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How Does Applying for a New Credit Card Affect Your Credit Score?

  • By Credit Diva of Dallas
  • 08 Apr, 2021

Your finances are much better off with a good credit score, so you want to make sure that you’re not doing too much damage by applying for new credit. When you put in an application for a card, the card issuer will look at your credit history in what is known as an inquiry. This is so they can find out how you handled credit cards and other credit in the past. In fact, the very act of applying for a new credit card can affect your credit score; but how? Keep reading for a little credit help.

Young redhead woman over grey grunge wall holding credit card pointing and showing with thumb up to the side with happy face smilingIt Depends

There are different kinds of credit inquiries. You’ve got soft inquiries, which are not considered when calculating your credit score. These include ones that you make and those made by loan and credit companies for promotional campaigns. Even your bank will want your credit information if you have a loan with them. Regular account audits are also likely to result in these kinds of inquiries, but all soft inquiries do not affect your credit score. 

Anytime you apply for credit, a job, even when you’re trying to rent an apartment, you‘re like to get hit with a hard inquiry. This can bring your credit score down by a bit, but if we’re talking multiple hard inquiries in a short space of time, then that deduction can last for years.  As long as you have a good gap between the hard inquiries, it shouldn’t be too much of an issue. One or two hard inquiries shouldn’t be too much trouble.

One unexpected bit of credit help? Applying for a new credit card can actually increase your score. Your application is an indication that you’re not reaching your total credit. If your new card incurs serious charges, however, then you’ll definitely be losing some points. You need to know your motive for getting that credit card because if you're doing it to increase your score, you won't be making too much of a difference.

The Average Credit Age Factor

About 15% of your credit score comes from something called credit age. Your credit age deals with how much involvement you’ve had with credit in the past. For people with a long history of credit, it will reflect better on the credit score. To determine the credit, they will look at the first account you created, the last account you made, and the average between them. The more accounts you have and the longer the time you’ve had them for, the less of a difference a new card will make.

If someone is new to applying for credit and suddenly decides to get a credit card, it’s more of a risk for the credit card company because they don’t know if that person is reliable enough. That’s why fewer accounts mean a lower average credit age, which gives you a lower credit score. If you haven’t opened an account in a while and apply for a new credit card out of the blue, your credit age lowers. For best results, consider your credit history before deciding to get a new credit card if you don’t want any surprises down the road.

PaymentThe Higher Your Charges, The Riskier You Seem

Now, 30% of your credit score will come from what’s known as your credit utilization. They measure this by looking at your credit card balance and comparing it to the credit limit. It’s advisable to refrain from making expensive purchases right away after getting the credit card. This means no taking out a credit card to pay for a vacation or to make frivolous purchases. Reckless financial behavior will cause credit card companies to lose confidence in you. The closer you get to the credit limit, the more likely you will see a drop in your credit score.

It Demands Diligence

You must perform a personal credit inquiry to make sure that all your information is correct. Mistakes in your credit information or fraud being carried out in your name can result in a financial nightmare. That’s why it’s important to conduct your own inquiry before you can even think about applying for a credit card.

If something seems amiss, it’s your responsibility to take it up with the credit reporting agency. Good financial management requires one to be very observant, and keeping an eye on your credit is one way of managing your finances well. Seeking additional credit help from a credit repair service is another good choice.

Consider The Before And The After

If you want to get a new credit card, then your credit score needs to be good in the first place.  That doesn’t mean you can do as you please after you get the card. Whether you pay on time, the frequency, and size of the charges you run up will affect your credit score.

Ask yourself why you’re getting the credit card and whether you need to get it now. Your timing can either help you, or it can give you a few hiccups along the way. If your credit score is a bit shaky, it's time to enlist some credit help. Consult with a professional to help you with credit repair solutions that’ll bring you back into financial health.

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