Applying for too many credit cards could risk your credit rating

It doesn’t need a degree in mathematics. There are over 70 million credit cards in circulation in the UK with less than 35 million adults qualified to have a UK credit card. So, as an average, we each have over 2 credit cards in our wallet or purse. So long as you can repay your credit card debt, you may well be thinking that there’s no danger. But the truth is slightly more alarming: over 2 million Britons risk damaging their credit rating be repeating applying for credit cards.

Despite the fact that, as an average, we each have over 2 credit cards, a report recently published by moneysupermarket found that 10 million credit card application have actually been refused by UK credit card issuers. While there many be any number of reasons why the UK credit card issuers declines to issue you with a credit card, three out of every four of us who have had a credit application declined will immediately apply for another credit card. Of these, 27% of all applications will be refused the second time.

While you may take some comfort from the fact that quite a large majority of us who have had a credit card application declined will be successful with our second application, the fact remains that each time we make a credit card application in the UK a record of that application is kept by UK credit rating agencies and these continued attempts to apply for a credit card are recorded as part of our credit rating. As a result, if we then want to apply for a loan or home mortgage, we may well find that our loan application or home mortgage application is refused because we have a bad credit rating.

And the reason why we have a bad credit rating has nothing to do with our ability to repay our loans and debts, but has everything to do with the fact that we keep applying for credit cards that are then turned down by the UK credit card issuer.

So, if your credit rating is a concern to you, and it should be, you should make sure that you do not keep making repeated applications for UK credit cards. Indeed, another double-whammy found in the moneysupermarket.com report was that only 17% of all credit applications approved on a second or third application had the same APR as the initial credit card application.

So, not only are you running the risk of damaging your chances of obtaining cheap loans and home mortgages in the future, but your immediate prospects of obtaining a credit card with the same APR as you had originally hoped to get are very likely going to be hurt if you continue to make repeat UK credit card applications.

Richard Smith
26th October 2006

More Information:

• Do You Need To Have More Than One Credit Card?
  Deciding whether or not to have more than 1 UK credit card can be a difficult decision to make. On the one hand, you want to keep a careful control on your personal finances and having numerous creditors makes this difficult. On the other hand, it can be convenient to have more than one credit card, for example in an emergency. So, should you have more than 1 credit card?
• Credit Building Tactics
  Much is written about credit ratings, the score against an individual’s name, that rates their eligibility for credit. This article discusses different methods that you can use to try and build a new, better credit rating.
• Applying For Credit Cards When You Have Bad Credit
  For those with a poor credit score, getting a credit card is harder. However, there are solutions and we will discuss and offer these in the article.
• Using Your Credit Card To Build Credit History
  Let’s say you want to buy a house, but you need to get a mortgage to help pay for the house. However, you have no credit history to speak of, so how can you apply for the mortgage to get your dream home?
  

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