Today I got an email from a reader that I wanted to share and answer here so that others can also see the response (and hopefully add to my answer!).

I am a diligent reader of your blog and I was wondering if you could help me out with my current situation.  I got into the miles and points game back in October of last year.  I had two longstanding cards before I was turned on to your blog (Chase Freedom and Amex Blue Cash).  From October 2011 to January 1st, I applied for a total of 7 credit cards and was approved for all of them.  2 Citi AA personal cards and Citi AA business, 1 US Airways Barclays card, 1 Chase Ink Bold, and 2 Chase Southwest cards.  Unfortunately, I did not apply for all of these on the same day (I didn’t even have a with the Citi business card).

Since then, I’ve read much about the importance of spreading out “churning dates,” preferably every 3-4 months, so that inquiries will systematically fall off your record. After processing a lot of tips and information, I set my next “churning date” for March 1st. I applied for the Chase Sapphire Preferred Card, the new Chase Ink Bold, the Citi Thank You Premier, and another US Airways Barclays card (read that it was churn-able). Unlike my previous experiences, I was not instantly approved for any of my applications. I called and found out I was denied 3 out of 4 times and all for the same reason, too many inquiries in the last couple months. I tried going to credit boards to see which credit bureau each bank pulled from but the information was either dated or it wasn’t there at all.

A couple reps told me that I had too many inquiries in the past 6 months and listed each one specifically! Did I not wait long enough?  How do other people churn 4x a year and apply for 6-7 cards each churn?  Now that I have 3 denials, what will happen to my credit score?  Will it just take a hit from the hard pulls or will it end up taking a bigger hit due to the fact that my apps were declined?  How long should I wait before I churn again?  And lastly, do you use any other method of credit card monitoring besides karma and sesame?  If so, does it show you which credit bureaus banks have pulled from?  Thank you for all of your help!

While this blog is not a blog about credit cards specifically, the use of rewards credit card is a big part of earning miles and points, so I know these are issues that many readers face.  I also want to point out that I am not a financial expert, credit expert, or anything of that nature.  That said, I do have some general tips and personal experiences that I feel may help in this case.

First, congrats on all the great cards you were able to get.  You picked up hundreds of thousands of miles and points in just a few months!  However, you seem to have now hit a wall.  Assuming that your credit is solid other than all the recent inquiries, your main problem sounds like it was too much, too quickly.  Your email mentioned that you read you should churn every 3-4 months, but it sound like you only waited from January 1st until March 1st to apply for additional cards after getting seven in the previous couple months.  That was likely not long enough, and your applications were being viewed as too recent.

Secondly, six to seven cards per churn is very aggressive.  Some people certainly do that many successfully, but many of those people have fairly lengthy and strong credit histories.  I don’t know the length of your credit history, but if it is a shorter credit history, then take that into account.  I personally am far more conservative and only do one or two every three to four months.  My advice would be to take a nice break from applying for cards.  Three to four months would be the minimum I would wait, but honestly I would wait even a bit longer (perhaps closer to six months) since you just received three denials.  The denials themselves will hurt your credit in the sense that they will show as inquiries, but you won’t have the benefits of the additional available credit and/or lower credit utilization score that would come if the application had been approved.  That many denials is a strong sign that it is time for a nice breather.

In addition to taking a break from applications, obviously make sure that you are paying all the bills on time and that you are keeping an eye on your overall credit utilization.  After you sit out of the application game for a minimum of several months, I would stick to a three to four month churn cycle and be a bit more conservative on the number of applications during each churn for a while.

I do monitor my credit with Citi IdentityMonitor ($4.95 a month) in addition to the free services you mentioned.  To get to the discounted $4.95 a month rate for Citi IdentityMonitor, paste this into your browser:  identitymonitor.citi.com/index.aspx?source=IMN00291  You can access your credit reports through that service, or you can get one from each bureau free annually from AnnualCreditReport.com.  The inquiries will display on the respective credit reports.  It will be helpful for you to monitor your credit score over the next few months and (hopefully) see it start to increase as the inquiries age.

Miles and points collecting is a life-long game, so be patient and strategic.  I know it isn’t very fun to sit and wait on the sidelines instead of applying for new great sign-up bonuses, but miles and points aren’t worth messing up your credit over.  More good deals will come along a few months down the road when you are in a better situation to take advantage of them.

