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Does Applying for a Credit Card Hurt Your Credit?

Last Updated: November 7, 2024

7 min read

Table of contents

Key points:

When you apply for a credit card, your credit card issuer will conduct a “hard inquiry” into your credit.
One hard inquiry might not significantly affect your credit, but multiple inquiries can have a larger impact on your credit score.
Getting more credit may lower your credit utilization, which could help your credit score, but make sure to use your new credit wisely.

If you’re considering a new credit card, you may want to weigh the consequences for your credit before taking the leap. Opening a credit card account may impact your credit history in several ways. Generally, credit card applications trigger “hard” inquiries, which may impact your credit score. Your new card might also affect your credit utilization ratio. A new credit account's overall influence on your score depends on your personal financial circumstances and how you use your card.

This guide can help you get a better sense of a new credit card application’s potential effects on your credit score.

How applying for a new credit card hurts your credit

Opening a new credit account has the potential to hurt your credit score in several ways. While that doesn’t mean you should never apply for new credit. Understanding possible drawbacks can help you make informed choices that minimize the negative impact.

FICO® Credit Score basics

A new credit card may impact many of the factors that influence your credit score. There are many credit scoring models, but 90% of top lenders use FICO^® Credit Scores, including Discover.¹

How hard inquiries hurt your credit

When you apply for a new card, the credit card company conducts a hard credit inquiry. The Consumer Financial Protection Bureau explains that whenever you submit any kind of new credit application, the lender requests your credit profile, including your credit score and credit report, from a credit bureau. This request is called a “hard credit inquiry” or “hard pull.”

FICO explains that a single hard credit inquiry often lowers your credit score by less than 5 points. However, several hard inquiries in a short period may do more damage. Applying for multiple credit cards at once can show financial instability, making you seem like a risky borrower.

You may protect your credit score by applying only for the new credit you need and taking a break between applications.

Not all credit inquiries affect your credit score. When someone views your credit report for any reason other than a new credit application, that’s considered a soft credit inquiry.

For example, a credit card company may conduct a soft inquiry before sending you a pre-approved credit card offer in the mail. That inquiry won’t affect your credit. However, if you were to apply for the credit card offer, the card issuer would likely conduct a hard inquiry, which may impact your credit.

Just remember: This potential dip in your credit score may only be temporary. If you continue to use the credit you already have and any new credit you receive responsibly, you should start to see your credit rebound soon.

How new purchases with your credit card can hurt your credit score

Spending habits on your new card may affect your credit utilization ratio.

Your credit utilization ratio (or credit utilization rate) is the portion of your available credit that you’re using at one time. A high credit utilization ratio may lead to a bad credit score. You can find your credit utilization rate by comparing your total outstanding balances across all your credit cards to the sum of all your credit limits.

Some cards may come with low introductory APR offers that make it easier to break up expensive purchases without accruing high interest charges. But even with low introductory APR credit cards, you should be mindful of your balance.

If you spend too much of your credit limit on your new card, your score may suffer because your credit utilization is one of the biggest factors in credit scoring models.

For example, suppose you have $2,000 available credit across multiple credit cards, and use your new card to buy a $1,000 camera. You’d have a high credit utilization rate of 50%, which could hurt your score. Instead, it’s best to avoid overspending on your new card and pay your balance in full each month.

How length of credit history impacts your credit

The length of your credit history has a small effect on your credit score–about 15% on the FICO^® Score scale. A longer credit history shows lenders that you have experience managing credit.

Credit scoring agencies use the average age of your accounts to help calculate the length of your credit history. A new credit card may bring down the average age of your accounts, which can, in turn, affect your score.

If you don’t have other credit accounts, keeping your new credit card in good standing can help you begin building credit history.

Does applying for a new credit card help your credit?

While a new credit application itself doesn’t necessarily have a positive effect, adding a new credit card to the mix can sometimes improve your credit score.

Did you know?

You can compare Discover credit cards to other industry-leading cards to find the best fit for your financial needs. And you can see if you’re pre-approved with no harm to your credit score. ²

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If you practice responsible credit management on your new card, it could make the following contributions to a good credit score:

Add to credit mix

Most loans and credit cards fall into one of two categories: installment and revolving credit. Installment credit, like a personal loan or mortgage, lets you borrow a fixed amount and repay it in set payments over a certain timeframe. Revolving credit, on the other hand, lets you borrow money as needed, up to a certain credit limit. Credit cards and lines of credit are both types of revolving credit.

Credit card companies and other lenders typically prefer to see a mix of both types in your credit profile. Credit mix accounts for about 10% of your FICO^® Score. If you already have a personal loan, mortgage, or student loan, a new credit card may improve your score by adding to your credit mix. However, if you already have multiple cards, a new card won’t improve your credit mix.

Add to payment history

Whether you want to establish or maintain a good credit score, a strong payment history is crucial. It accounts for about 35% of your FICO^® Score. If you’ve ever missed a credit card payment, then you know how bumps in your payment history may have a major impact on your credit.

When you start using a new credit card, be sure to stay on top of your bills. By paying at least the minimum amount required before the due date every month, you can build your payment history.

Remembering payments doesn’t have to be difficult. Some credit card companies allow you to set up autopay in your online banking portal. You can avoid missing payments by enrolling in autopay—just make sure you always have enough money in your linked bank account.

Improve credit utilization

As long as you keep your credit card balances low, a new credit card may decrease your credit utilization ratio by increasing your available credit.

Say you have two credit cards with $1,000 credit limits, so your total available credit adds up to $2,000. If you have a credit card balance of $450 on one card and $550 on another (totaling $1,000), you’re left with a credit utilization rate of 50%. That high credit utilization ratio might result in a bad credit score.

Now, let’s say a card issuer approves you for an additional credit card with a $3,000 credit limit. Now, your credit limits add up to $5,000. If each credit card balance remains the same, you’re left with a more manageable 20% credit utilization ratio.

To keep your credit utilization low, it’s important to avoid overspending and pay down your balances as much as you can.

Apply for credit when you really need credit

Most credit and personal finance professionals are very clear on one thing—don’t apply for credit that you aren’t going to use. While a new card may improve your credit score, you should only apply when you have a need and are able to manage new debt. As you compare the best credit cards for your needs, consider how each new card may affect your credit score and fit into your financial life.

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