What is credit card churning?

The Chase Sapphire Reserve 5/24 rule is not real, at least not right now, according to what a Chase representative said over the phone. The rule is a rumor, based on reality, that has circulated online and is talked about on many third-party sites. Supposedly, if you’ve opened 5 credit cards from any issuer in the past 24 months, you’ll automatically be denied for … read full answerany new Chase card you apply for. Language to that effect briefly appeared on Reserve’s application in 2016, but Chase removed it the same year.

Most evidence that this rule still exists comes from people’s anecdotes on forums. But if you ask Chase, they’ll tell you the 5/24 rule is not currently used. That’s not to say Chase doesn’t take the number of accounts you’ve opened recently into consideration. But you won’t be denied based on that alone.

Here’s what matters more than the Chase Sapphire Reserve 5/24 rule:

• Credit standing. Your credit report and credit score are very important for approval. You’ll need excellent credit for Sapphire Reserve, which means a score of 750+ is ideal. And you’ll want your credit report to be in top shape, showing on-time payments and low utilization.
• Income. You must be able to afford both the card’s $450 annual fee and your minimum monthly payments. Those payments could be pretty pricey, considering the lowest credit limit anyone will get is $10,000. So you’ll need some source of income, even if it’s not from a job. Assets also count.
• Debt. Issuers look at both your income and your debt to see how much you can afford to spend on new credit cards. Paying down debts gives you a better chance of approval.
• Your housing status. Chase considers whether you own or rent your home. Ownership shows more stability than renting.
• The number of cards you’ve opened. No, Chase won’t automatically deny your application just because you’ve opened 5 cards in the last 24 months. But opening cards that frequently will raise red flags and increase the odds of denial, especially if anything else on your application indicates you’re a risk. People often open a bunch of new credit card accounts when they’re having trouble making ends meet.

These certainly aren’t the only things Chase looks at when deciding whether or not to approve you for Sapphire Reserve, but they’re some of the most important. And while the 5/24 rule isn’t an official policy in terms of automatic denial, Chase does take a look at the number of cards you’ve opened recently.

1. What is a credit score?

Your credit score is a number that lenders and creditors use to quickly evaluate whether or not they should extend credit to you. It’s how you can get pre-approval letters for credit cards, car loans, student loans without ever filing out an application. Credit scores are creating using a mathematical formula, which assigns value to different things like timely payments, bills being sent to collections, or bankruptcies, etc.… read full answer

2. Your Credit Score Helps Determine Interest Rates

You probably don’t need to be told your credit score is important, but most consumers don’t realize just how much it can cost or save them. Your credit score is often the deciding factor in how much interest a lender will charge you, for instance a borrower with a score in the lowest range might have to pay 4% or more extra interest on a loan. If that was on a $200000, 30 year mortgage, the lower credit score borrower would have to pay back $175,462.90 extra in interest.

3. What is factored into a credit score?

There are many different credit scoring systems out there today: each of the three major credit reporting agencies has their own score, while a number of other small agencies operate independent systems. These smaller systems might specifically target how you have managed rental and lease payments, while others look at your telecommunications payment histories. The major agencies, however, agree on the basic components of your credit score, but they weight each one differently. The most common components are listed below in order of their importance:

A. Payment History – The most important piece of your credit score is how you’ve handled your bills in the past. Prompt, timely payments will raise your score significantly, while regularly missing payments or being late will cause it to fall. Having any of your account sent to collections or declaring bankruptcy can wreck your credit score for years. Your most recent information is given extra weight, while older accounts and payment histories are less important.

B. Total Debt and Available Credit – the next most important part of your credit score is how much total debt you have, compared to how much credit you have available. To keep their score high, a consumer needs to both keep open lines of credit, while not getting close to their maximum credit limit. The actual amount of debt you have is less important than how it compares to your income and your maximum available credit.

C. Length of Credit History – simply put, the longer your active accounts have been open, the more valuable they become. Creditors are evaluating how much money they could potentially make by lending to you, so having a long, stable history makes you more appealing to them.

D. Types of Credit – having a wide variety of different types of accounts will raise your credit score. For instance a consumer who has successfully managed a mortgage, a car loan, student loans and credit cards will appear more appealing than a consumer than only has used credit cards.

E. Credit Inquiries – A small component of your credit history, how many credit applications you’ve filled out recently will impact your credit score. This is especially important for a consumer that is already close to reaching their maximum credit limit. There is an exception for consumers who are obviously shopping rates for mortgage, car loans, etc.

The best unsecured credit card you can get with a score of 524, which is bad credit, is the Credit One Visa.
And even that isn't an appealing option when you look at the terms. First off, unsecured credit cards for bad credit are very expensive. Secondly, they afford you relatively little spending power, as a significant portion of your credit limit will be consumed by up-front fees.… read full answer
I'd just get a secured one, like Discover it Secured, which even offers rewards. Or, try Capital One Secured, which might only require a deposit as low as $49.