by Lyle Daly | Jan. 2, 2019
Conventional wisdom says that you should be selective about your credit card applications, because each one results in a hard inquiry that can cause your credit score to go down. While that's technically true, it also exaggerates just how much of an impact those hard inquiries have on your score.
If you want to know the truth on what kind of drop to expect, take a look at what the numbers say and my own firsthand account after a slew of credit card applications.
Each bank runs a hard inquiry on your credit file when you apply for a credit card with them. One hard inquiry, on average, brings a FICO® Score down less than five points. Considering scores range from 300 to 850, five points or less isn't much damage.
Now, that's just the average, and the effect of a hard inquiry also depends on your credit history. If you don't have much credit history yet, one hard inquiry could have a greater impact on your score.
Keep in mind also that when you successfully apply for a credit card, that new card will reduce your average account history age (unless it's your very first credit account). That's another factor that can decrease your credit score.
Maybe you're interested in getting a couple new credit cards, which means multiple hard inquiries on your credit file.
Again, there's no cut-and-dry answer to how much this will affect your credit, because it depends on your credit history. Each hard inquiry can cause your score to drop a small amount, but if you have a short credit history, those small drops add up. And multiple new credit accounts can also lower your average account age quite a bit, which may hurt your score.
On the other hand, if you have an excellent credit score, applying for multiple credit cards likely won't be a problem, because the more-important scoring factors (payment history and credit utilization) will already be working in your favor.
For a firsthand example, check out what happened to my credit score after I applied for six credit cards in one day in the middle of August. In case you're wondering, I decided to get a few new cash-back cards to earn more back. First, here's my FICO® Score with Experian:
Image Credit: American Express
As you can see, my score hasn't changed much. Here's what it was for the last four months:
Since FICO® Scores are by far the most popular, that's the score to focus on when monitoring your credit. However, VantageScore has been growing in popularity, so it's also worth a look. This is what my VantageScore with TransUnion looked like before and after my credit card applications:
Source: Chase Credit Journey
This one has fluctuated more, but it's still a high score. Part of the reason it has dropped is because my new credit cards are lowering my average account history.
Although multiple credit card applications usually aren't a problem, they can hold you back if you're building your credit. Here's how to approach new credit card applications at each credit score range:
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