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Does Applying for a Credit Card Hurt Your Credit Score?

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Yes, applying for a credit card hurts your credit score -- temporarily. But in the long run, it can boost your credit score if you manage that new credit well.

There are a few ways applying for credit cards can affect your credit. Once you've learned more, you'll see that credit card applications are really nothing to worry about.

How opening a new credit card affects your credit score

While a new credit card can hurt your credit score some, it's unlikely to cause a big drop. And over time, it can actually raise your credit score. Here's why.

Why your score might drop at first

Your credit score is calculated based on several scoring categories. When you open a new credit card, it has a negative impact on two categories:

  • New credit: Includes how long it has been since you've opened a new credit account, your number of new credit accounts, and recent applications for credit. Makes up 10% of your FICO® Score.
  • Length of credit history: Includes the age of your oldest credit account, the age of your newest credit account, and the average age of all your credit accounts. Makes up 15% of your FICO® Score.

Opening a new credit card affects factors equaling 25% of your FICO® Score (the most widely used type of credit score).

LEARN MORE: The Complete Guide to Your FICO® Score

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Getting approved for a credit card

Check credit score requirements before applying for a credit card. Some credit cards only approve people with excellent credit. Others are made especially for people with low or no credit. Here are our favorite credit cards organized by credit score requirements:

Why your score might improve over time

There are also two factors responsible for a much larger portion of your credit. These aren't affected by new credit card applications:

  • Payment history: Your record of on-time and missed payments. Makes up 35% of your FICO® Score.
  • Credit utilization ratio: The amount you owe on your credit accounts compared to your combined credit limits. This is 30% of your FICO® Score.

READ MORE: What Is a Credit Utilization Ratio?

If you're doing well in these categories, then your credit should be fine.

A new credit card can even help if your credit utilization ratio is too high. Let's say you have one credit card with a balance of $5,000 and a credit limit of $10,000 -- your credit utilization would be 50%, on the high side. If you open another card with a $10,000 credit limit, it would cut your credit utilization in half, and almost certainly raise your credit score.

How to improve your credit

If you're working on improving your credit, there are a few great ways to do it:

  • Pay your bills on time and in full: Since your payment history is the biggest part of your credit score, on-time payments are very important. It's typically only on-time credit card payments that raise your credit score, but it's still good to pay on time with other bills, too.
  • Don't use too much credit: The sweet spot is no higher than 20% to 30% of your credit limit. So, for each credit card you have, multiply the credit limit by 0.30. Try not to let the balance get any higher than this amount.
  • Keep credit cards open: Older credit accounts are better for your credit score. While it's okay to cancel a card you don't want every now and then, try to keep most of your cards open to build a lengthy account history.

LEARN MORE: How to Increase Your Credit Score

Credit cards for building credit

The cards below are some of our favorite cards for building credit. For the full list, head to our guide: Best Starter Credit Cards for No Credit

As of Sep. 23, 2022
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Discover it® Secured Credit Card Petal® 2 "Cash Back, No Fees" Visa® Credit Card Capital One Platinum Secured Credit Card
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Credit Rating Requirement:

New/Rebuilding Under(579) Info Icon Circle with letter I in it. Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.

Credit Rating Requirement:

Fair/New to Credit Under(669) Info Icon Circle with letter I in it. Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.

Credit Rating Requirement:

Fair/New to Credit Under(669) Info Icon Circle with letter I in it. Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.

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Why does applying for a credit card affect your credit score?

When you apply for a credit card, the card issuer reviews your credit history. This puts what's called a "hard credit inquiry" on your credit file and affects the new credit category that makes up 10% of your FICO® Score.

New credit matters because there's a correlation between your number of credit applications and your risk of defaulting on debts. FICO has found that consumers with at least six hard inquiries on their credit reports are up to eight times as likely to declare bankruptcy as consumers with zero inquiries.

A credit inquiry is a request for information on a consumer's credit file. There are two types: hard inquiries and soft inquiries, also known as hard and soft credit checks.

Hard inquiries

A hard credit inquiry is triggered by a credit application. Examples include credit card or loan applications, requests for a credit limit increase, and in some cases, applying to rent an apartment. You must give your permission for any party to perform a hard inquiry.

This type of inquiry affects your credit score. It's not a large impact -- for most consumers, fewer than five points. However, multiple inquiries can bring your credit score down more.

Hard inquiries stay on your credit file for two years, but only affect your FICO® Score for one year.

Soft inquiries

A soft credit inquiry doesn't affect your credit score. This type of inquiry doesn't provide as much information as a hard inquiry, and creditors don't need your permission to perform a soft inquiry.

While there are many potential reasons for a soft inquiry, here are some examples:

  • You use a prequalification tool to see what kind of credit cards or loan rates you qualify for.
  • You pull up your credit score with a free credit score service.
  • A potential employer checks your credit.
  • A credit card company checks your credit in order to send you a preapproved credit card offer.

LEARN MORE: What's the Difference Between Hard and Soft Credit Checks?

For more information, watch the video below.

 
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How much does your credit score go down when you apply for a credit card?

Your credit score will normally go down by fewer than five points when you apply for a credit card.

FICO reports that for most people, one credit inquiry takes off fewer than five points under its credit scoring system. The impact can vary based on your own unique credit history.

The results of a hard inquiry can be different under other credit scoring systems. FICO® Score is the type of credit score that's used by most top lenders.

Does getting denied for a credit card hurt your credit score?

No, getting denied for a credit card doesn't hurt your credit score.

Your credit score will drop a small amount because of the credit application. However, this is something that happens with any new credit application because of the hard inquiry it puts on your credit file. It occurs regardless of whether the card issuer approves or denies your application.

What to know before you open a credit card

Your credit score will probably go down a bit from opening a credit card, but there's no reason to let that stop you. When used well, a new card can improve your credit and help you qualify for lower interest rates on mortgages, auto loans, and any other financing you may need. The best credit cards also include plenty of valuable benefits that easily outweigh a small, temporary credit score drop.

Want to boost your credit card knowledge before getting a new card? Check out How Credit Cards Work: A Beginner's Guide.

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