Expert Q&A

Want a new card? Focus on the 3 keys to building good credit


A reader wants to improve his chances of getting approved for a new credit card. But is closing older accounts and leaving balances unpaid the right approach?

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Question for the expert

Dear Credit Score Report,
I was considering applying for a credit card. I have about five credit card accounts open right now. I have no debt and own my house outright. I have a steady job and a credit score of about 780. My question is: When the credit card company reviews my credit to accept/decline me for their credit card, is it better for me to close some (or most) of my existing credit cards prior to applying? Also, I typically pay my balances off in full every month. Would it be better for me (in the eyes of the credit card companies) not to have my balances paid off? Would this increase my chances of getting accepted? Thank you. — Pete


Answer for the expert

Hey Pete,
From what you describe in your email, it sounds like you’re doing lots of things right — including keeping debt levels low — which has resulted in a solid credit score. Even if you don’t change anything you’re doing, you’re very likely to get approved for a new credit card. However, a few small tweaks to your current approach could send your score even higher.

You’re already on the right path. When I speak to credit scoring experts, they focus on three key approaches for borrowers looking to establish a strong credit history:

1. Paying bills on time.

2. Keeping debt levels low. 

3. Not opening or closing credit accounts unnecessarily.

You seem to be doing all three. Based on your credit score, I’d wager that you are responsible about making on-time payments to your lenders. Meanwhile, by paying off your monthly balances (something you certainly shouldn’t stop doing), you are keeping debt levels low. By thinking carefully before opening or closing any accounts, you’ll complete the trifecta of good borrowing. That combination will keep you looking good in the eyes of lenders.

But you don’t have to take my word for it. I asked Chase, the top U.S. credit card issuer, about your situation. The bank acknowledged that it’s tough to provide a definite answer to whether or not you’ll be approved for a new credit card. However, Chase says that typically someone with your credit score, credit history and low debt levels “would be viewed very positively,” according to spokesman Paul Hartwick.

So what about other banks? Although different card issuers have their own methods of deciding who to lend money to, banks view borrowers who have high credit scores as being less risky. Your good credit score doesn’t guarantee an approval, of course:  Whether you get approved depends on the bank and the specific card you apply for. To generate a list of cards you are more likely to qualify for, you can try CreditCards’com’s Cardmatch tool (end shameless plug).

At the same time, when it comes to your borrowing habits, you can do even better. I’d recommend changing your payment pattern from “typically” paying your card accounts in full to “always” doing so. (After all, even though you mention being debt-free, credit card balances are still debt.) That’s because your utilization ratio — which compares your card balances to the credit limits on those cards — is an important component in determining your credit score.

Additionally, continue to think carefully before adding or removing any card accounts. Ask yourself exactly why you’re considering opening or closing a specific card. For example, you may want to close a card because of the temptation to spend — or the fear of identity theft. Canceling your credit cards may have the unintended consequence of lowering your credit score, so be cautious. (The reason? Closing cards can eliminate the lines of credit associated with those accounts, thereby increasing your utilization ratio.) On the flip side, opening cards can also potentially ding your credit score since credit applications appear as hard inquiries on your credit report, signaling that you’re getting ready to take on more debt. So you’ll want to be careful about that, too.

Since you’re asking these questions, however, it shows you have a thoughtful approach to borrowing — one that lenders should also recognize.

Good luck!


See related:Will canceling your credit card hurt your credit score?, ‘Hard’ inquiries have limited credit score impact, How to cancel a credit card, Pay off your balance each month? Your credit report may not show it

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