Hopefully that helps some give you some direction on what to do next.  If other long-term credit card churners want to weigh in with tips and trips to help out this reader, please do!

 

Posted by mommypoints | 20 Comments

20 Responses to “Reader Question: Why am I Suddenly Getting Credit Card Denials?”

  1. Carste Varming says:

    With an increase from 2 to 9 cards in a few months you have definitely scared your creditors. I would give your credit report a rest and wait at least 6 months. I would also make sure that one of the cards you have is a long term thing. If you got the right US Airways card then it should pay for itself every year and thus this card could help you build long term credit. So slow down and be more strategic.

  2. Peter S says:

    If I am readinng this correctly. He only had two cards with lengthy history. When he start out with only two cards as a base, his seven new cards will definitely dilute the average age of credit quite a bit thus lowing his credit score. I would also recommend him to wait a longer period of time before applying for credit card. I would wait at least four months.

  3. aznprzn says:

    I was so ready to churn lately. I never did a single day app o rama I think my last app was in late dec early Jan. I was planning on going for it late March,but after this post I better hold til late April..Ugh Im 30 and I have the patience of a 10yr old..My last churn was Chase Saphire,Chase Ink, 2x Amex Spg and Biz, Citi TY Points, Chase Freedom,

  4. Fred says:

    Greedy, greedy, greedy…..
    Will make all of us look bad.

  5. Chris S. says:

    When you’re denied, the credit card companies are required to provide you a copy of the report they obtained if you request it. Request a copy of this report, and look for red flags.

  6. Jim says:

    Also, I would not do two Chase apps at the same time. Some have done it and it worked, but I only do about 3 Chase apps per year.I hate being denied!

  7. kitty B says:

    The chase apps always ask if you’ve been turned down for the last 6 months. That tells me this person might sit on the side lines and be patient for a good 6 months/ 180 days.

  8. Pamela T says:

    This is all well and good, but how does canceling all these great cards to avoid paying the annual fee affect one’s credit rating? This is what makes me nervous.

  9. gpapadop says:

    Pigs get fat and hogs get slaughtered!

  10. modernhaus says:

    I wouldn’t personally be so aggressive with credit card apps, but don’t fault the writer as “greedy” or a “hog”. Many miles bloggers are posting their churn schedules, which are every bit as aggressive. Writer is probably taking their cues from these “pros”.

  11. Robert Hanson says:

    About annual fees and cancelling cards: Call the bank just before the fee is due, and ask to cancel the card “because of the fee”. Often they will transfer you to a retention specialist whose job is to keep you on board. They may offer to drop the fee, or give you a statement credit equal to the fee. Even if they offer you nothing, they will certainly offer you the opportunity to “change your mind”, and keep the card.

    So before you call them, consider what you will do if they will not drop the fee. With some of the Hotel cards, {Marriott Priority and Hyatt}, you get a free night certificate when you pay the fee. If you travel at all, that free night will more than make up for the cost of the fee. The US Airways card gives you 10K bonus miles everytime you pay an annual fee. I’d happily buy 10K miles for $89, since the value of the miles for an upper class ticket to Europe is so great. So I’m going to pay the fee and keep the card.

    If they will not drop the fee, and the perks for keeping the card aren’t worth it to you, you may want to drop the card. Especially if it’s one that you may be able to get the bonus on again in the future.

    Unless: it’s the “oldest” card you have, which adds greatly to your credit rating if you keep it. A friend of mine is keeping his utterly useles Capital One card, and paying the fee, just because he has had it for many years longer than any of his other cards.

    On the other hand, you can get into dangerous territory if your credit limit is many times your income. So if you are sitting on $300K of credit, and your income is only $50K, you may be more likely to be approved for new “bonus” cards if you cancel some cards, and bring your available credit closer to what’s reasonable for your income. IMHO

  12. AlohaDaveKennedy says:

    Probably stumbled on a tripwire tied to the toe of a cardinal – average age of accounts or number of inquiries seem the most likely tripwires, but if you had spend requirements and ran up spend by advance purchasing (say loading up on gift cards) standing balances or percentage use of credit line may be a factor. The percentage usage of credit tripwire can happen especially if you have a small credit line on a card and max it out, even if you pay if off in full before due. That is why my card tracking spreadsheet show percentage credit line consumption by card and aggregate credit line consuption by institution to typically keep credit consumption at or below 30% per card and per institution.

