Although it’s great news that Chase increased its signup bonus for the Sapphire Preferred credit card yesterday, some people are understandably hesitant about applying if they’ve had recent activity on their credit report. It’s not uncommon for those who read this blog to apply for several cards at once and sometimes dozens in a given year. For example, Larry emailed me last night:
If I was rejected for the Sapphire Preferred only a couple of months ago because I “had too many credit cards,” (according to the re-consideration line), do you think it is worth applying again?
I told Larry that I recommend he wait if there weren’t any other recent changes in his credit history. Any hard inquiry typically lowers your score by 5-10 points for about 2-3 months, and it stays on your record for two years even after it no longer affects the score. For most people, a temporary decrease is negligible if you have a good score — 750 minus 10 is still a healthy 740 — and well worth getting the signup bonus. However, no one wants to apply and risk a hit if they think there’s a good chance of getting rejected.
Chase in particular has made it more difficult to get approved for some of their credit cards recently. Aggregate reports suggest that Chase is denying new applications from people who have already received five new cards in the last two years. Given the average person might apply for one new card in this time period, it’s not a lot to worry about. It is an issue for people who “churn” and trying to apply for many cards in one year.
There is not much you can do to avoid this problem because the past approvals are already on your credit history. However, the rule is not as hard and fast as you might think. You may still be able to make a successful application given the following considerations:
- If your applications in the past two years are distributed over several credit bureaus, it’s possible that any one report will not show more than five. See if you can determine this number for each bureau (TransUnion, Experian, and Equifax) and check out the Credit Pulls Database to see which report Chase pulls in your state.
- If you applied so recently that the new applications aren’t even on your credit report yet, then that could also work. In other words, a better interpretation of the rule may be “new applications between five days and two years ago.” Applications in the last week or more than two years probably won’t matter.
- The “five card” rule is not hard and fast. If you fall under the five card rule when you exclude business cards and those on which you’re only an authorized user (not the primary accountholder), then it’s possible there will be an exception.
One consolation: The strict rules on applying for new cards seem only to affect those that earn Ultimate Rewards points. If you’re applying for a new card that earns airline miles or hotel points with one of Chase’s partners, those opportunities appear to remain viable even with a recent history of new applications.
Assuming you are approved, what about the signup bonus? Again, for the average person there is nothing to worry about, but if you have had the Sapphire Preferred card before, then you must wait at least two years in order to get it a second time. This means two years since you received the last bonus, not since you applied for the card (there may have been a couple months’ delay). You also cannot be a current Sapphire Preferred cardholder, but you could be an authorized user on another person’s card.
