Hi everyone.
I've been spending alot of time contemplating credit score issues and I am now considering applying for 4 new credit cards at once. However, I plan on never activating the cards for use or charging anything to the accounts.
I know my score will take a big hit for this one day of hard inquiries, but I think that in the long run it will greatly benefit my score because of the large increase in available credit with no increase in used credit.
But at the same time i've heard that when I go to apply for a mortgage, the banker will probably notice my available credit and use that against me.
My question is – what are all of the possible downsides of having many credit cards besides the obvious temptation of spending money you don't really have?
Thanks so much for your help and I'm looking forward to your advice.
Thanks for the great responses – my score averaged from the three bureaus is 736 and all the offers were approved. In all honesty, my company's stock just hit a 3 year low, so I am going to 0% cash advance the credit into my corporate discount ESPP program and flip the shares. I know this is not encouraged by most corporations – but hey the free money is hard to pass up.
Then I will reimburse the cards and let them sit until I see another opportunity of this sort. Thanks again!
Before you apply for 4 cards, do you know if your credit score is high enough that you know you'll be approved? Are you applying at banks that will approve you? (In other words, have you done your homework first?)
But assuming you know your score is good and you are applying at banks that will likely approve you, I see no problem with your plan. Your score will dip for about 6 months, and as long as you don't need credit within that time, it won't even matter.
The concept of "they will count my available credit against me" is a myth. What matters is how you manage your credit. You already know that from your research into credit scores. And if for some odd reason you apply for a mortgage some day at a place that says they can't approve you with that much available credit, you can simply close the accounts at that time. That would solve any problem, but that's not going to happen. I got approved for a mortgage with 14 open credit cards. 13 had zero balances, and all they cared about is how much I owed in total.
Keep in mind if you never activate the cards or use them, you risk having the accounts closed without your consent. You should activate the cards and use each one at least once every six months so they stay open.
But if you are not absolutely sure you can handle the increase in available credit… if you think you might go out and run up the balances on the new cards… then please do yourself a favor and do not apply. It's not worth the risk.