Does Applying for a Credit Card Hurt Your Credit? Bankrate.com Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Applying for a Credit Card Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. SHARE: agrobacter/Getty Images February 02, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Steve Bucci Emily Sherman is a senior editor for CreditCards.com and Bankrate Credit Cards, specializing in product news and recommendations. She has worked as a writer and editor in the credit cards space for several years, covering any and all topics related to how cards work, rewards programs, card benefits, travel, cash back and more. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Bankrate logo The Bankrate promise
At Bankrate, we have a mission to demystify the credit cards industry — regardless or where you are in your journey — and make it one you can navigate with confidence. Our team is full of a diverse range of experts from credit card pros to data analysts and, most importantly, people who shop for credit cards just like you. With this combination of expertise and perspectives, we keep close tabs on the credit card industry year-round to: Meet you wherever you are in your credit card journey to guide your information search and help you understand your options. Consistently provide up-to-date, reliable market information so you're well-equipped to make confident decisions. Reduce industry jargon so you get the clearest form of information possible, so you can make the right decision for you. At Bankrate, we focus on the points consumers care about most: rewards, welcome offers and bonuses, APR, and overall customer experience. Any issuers discussed on our site are vetted based on the value they provide to consumers at each of these levels. At each step of the way, we fact-check ourselves to prioritize accuracy so we can continue to be here for your every next. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. I strongly recommend applying for credit (of any kind) only when it is needed or when there is a useable benefit to you. Why do I say that? Because the simple act of applying could result in a negative outcome if it’s not done correctly. Let’s take a look at how applying for a credit card affects you and see if we can determine if it’s worth it in the end. How applying for a credit card can hurt your score
When you apply for a credit card, you will trigger what is known as a hard inquiry. An inquiry can be simply defined as asking for information, in this case, from your credit report(s). You may know that there are two types of credit report inquiries; these are known as . An example of a soft inquiry is when you request a copy of your own credit report; another is when you receive a of credit. The reason these inquiries don’t impact your report or your score is because you are not asking for new or additional credit. Soft inquiries are information-only requests regarding your credit. On the other hand, hard inquiries not only request your credit information, but they are also made for the express purpose of obtaining new or additional credit. Let’s say you did get a preapproved offer for a new credit card and decide that the terms are advantageous, so you go for it. At that point, you will have to actually apply for the card and you will trigger the aforementioned “hard inquiry.” This is also the point that your credit report (and thus, your score) will be affected. Taking on new credit signals additional risk to your credit profile and could result in a dip in your score; this dip will be for one to two months on average. Why? Because it’s not clear why you want more credit and it’s not clear that you can handle the additional credit. How much of a scoring dip depends on several other factors, which we will examine next. How applying for a credit card can help your score
So you and you were approved. As noted above, your score may take a dip, but the impact (if felt at all) will likely be minimal. This is because you will have simultaneously increased your available credit, which could negate any losses from the hard inquiry. This result is especially pronounced in the case of a consumer with a limited credit history or a “thin file” as it is known in the credit business. Because the thin file has fewer data, any change will likely have a more pronounced effect. Let me illustrate: Let’s say you fill your bathtub with water, then add a few drops of red food coloring. The change in color would be virtually invisible as the dye will be fully diluted by the large volume of water. Now let’s do the same thing but this time with only a shot glass of water. The color change from the dye in a small volume of water will be much more pronounced. The same effect applies to your credit report and, thereby your score. More data means less scoring impact; fewer data, more scoring impact. You could also hurt yourself if you took out the credit card with the intent of charging something really big that would put you over 30 percent of your new available credit. Adding a large new debt and using a significant portion of your credit limit indicates a new potential risk, at least until you bring down your and show you are able to make the larger payments over time. I would not suggest you go beyond 25 percent if possible. This will be best for your score’s , which accounts for approximately 30 percent of your total FICO score and is “extremely influential” to your VantageScore. I recommend you add the new debt service amount and due date to your monthly payment calendar. is the No. 1 factor in FICO scoring, so be careful here. More than one consumer has fallen into the trap of forgetting about a new credit obligation in the beginning. I like for this reason. I usually set up a payment with my bank’s bill pay service the day I receive the bill. I set the pay-by date to coincide with the card’s due date since I like keeping my money until it’s due, but I also don’t like ever being late with a payment. Do what is best for you and your situation. Just be sure those payments are made on time. Does being denied a credit card hurt your score
If, on the other hand, your , you will likely see a drop in your score that won’t be overcome by an increase in available credit. The very act of applying sends a signal to the credit scoring elves that you may want to take on new debt, which is always a risk. In this case, a lender has reviewed your file and your income (which is not in your credit file) and rejected your request. Remember that even with preapproved offers of credit, there are no guarantees that you will be approved. This is true anytime you apply for credit, so keep that in mind. It is one of the main reasons I suggest, as I did in the beginning that you only apply for credit when you need to or it is otherwise to your advantage, like a of some sort. And only apply when you are relatively sure you will be approved. How to increase your odds of being approved
Wait! How can you be sure that you will be approved? Didn’t I just say there are no guarantees? I did, but there are actions you can take to increase your chances of being approved when you need or want to take on new credit. You do this by paying your bills on time and as agreed each and every month because you know that payment history is important to your score. You also keep an eye on how much of your available credit you have used and keep that number below 25 percent across the board (meaning all of your credit cards). You don’t close old accounts without a good reason to preserve your . You have a healthy mix of both and installment accounts to demonstrate your ability to handle both variable and fixed payments. This also means you need to be careful not to apply for too much credit at one time. An increase in your credit score may lead you to think you need to strike while the iron is hot and get every credit card you can. This is a strategy that will cause a lot more harm than good, so it should be avoided at all costs. The bottom line
Remember that adding new credit has its pluses when done correctly and minuses if you don’t. So the name of the game here is patience and planning. I know that is hard in our fast-moving world, but having will be worth it in the end. Good luck! Have a credit score question for Steve? Drop him a line at the page. SHARE: Steve Bucci Emily Sherman is a senior editor for CreditCards.com and Bankrate Credit Cards, specializing in product news and recommendations. She has worked as a writer and editor in the credit cards space for several years, covering any and all topics related to how cards work, rewards programs, card benefits, travel, cash back and more.