Will a Credit Card Application Hurt My Credit Score?

You credit score is reviewed by creditors and lenders in order to approve your credit card application. Your credit score is a number usually in the range 300-850. The higher is the number, better is the score.

You can build a good credit score by using your credit card responsibly. You must be aware of the fact that too many credit applications in a short time may have adverse impact on your credit scores.

Credit Card Application Process

When you apply for a credit card, the card issuer will make a credit check. It reveals them information such as how much credit you can handle, whether you have made timely payments or have any serious delinquencies, the balance carried on your credit cards, loans to be paid etc.

The creditor will make an inquiry on your credit report. It is mandatory that you credit report has been provided by one of the major credit bureau. 10% of your credit score depends on the number of credit inquiries made in the last 12 months.

How does Credit Card Application Affect your Credit Score?

Whenever you apply for a credit card, an inquiry is made to check the credit score. Multiple inquiries can have adverse effects; specifically if you have a short credit history.

As 10% of your credit score is based on new credit inquiries, a hard inquiry made can affect your credit score when you apply for a credit card or loan. Impact of inquiries made on your credit report remains for two years.

Every hard credit inquiry drops your credit score by a few points. You can regain the points lost in few months, but you will see its adverse effect if your credit history was already poor.

How Long Will the Application Count Against You?

Credit inquiries made within one year are considered while calculating credit score; whereas it will completely fall off your credit report after 2 years.

Should you Apply for a Credit Card if It Can Hurt Your Credit?

If you are planning for a mortgage loan or auto loan within a year, you need good credit history to get it approved as well as to get it at low interest rate. In such cases, it is recommended that you shouldn’t apply for a credit card if it is going to hurt your credit score.

Multiple Applications may Lead to Denial

Even though your credit score is not affected much, too many credit card applications made recently can indicate that you are desperate to get it. It also makes them think that you are taking too many accounts and may find it difficult make monthly credit card bill payments. It suggests financial risk and you might be turned off.

Does Credit Card Approval or Denial Affect your Credit Score?

Though approval of your credit card application doesn’t affect your credit score directly, it leaves its impact on your credit. If your credit card application is approved, it will hit you in the ‘age of credit history’. If denied, there is not much impact.

If you are to apply for a new credit card and thinking of multiple applications, keep in mind the risk associated and act wisely!

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