Understanding Credit Scores and the Effect that Credit Card Applications Have on One’s Credit Score

How to Travel for Free: Part 3 of 7

In my previous post I discussed how you can earn a lot of free travel quickly by signing up for a credit card with a big sign-up bonus. A question that arises for many people is: what effect does signing up for credit cards have on one’s credit score?

It is an important question. A good credit score is key to getting loans, such as for a home mortgage, at the lowest rate possible. A quarter point swing in the interest rate on a 30-year home loan can easily be the difference in $10,000, $20,000, or even more over the life of the loan.

In most cases it would be foolish to earn credit card bonuses if doing so meant you would miss the lowest rate on a home loan. But does it?