Applying for a Credit Card Can Hurt and Help Your Credit Score

Among a number of questions, one that pops up in people's minds while applying for a credit card is, how does it hurt my credit score?

Anuradha Garg - Author

May 10 2022, Published 1:32 p.m. ET

A person using a credit card
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People who apply for a credit card (especially for the first time) may be faced with a number of questions such as which credit card to apply for, the benefits it offers, fees, etc. However, in regards to their credit score, most people want to know more. How does applying for a credit card hurt your credit score? Let's discuss.

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There are two types of inquiries, soft and hard inquiries. Soft inquiries don’t impact your credit scores but hard inquiries do. Usually, soft inquiries or a soft pull happens when someone runs a credit check on you but for reasons unrelated to lending you money. A hard pull, on the other hand, happens when lenders check your credit before approving your loan. When you apply for a credit card, you are in for a hard inquiry.

How does a hard inquiry impact your credit score?

A hard inquiry impacts your credit score by a few points. Taking on a new credit means additional risk to your credit profile. Therefore, applying for a credit card or for that matter another loan can hurt your credit score a bit in the short term.

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credit card credit score impact
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A credit score is calculated based on various categories and opening a new credit card can impact two major categories.

New credit: This includes the time you opened your new credit account and the number of your new credit accounts.

Length of credit history: This includes the average age of all your credit accounts.

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Inquiries play a minor part in credit scores.

Hard inquiries remain on your credit report for two years, while FICO (the FICO score is the type of credit score most used by top lenders) only considers inquiries from the last 12 months. According to FICO, “Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports.” However, it also mentions that inquiries usually play a minor part and only account for 10 percent of the FICO score.

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A new credit card can boost your credit score too.

However, in the long term, a new credit card can actually boost your score. It will depend on how well you manage your new credit. Having a new credit card could lower your credit utilization rate. The rate is basically your total credit card debt divided by your total credit card limits. Lower credit utilization is good for your credit score.

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If you manage to pay your credit card bills on time, your score will improve over time since payment history has the largest weightage on your credit score.

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Another benefit of having a new credit card is that it can help you improve your credit mix. Diversity in your credit report is generally taken as a good sign and helps your scores improve. However, this will only happen if this kind of loan is first-of-the-kind.

There are ways that a new credit card might end up hurting your credit score. For example, a new credit card could lead to a decline in your length of credit history.


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