Editorial Note: gendergeek.org Advisor might earn a the supervisory board on sales do from partner links on this page, yet that doesn"t impact our editors" opinions or evaluations.

You are watching: Does applying for a credit card hurt


When you’re in search of the perfect new credit card, many factors may influence your decision. Execute you have a great credit score that might help you qualify because that the ideal credit cards? room you willing to salary an annual fee for much better benefits and also rewards? most of all, you may wonder exactly how a new credit map account will affect your credit score.

If you automatically assume that a brand-new credit card will certainly hurt your credit transaction score, you may be in for a satisfied surprise. While it is feasible for a brand-new account to damage your credit, in many situations opening a new credit card might have the contrary effect.

How a new Credit map Might aid Your credit Score

When you’re trying to build or rebuild her credit, a brand-new credit map can often be one asset. Don’t count on a guaranteed credit score boost (credit scoring is more complex than that), yet there space legitimate occasions whereby a brand-new card might give her score a boost.

1. Your credit transaction Utilization might Decrease

Perhaps the biggest potential benefit to opened a new credit card, at least from a credit scoring perspective, is the truth that the brand-new account can lower your as whole credit use rate. Lower credit utilization deserve to be an excellent for your credit transaction score.

Credit utilization, the relationship in between your credit card balances and also limits, is the second most crucial factor considered in your credit scores. The just credit scoring factor that matters much more is payment history.

Rod Griffin, manager of customer Education and Advocacy through Experian, explains that “the additional easily accessible credit border have the right to reduce your in its entirety utilization rate, or balance-to-limit ratio.” Here’s an example of how that works.

Imagine you have actually the adhering to two credit cards.

Name the CardBalanceCredit Limit

Credit card #1

Credit card #2$500$1,000

Your in its entirety utilization rate in the example over is 50%. Due to the fact that you have $2,000 in accessible credit and your balances complete $1,000, you’re using (or utilizing) 50% that your available credit limits. (Tip: You have the right to calculate use by separating your complete credit card debt through your full credit card limits and also converting that number to a percentage.)

Now, imagine you open a third credit card account.

Name the CardBalanceCredit Limit

Credit map #1

Credit card #2$500$1,000
Credit card #3$0$2,000

Although you owe the exact same $1,000 in credit card debt, your obtainable credit has jumped indigenous $2,000 come $4,000. The greater combined credit transaction limit lowers her utilization price from 50% come 25%. Due to the fact that you cut your credit utilization in half, yes sir a an excellent chance your credit transaction score would improve.

Of course, a new credit card isn’t a long-term solution for credit card debt. You need to aim come pay turn off your full credit map balance each month, nevertheless of your available credit limits.

Griffin says, “If your utilization rate is a problem, you space much much better off paying down your existing debts 보다 opening a new account that can lead come even an ext debt.”

2. Extr On-Time Payment History

Payment background influences your credit transaction score an ext than anything else. It’s precious 35% of your FICO Score and 40% of her VantageScore. So, once you manage a brand-new credit map well, the new positive payment history may be a an excellent way to enhance your score end time.

If the brand-new credit map is your very first account, however, it may take some time before it counts in your credit transaction score. FICO, because that example, calls for you to

Own at the very least one account it is been open up for six months and;Own one account that’s been updated in the last 6 months to qualify for a credit transaction score

3. Your credit Mix might Improve

Credit scoring models, like FICO and also VantageScore, evaluate the types of accounts that appear on your credit transaction report. As soon as your reports show diversity, it have the right to be an excellent for your credit scores.

For example, if you only have installment loans, including a credit transaction card can boost your scores by adding a revolving account.

However, if you currently have other credit card accounts open, including another one to her report won’t improve your credit mix. A brand-new credit map won’t hurt her account diversity in this scenario, but you shouldn’t expect it to assist your credit score in this category either.

How a new Credit Card might Damage Your credit transaction Score

There are a couple of scenarios where a new credit map might an outcome in credit transaction score damage. It’s wise to know these potential credit setbacks before you use for a new account.

