Chris O'Shea
Before applying for a new credit card, it’s a good idea to think through how it will impact your finances and your credit score. Yes, even just applying for a new card can affect your score, which can be a big deal. Here’s what you need to know.
Inquiry Hit
When you apply for a new credit card, the issuer checks your credit report to determine your creditworthiness. This is what is known as a “hard pull.” A hard pull will lower your credit score, regardless of whether you are approved for the new card or not. This negative impact on your score will usually disappear within a few months, but the pull does stay on your report for up to two years. Keep in mind that how much your score goes down depends on your personal history. If you have a high score and a long, solid credit history, your score will not be as impacted as someone with the opposite situation.
Why It Hurts
Opening a new credit card hurts your score because issuers might see a potential for missed payments. This is especially true if you open multiple accounts within a short period. Your credit score will likely go down even more than if you just opened one account.
Think it Through
Now that you know applying for a credit card will “ding” your credit score, take some time to think it through before signing on the dotted line. First, you should do your best to make sure you will get approved. If you apply and get rejected, your score will still go down and you’ll have nothing to show for it. Also, consider the timing of the new card. If you’ve opened another card within the last six months, consider waiting a bit before applying for the new card.
Do One Thing: Make sure that your credit score is as high as possible before applying for a new credit card. You’ll be more likely to be approved and the application won’t hurt your score as badly.
Jean Chatzky
