Debunking the Myth: Credit Card Points will Ruin Your Credit?

Miles & Points Strategy—strategically using credit card rewards to fund travel—has gained popularity among savvy travelers. However, a common concern persists: Does opening multiple credit cards for rewards harm your credit score? Let’s explore this topic and separate fact from fiction.

Understanding Credit Score Factors

Your credit score is influenced by several components:

1. Payment History (35%): Timely payments are crucial. Consistently paying your bills on time positively impacts your score.
2. Credit Utilization (30%): This refers to the percentage of your available credit you’re using. Lower utilization rates are better.
3. Length of Credit History (15%): The average age of your credit accounts matters. Opening new accounts can slightly reduce this average. <— TIP: NEVER close the oldest credit card in your wallet, this card is helping build your credit history.
4. Credit Mix (10%): Having a variety of credit types (e.g., credit cards, loans) can be beneficial.
5. New Credit Inquiries (10%): Each time you apply for credit, a hard inquiry is made, which can temporarily lower your score.

The Impact of Miles & Points Strategy on Credit

Engaging in Miles & Points Strategies involves opening new credit cards to earn rewards. Here’s how it can affect your credit:

• Hard Inquiries: Each new credit card application results in a hard inquiry, potentially causing a slight, temporary dip in your score.
• Average Account Age: Opening new accounts can lower the average age of your credit history, which may slightly impact your score.
• Credit Utilization: New credit cards increase your total available credit. If you maintain low balances, this can improve your utilization ratio and positively affect your score.
• Payment History: Managing multiple cards responsibly by paying on time can enhance your payment history, boosting your score.

Real-World Experiences

Many individuals have successfully engaged in travel hacking without damaging their credit.​

When I was in college, I made poor financial decisions that lowered my credit score into the 600s. Now, 20 years later, after years of diligent effort to improve it, I'm proud to say that my score remains above 800—even while opening 10–20 credit cards annually.​

This journey demonstrates that with responsible management, travel hacking can coexist with excellent credit.​

— Ashley Malfitano, Founder of Miles Mindset

Best Practices for Responsible Credit Card Usage

To ensure travel hacking benefits your credit:

• Pay on Time: Always pay your credit card bills promptly to maintain a positive payment history.
• Monitor Utilization: Keep your credit utilization low by not maxing out your cards.
• Space Out Applications: Avoid applying for multiple credit cards simultaneously to minimize hard inquiries.  We suggest waiting 90 days between applications.
• Maintain Older Accounts: Keep your oldest credit accounts open to preserve the length of your credit history.
• Track Your Accounts: Use tools like spreadsheets or budgeting apps to manage multiple credit cards effectively.

Opening multiple credit cards doesn’t inherently ruin your credit. With disciplined financial habits—timely payments, low utilization, and careful account management—you can enjoy the perks of travel rewards while maintaining or even improving your credit score.