While it may seem like a simple question, the fact of the matter is that there are several different issues that go into determining whether adding a credit card to your portfolio will hurt your credit score or not. There is both a short-term and a long-term consequence to applying for a new credit card, and you want to know ahead of time what kind of impact you’re likely to see.
Here are the things to consider if you want to apply for a new credit card, but you’re also hoping to be able to improve your credit score:
- Getting a new credit card will make your credit score dip – briefly. Whenever you apply for credit, the creditor does a credit check on you. This kind of credit check is one small component of your credit score. The more credit inquiries you have on your file, the lower your score. These purge off rather quickly, however, and as long as you’re not applying for several credit cards all at once you should probably be all right.
- Longevity of your credit accounts plays a role in your credit score, too. Around 15 percent of your credit score is determined by the age of your credit accounts. If you’re closing old accounts to open new ones, it’ll make your score dip. Likewise, an account that you’ve opened just recently doesn’t have as much weight as an account that’s several years old.
- Your behavior after you get the card is key. The biggest percentage – around 35 percent – of your credit score is determined by your bill-paying history. Whether you get a new credit card or not, making sure that your bills are paid on time every time is the most important factor in your credit score. If you get a new card and don’t pay the bill, your score is going to suffer.
- Credit ratio plays a role, as well. The amount of your credit limits compared to the balance on your cards is a significant part of your credit score. If you open a new card and then don’t add much of a balance to it, you’re lowering that ratio, which will most definitely improve your credit score over the long haul, even if you take a temporary dip after the application process.