I read somewhere about 2/3/4 credit card rule. And was curious to know more about it, can someone explain me in simple language?
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The 2/3/4 Rule is an unofficial but widely followed guideline (mostly based on credit card issuer behavior) and especially useful if you’re planning to apply for multiple credit cards in a short period.
Here’s what it means as per my knowledge and it can be different as this is not official, it’s just a theory:
- 2 cards in 30 days - Don’t apply for more than 2 credit cards in a single month.
- 3 cards in 90 days - Keep it to no more than 3 cards in 3 months.
- 4 cards in 12 months - Ideally, apply for no more than 4 credit cards in a year.
It is just a concept or theory followed by people to maintain their credit score/history better.
These can be some of the benefits if you follow this 2/3/4 credit card rule :
- Every time you apply for a credit card, a hard inquiry is made on your credit report. So, too many inquiries in a short time can lower your credit score.
- If you will apply for multiple cards in a short span of time, then there are high chances of getting rejected and it will actually lower your credit score.
- Applying slowly will help you build a better credit history and stay in control of expenses, and unlock better credit limits in the future.
If you’re applying for your first or second card, you don’t need to worry too much about this rule.
But if you’re already holding 2-3 cards and planning more, following the 2/3/4 rule is a smart way to avoid rejections and credit score dips.