If you’ve been following along with my #CobaltTravels posts (making that a thing now, check out the hashtag on Instagram!), then you know that the way Michael and I are able to travel like we do is all because of points and miles. And how we accumulate those points and miles is through credit card sign up bonuses and spend. If you missed last week’s #CobaltTravels post, I talked about one of my favorite travel credit cards. Long story short, the fastest and easiest way to accumulate a lot of points and miles for travel is to strategically open credit cards, meet the minimum spend requirements, and collect the sign up bonus (which is almost always in the form of points or miles). There are other perks that can be exploited such as cashback. Visiting https://ringgitohringgit.com/cashback-credit-cards-malaysia/ will explain this hack to you in further detail.
For anyone that’s new to the points and miles game, the first question that always pops up when I say that the key is to sign up for credit cards is: “Will opening credit cards hurt my credit score?”
Will Opening Credit Cards Hurt My Credit Score?
Today’s post is all about dispelling the number one myth about opening credit cards for the purpose of accumulating points and miles for travel. Spoiler alert – No, opening credit cards will not hurt your credit score. As long as you’re responsible and on top of your finances. First, I feel like this goes without saying, but I’m going to say it anyway, DO NOT open a credit card if you cannot pay off the full balance at the end of each statement period. DO. NOT. That would defeat the whole purpose of collecting points to travel for free. You’d end up paying more in interest on the amount you owe than you would on that flight to California! It may be worth discussing with your local bank to ensure you are making the right decision. Federal Credit Union Houston may be able to help you further.
In full transparency, I currently have six open credit cards in my wallet that I opened strategically to get the sign up bonus and utilize for maximum bonus earning opportunities on my everyday spend. My credit score is “excellent” and above 750.
When you first apply for a new credit card, your credit score may take a small hit simply as a result of applying for the card. When you apply, the credit card company will make a “hard inquiry” into your credit history (it’s taking a look at your credit history to see if it should offer you a line of credit). Any hard inquiry might cause your score to dip a bit temporarily, but don’t worry, it will bounce back. Another factor to keep in mind that may cause your score to temporarily dip is that opening a new card will decrease the average length of your accounts (the time that you’ve had credit accounts open). Creditors prefer that you have a longer history of responsibly handling lines of credit.
One factor that helps balance out this negative ping is that opening a new credit card adds to your total credit history. Your total credit history is essentially a plot map that creditors use to evaluate your credit-worthiness. You’ll notice that if you try to avoid using credit cards and solely stick to debit cards, for example, even though you might not have any debt, your credit score won’t be as high as you’d like it to be simply because creditors have nothing to gauge your credit history off of since you don’t have any data points to reference.
Overall, it really all balances out. The only caveat I would give you is that if you’re in a position where you believe you’ll be making a large purchase such as a car or a house in the very near future, you may want to hold off on opening too many new cards since those types of purchases lend themselves to deeper dives by creditors and banks into your credit history. You don’t want it to look like you’re continuously opening up new lines of credit.
Bottom line, so long as you’re financially responsible, always pay your bills on time, and carry very little debt, opening new credit cards will not hurt your credit score.
Interested in checking out the current sign up bonus for one of my favorite cards (the Chase Sapphire Preferred) and comparing it with other travel credit cards?! Check out this super helpful comparison list! If you have any questions about the card or other travel credit cards, feel free to shoot me an email at firstname.lastname@example.org and I can walk you through any questions you might have!
*I am not a financial planner or advisor or anything of the like. I’m simply sharing my experience.
Disclaimer: If you click and/or sign up for a credit card through certain links on this site or any of my related social media platforms, I may make a commission from that click and/or purchase. As always, all opinions are my own.