes quite a bit.

Make sure you understand how credit reporting works. You can pay off your entire balance every month and still have it negatively affect your score... it all depends on the timing of when they report and when your payment is applied. Example:

If your limit is $1000 (combined across all cards you have), any balance over about $300 (again, combined) being reported is going to start having a negative impact because of the utilization of available credit. Go above about 50%, it gets worse, and keep a balance of 80% or more and your score will get hit hard. The key here is what's reported. Even if you charge $900 of your $1000 limit and pay the whole thing off every month, if they report to the bureau when your balance is $900, your score will suffer. This is another reason to look at your actual report: see what date they tend to report, and make an effort to pay most of your balance off before that date to ensure your balance is close to 0, but not 0... read on.

There has been much debate over the merits of keeping a small balance all the time. The prevailing argument seems to be if you always report a $0 balance, eventually the scoring algorithm will see the card as inactive, and give it an inactive status, which may cause you to lose anything about that card that is helping your score, such as a good payment history. Any small balance will cause the card to remain current and active and therefore continue to benefit your score as time goes on.

Note this is just a theory; the actual answer is a closely guarded FICO secret and the public will probably debate this forever. But it's the most popular theory - logic says you demonstrate more responsibility by utilizing it, regularly but lightly, and paying your balance every time, than to have an idle card collecting dust in your wallet. These two scenarios may be vastly different than what is actually happening with your card, but remember, all that matters is that moment when the creditor reports your card. What's your current balance, your current limit, and did you make your last payment on time. There's no overall usage history whatsoever in a credit report. Right or wrong that's the way it is, understanding that will help you in the future.

Lastly... use credit wisely. DO try to get some credit history, but do it over several years, not all at once. You'll find it difficult to get a mortgage for your first home if all you have is one credit card on your report, but you may also have trouble if you have 15 of them. Set a goal to have 2-3 cards in about 5 years, but DON'T overuse them, overextend yourself, or charge more than you could afford to pay off every month. Once you've established yourself at that point, consider an auto loan if appropriate. This will help your credit diversity, making a future mortgage that much earlier.
posted by SquidLips at 10:37 PM on May 31, 2009 [1 favorite]


Sorry, ignore what I said. I seem to be handing out a lot of incoherent advice lately.
posted by dhartung at 11:44 AM on June 1, 2009


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