Credit Score Basics Every Bonus Hunter Should Know

If you're earning bank and credit card bonuses regularly, understanding how these activities affect your credit score is essential. The good news: most bonus-related activities have minimal impact on your credit. But there are a few things to watch out for.

Credit Score vs. ChexSystems: Two Different Reports

Your credit score (from Equifax, Experian, and TransUnion) tracks your borrowing and repayment history. ChexSystems is a separate reporting agency that tracks your banking history — overdrafts, account closures, and fraud. Banks check ChexSystems when you open a checking or savings account, while credit card issuers check your credit score.

• •Opening a bank account — Typically triggers a ChexSystems check (not a credit inquiry). No impact on your credit score in most cases.
• •Opening a credit card — Always triggers a hard credit inquiry, temporarily lowering your score by 5-10 points.
• •Closing a bank account — No impact on your credit score (bank accounts aren't reported to credit bureaus).
• •Closing a credit card — Can affect your credit utilization ratio and average account age. Keep older cards open when possible.

How Hard Inquiries Work

When you apply for a credit card, the issuer performs a hard inquiry on your credit report. Each inquiry lowers your score slightly (usually 5-10 points) and stays on your report for 2 years. However, the scoring impact diminishes quickly — most of the effect wears off within 3-6 months.

For bonus hunters applying for several credit cards per year, inquiries can add up. The key is spacing out applications and knowing each issuer's sensitivity to recent inquiries.

Credit Utilization: The Biggest Factor

Credit utilization — the percentage of your available credit that you're using — accounts for about 30% of your credit score. When you meet minimum spending requirements for credit card bonuses, your utilization temporarily spikes. A few ways to manage this:

• •Make multiple payments per month during the spending period to keep your reported balance low.
• •Spread spending across multiple cards rather than maxing out one card.
• •Pay the statement balance in full before the due date — carrying a balance for bonuses is never worth it.
• •Remember that utilization has no memory. Once you pay down the balance, your score recovers immediately.

The Benefits of Multiple Accounts

While opening new accounts temporarily dings your score, the long-term effect is usually positive. Each new credit card increases your total available credit, which lowers your overall utilization ratio. Over time, having multiple accounts in good standing also strengthens your credit mix and builds a longer credit history.

Protecting Your ChexSystems Report

Opening and closing many bank accounts can leave marks on your ChexSystems report. While this won't affect your credit score, some banks may decline your application if they see too many recent account openings. To manage this:

• •Don't close accounts immediately after receiving the bonus — wait until the minimum holding period passes.
• •Avoid applying for more than 3-4 new bank accounts in a 6-month period.
• •Check your ChexSystems report annually (it's free) to know what banks will see.
• •If denied for a bank account, try banks that don't use ChexSystems, such as many online-only banks.

Building Credit While Earning Bonuses

The most successful bonus hunters actually build excellent credit over time. By opening credit cards, using them responsibly, paying in full each month, and keeping old accounts open, they steadily increase their score. A higher credit score means better approval odds and access to premium cards with the largest bonuses.

Score Ranges and What They Mean for Applications

• •750+ (Excellent) — You'll be approved for virtually any credit card. Target premium cards with the highest bonuses.
• •700-749 (Good) — Approved for most cards. Some premium cards may require a higher score.
• •670-699 (Fair) — Stick to mid-tier cards. Avoid premium cards that are likely to deny you and add unnecessary inquiries.
• •Below 670 — Focus on building credit before pursuing credit card bonuses. Bank bonuses are still available since they rarely check your credit score.