1. Her “Length of credit History” can Be Hurt

In addition to her payment background and credit utilization, credit transaction scores additionally pay attention to your length of credit transaction history. This category is worth 15% of her FICO Score and, alongside your varieties of credit transaction accounts, 21% of her VantageScore credit score.

When a scoring design evaluates your size of credit transaction history, that may take into consideration factors such as:

How lengthy the account on your credit report have been openThe average period of accounts on your credit transaction reportAges that the oldest and newest accounts on your credit report

In every one of these cases, larger accounts could give friend an leaf in the credit score department.

Your size of credit history isn’t as crucial as various other credit score factors, but it does have actually some influence. As soon as you open up a new credit card, the average period of account on your credit reports may decline. Her score might go under a little as a result.

Average age of account is a element in credit scores that can only be boosted with time.

2. A brand-new Hard inquiry Will appear on Your credit transaction Report

When you apply for a new account, you provide a lender permission to access your credit transaction report. This type of credit accessibility is recognized as a hard inquiry.

Hard inquiries can damages your credit score, but the affect is generally tiny and no last for long. In part cases, a new hard inspection won’t affect your credit transaction score in ~ all.

But if you taking treatment of the rest of your credit health, you shouldn’t issue too much about credit inquiries. They have a minor impact that’s short-lived.

Before You use for a new Credit Card

Although it can be tempting to run on an attractive credit card offer, you should take a minute to think about a few factors before you fill the end the application. Think about what you want to do with your credit transaction over the following three to 6 months. If you have any significant purchases planned, it’s smart to placed unnecessary credit applications on hold.

Do you have actually plans to use for a new mortgage? room you going come finance a new vehicle? In either case, it’s finest to store your credit background as steady as possible until the secrets are in your hand.

In addition to deciding if it’s the appropriate time to apply, you should also assess the current condition of your 3 credit reports and scores. Credit transaction card issuers will check your credit when you apply for a brand-new account. You desire to make certain your credit is in the best shape possible before friend fill out an application.

It’s additionally wise to examine your credit reports in development and make certain no uncomfortable surprises room waiting because that you. If you discover any kind of credit report errors or suspiciously information, you have the right to dispute those mistakes with the credit transaction bureaus.

Where to accessibility Your complimentary Credit Reports

Thanks come the Fair credit Reporting Act, friend can access a cost-free credit report indigenous Experian, TransUnion and also Equifax once every 12 months (free every week with April 2022). Your complimentary reports are obtainable at AnnualCreditReport.com.

You might be licensed has been granted to additional free reports under any of the adhering to circumstances as well.

You’re unemployed and also plan to apply for a task within 60 daysA company denies your application or uses you worse terms based upon your credit once you apply for credit, insurance or employment. (You will obtain an adverse activity letter in the mail, and also you have 60 days to claim your report)You receive public help incomeYou’re a victim of identity theft or fraud

Is a new Credit Card appropriate for You?

There’s no denying the benefits of credit transaction cards. When you use a credit transaction card responsibly, the can assist you build credit and also earn beneficial rewards in the process. A credit transaction card is likewise one the the safest means to pay for transactions many thanks to the robust fraud protections available through the Fair credit transaction Billing Act.

But there are some instances where a brand-new credit card might not it is in a good fit because that you—at the very least not for now. Together mentioned, if you setup to use for major financing in the following three to six months, you might want to put off every non-essential credit applications in the interim.

A new credit map might likewise be a negative idea if you don’t trust yourself to prevent racking up added debt. As soon as you swing a balance indigenous month to month top top your credit cards, it’s expensive. This negative financial habit could additionally trigger rise in your credit transaction utilization rate. Higher credit utilization could lower your credit transaction score also if you save your monthly payment on time.

See more: Does Salt Kill Fleas On Dogs Instantly? 4 Natural & Otc Remedies

Are you worried the added credit limit of a brand-new credit card will certainly be as well tempting? If so, it’s far better to focus on budgeting and also paying off blame first, prior to opening a new account.