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Do Airline or Hotel Cards Impact Your Credit?

Do Airline or Hotel Cards Impact Your Credit?

Do Airline or Hotel Cards Impact Your Credit?
Do Airline or Hotel Cards Impact Your Credit?

Do Airline or Hotel Cards Impact Your Credit?

Co-branded airline and hotel credit cards can help you earn rewards through loyal brand spending. However, opening these cards impacts your credit just like other accounts. Managing utilization and score factors responsibly allows limiting risks when getting cards for your favorite travel brands.

How Airline and Hotel Co-Branded Cards Work

Airline and hotel co-branded cards are credit cards associated with specific travel brands that offer:

  • The ability to earn airline miles or hotel points through spending
  • Elite status perks like priority boarding or late checkout
  • Annual companion tickets or free hotel night rewards
  • Brand-specific bonuses and discounts

These cards incentivize loyal brand spending.

Potential Credit Impacts of Co-Branded Cards

Like any credit card, opening an airline or hotel co-branded account can influence your credit profile and scores in these ways:

  • Credit inquiries – Issuer will perform hard inquiry when applying, causing temporary score drop
  • Credit history – Adds to total number of open accounts and mix of credit types
  • Utilization – Impacts overall and per-card credit usage ratios
  • Payment activity – Requires responsibly managing another line of credit
  • Account longevity – Length of this new credit history builds over time

Strategies to Minimize Credit Impacts

Follow these tips to avoid negative credit impacts when getting new co-branded cards:

  • Space out applications to minimize hard inquiries
  • Keep utilization low on all cards to absorb new limits
  • Make on-time payments to build positive history
  • Use for budgeted purchases only you can repay quickly
  • Set payment alerts to avoid ever missing due dates
  • Monitor your credit reports and scores regularly
See also  Using Points & Miles to Book Award Travel

Evaluating Your Credit Before Applying

Before applying for new airline and hotel cards, examine:

  • Your credit score – At least 670+ recommended for approval
  • Total open accounts – 10 or more risks denial
  • Current card balances – High utilization may disqualify
  • Recent new accounts – Too many new cards red flag
  • Pre-approval eligibility – Better chance when pre-qualified

This helps avoid unnecessary score damage from denied applications. Check for pre-qualified offers before formally applying.

Maintaining Good Credit Habits

Once approved, implement responsible habits like:

  • Never missing payments to avoid derogatory marks
  • Paying down balances promptly to control utilization
  • Avoiding maxing out limits which hurts scores
  • Not applying for more new credit right away
  • Setting up autopay to guarantee on-time payments
  • Monitoring credit reports for errors or fraudulent accounts

Proper usage prevents these new cards from harming your scores.

Closing Old Accounts to Offset New Ones

When opening airline and hotel cards, you may choose to close old unused cards in your wallet. This can help:

  • Keep overall number of open accounts reasonable
  • Offset the age of new accounts on your history
  • Maintain similar utilization by shifting credit limits

Just be sure to avoid closing your oldest accounts as that hurts credit history length. Leave old accounts open if they have no annual fee.

Paying Annual Fees to Keep Accounts Open

For airline and hotel cards with annual fees:

  • Weigh the rewards value against the annual fee cost
  • Consider product changing to a no annual fee version if offered
  • Call issuer to request fee waivers or retention bonuses
  • Keep account open if possible to preserve credit history
See also  Using Credit Card Travel Credits Efficiently

Sometimes paying annual airline and hotel fees makes sense to keep your accounts open and continue building history.

Impacts If an Account Gets Closed

When airline and hotel credit cards get closed, credit effects may include:

  • Credit history length shortens if older account closed
  • Credit mix reduces with fewer open revolving accounts
  • Total available credit decreases lowering overall limits
  • Closed accounts fall off reports after 10 years
  • Utilization ratio may increase without limits from closed cards

Carefully assess when to close accounts not providing enough value. Keeping cards long-term diversifies credit portfolio history.

Key Factors to Avoid Score Drops

To prevent score declines after opening airline and hotel cards:

  • Leave old accounts open unless paying fees no longer worthwhile
  • Apply for pre-approved offers only to avoid denial inquiries
  • Don’t carry balances and pay in full to control utilization
  • Maintain on-time payments and keep utilization below 30%
  • Limit card applications to 1-2 total new accounts annually at most

With prudent management, new co-branded cards provide rewards value without credit score damage.

Key Takeaways on Managing Brand Card Impacts

  • Hard inquiries and new accounts may cause temporary score dips
  • Closely monitor utilization and payment activity on all cards
  • Avoid closing old accounts unnecessarily
  • Check credit reports regularly for errors or fraudulent accounts
  • Keep practicing responsible habits over the long term

The short-term credit impacts from opening new airline and hotel cards for rewards purposes can be minimized through diligent monitoring and optimal account management strategies.

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