    That said, you can always ask for a reconsideration.

  13. Rick i says:

    I want to know if the above commentor is the same Robert Hanson of Fatwallet fame? if yes I’d love to talk with you. Rick@frugaltravelguy.com

  14. Mommy Points says:

    @Carsten, sounds like good advice to me. Thanks!

    @Peter S, I agree. Thanks!

    @aznprzn, I highly recommend waiting a full three months, if not a bit longer between applications. I understand how hard it is to wait though!

    @Fred, it can be hard to strike a balance between getting lots of miles and points without taking it too far too soon.

    @Chris S, very true. If you are looking for a free way to get your credit report, that is a good way to do it if you are denied.

    @Jim, I agree unless it is one biz and one personal. You may also get away with two personals if you don’t have many Chase accounts, but I would not personally recommend two personals at once.

    @kitty B, I agree that six months is a good target to lay low. Though honestly, many of the Chase apps asked if you have ever been turned down by Chase.

    @Pamela T, Robert below has good advice. Some you don’t cancel because you want the card and/or they give you a good retention bonus or they come with an annual perk, some you downgrade to a fee-free version, and some you just cancel and take the small hit. The hit should be too bad if your credit utilization won’t be severely impacted.

    @gpapadop, being strategic is important.

    @modernhaus, I agree. It is easy to see how someone new to the miles and points arena could get into this situation. That is exactly the reason that I published the question and answer as a public post. Aggressive churns work for some, but that doesn’t mean they are right for everyone. I often get negative comments and/or emails for not being more aggressive on my churns. ;)

    @Robert, great advice. Thanks for sharing!

    @AlohaDaveKennedy, those darn tripwires. I agree that there may have been some of those factors at play that led to a perceived increase risk/decreased credit score.

    @Rick, hope you connect with the Robert Hanson you are looking for. ;)

  15. Robert Hanson says:

    @Rick Sorry, but no, I have no connection to Fatwallet “fame”. I am however, a legend in my own mind.:>)

  16. Vincent Fox says:

    I was recently denied on the Amtrak 32,000 points offer I had just received. So I called their reconsideration line. They just didn’t feel comfortable about the amount of new credit line in a short period, as I had just opened a Chase Sapphire 42 days earlier. So the real problem was the size of the added credit, because the default amount offered for the Amtrak would have pushed it over the threshold. After a bit of checking, the agent said he could offer it to me no problem, but the credit limit on the Amtrak card would have to be lower and that was that. They are sending me my card.

    I think there are guidelines not hard&fast rules like “6 months”, and you just have to call and “work the system” since it sometimes doesn’t work well for people who have more frequent applications than the norm.

  17. russell says:

    Something that can help:
    Typically if you have good credit the newly opened card will open with a fairly high credit line. Call and ask to have it lowered (potentially a lot) as this will automatically drop your credit utilization. If you get a detailed credit report you should be able to see that these voluntary credit reductions actually show up as a positive. (It also helps against credit card fraud, by lowering the max that can be stolen).

  18. Bitachu says:

    the op should look at their free credit report…but don’t get all three at the same time..spread them out over the year..also use quizzle to look at the experian report…for instance get your free TU report today…then in 1 month or so get your quizzle experian report free..then 2-3 months get your equifax…..then get another quizzle..then 3 months after that get your experian

  19. mommypoints says:

    @Russell that would lower your available credit, but would actually increase your credit utilization percentage. For example, using $2000 of a $10000 limit is 20%, but $2000 of a $5000 limit would be 40%. I’m not sure that I would recommend having your credit line decreased in most instances, but if you are to a level where banks are nervous about the total amount of available credit, then maybe it would be useful in some limited cases. Thanks for sharing!

  20. JOHN says:

    Thanks for the CitiMonitor link. It still works at $4.95/month and the information I gained is very useful to maximize my credit scores. Interesting point is that for charge cards like the Amex Platinum the high credit is used in place of a credit limit when establishing your usage ratio on your current balance.

    So for example if the largest amount charged ever was $7K and your statement balance of $3200 plus new charges of $600 get reported as $3800/$7K and your ratio is greater than 50% and I got nailed for about 5-10 points, which took me below an 800 score. Lesson learned, pay my charge card ASAP instead of on the due date.

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