If you’ve read any advice about churning credit cards, you’ve probably tripped across someone telling you that you should not churn cards for the year or two before you plan on buying a house. It’s sound advice, though I know lots of people don’t bother following it, especially when there’s hysteria around an extra 10,000 points for a sign up.
Here’s a real-world example of why this is great advice:
I’m on the board of my co-op building, and at last night’s board meeting we were reviewing the finances of someone who was refinancing in our building. When going through the person’s application we were looking at their credit report, and on the report it says, “the number of inquiries on the consumer’s credit file has adversely affected the credit score.”
I know that my own credit report contains that language (probably because of the dozen-plus cards I’ve applied for over the past year), and that it’s simply stating that I’ve been dinged some points because of the number of inquiries (it doesn’t mention the increase in score from having open, unused credit).
A couple of board members brought this up as a concern, questioning why so many cards have been opened, and why the credit bureau called it out.
If you’re a churner, you have an easy-enough explanation for that, but if you have a board that’s quick to make a decision, you may not even get a chance to explain yourself. Hence – if you’re going to buy a house within the next 2 years, please do not churn cards.
(Or to paraphrase Arrested Development: And that is why you never churn credit cards when you’re going to buy a house).