What do I do if I have a high number of recently opened accounts?
A high number of recently opened accounts can temporarily affect your credit score. This could be because there may have been hard enquiries done on your credit score. As a result, a high number of recently opened accounts could indicate financial strain.
Why were hard enquiries done?
Whenever you apply for a new line of credit, credit providers need to gather some information on your credit history to see whether you would be a safe bet to loan money to. They gather this information from your credit report and every time this is done, there is a hard enquiry. A hard enquiry can hurt your credit score a bit. If you have multiple new accounts, each one of these would have come with a hard enquiry, which will affect your score further. Fortunately, the negative effect of a hard enquiry does not last long and if you manage your new credit responsibly, your credit score will bounce back in no time.
How could new accounts indicate financial strain?
If you are applying for multiple credit accounts at a specific time, this could indicate that you are potentially taking on more credit than you can handle. This will generate the hard enquiries on your credit report. If you do have a high number of recently opened accounts, there are a few key things that you need to remember:
- Make sure that you pay all your bills on time and by the amount that was agreed upon with the credit provider. A good payment history is the most important factor when determining your credit score.
- Use less than 30% of your credit utilization ratio.
- You should only apply for more credit in the future if you can afford to do so.