A Penny Saved

Many folks have jumped on the bandwagon of applying for credit cards to receive the bonuses. The big ones lately have all been business credit cards, which anyone can apply for ( as a sole proprietor ). Some of the bonuses run in the hundreds of dollars, and it can be very tempting to hop on board to claim you prize. In fact, 5 Cent Nickel wrote a great post recently showing off the best bonuses - for a total of $700. Yowza.

It’s hard to say no to $700, especially if you have great credit and know you’ll get approvals across the board. What’s the concern then? Your credit score, of course. Every time you apply for credit, your score gets dinged a few points - the higher the score, the harder the ding. In addition to that, a large portion of your score is determined by the average age of your accounts. Say you have 5 credit lines your report now, with an average age of 10 years. Then you apply for all 5 cards that Nickel listed to get the $700 in bonus money. Now your average account age is just 5 years - it dropped in half. You can be sure your score will take a hit.

Granted, your score will recover as the accounts age, and as the inquiries fade into the background. It’s certainly not a death sentence in any way. But be warned - don’t go for the bonuses if you’re planning on buying a house soon, or of you’re applying for a personal loan of any kind. You also might want to steer clear if your credit is shaky - the last thing you’ll need is a tanked score.