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Does Opening a Credit Card Hurt Your Credit?

Last Updated: September 17, 2024

5 min read

Table of contents

Key points:

A new credit card could hurt your credit score since a credit card company runs a hard inquiry during the review process.
New credit accounts might reduce the average age of credit on your credit report, which may hurt your credit score.
With responsible use, a new credit card can be used to build credit history over time and help credit scores.

Opening a new credit card account can impact your credit score in several ways. At first, a new hard inquiry could impact your credit score. But, over time, with responsible use, the new credit account could help you build credit history, improve your credit utilization ratio, and positively affect your credit score.

Does opening a new credit card hurt your credit?

Opening new credit accounts can hurt your credit score in two main ways:

The credit card issuer could pull your credit report as part of their review process, what’s called a hard inquiry. This kind of inquiry on your credit report can negatively affect your score, though it generally has a small impact on your FICO^® Score (Fair Isaac Corporation).¹ According to myFICO^®, 10% of your credit score is based on new credit accounts, and opening multiple credit card accounts too quickly could show you’re a greater risk to lenders.
Card issuers report newly opened accounts to the credit bureaus. New accounts can impact length of credit history and the average age of your accounts, especially if you only have a few credit cards and they’ve been open for a long time. The exact impact depends on the applicant’s unique credit history. Since length of credit history makes up about 15% of your FICO credit score, be mindful when opening new accounts.

While over time, with responsible use, getting a credit card can help build a better credit history, it’s helpful to keep in mind that opening a new credit card could hurt your credit score, at least initially.

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Other ways opening new credit cards can hurt credit score

There are a few other ways opening new credit card accounts can negatively impact a credit score.

Opening multiple credit cards at once

Applying for several new credit cards could be seen as a sign of riskier borrowing and spending. Opening multiple cards quickly could cause a drop in your credit score.

More credit card debt

If having a new credit card account leads to more debt or exceeding your credit limit, your credit score could suffer. Plus, if having too many accounts causes you to make late payments, that could hurt your credit score, too.

Mix of credit

Another way a new credit card can hurt your credit score is if you use a balance transfer offer to transfer the balance of a loan to your new credit card. This can increase your debt-to-credit ratio and reduce your mix of credit.

Additional factors that may negatively impact credit score

Although opening a credit card may affect your credit score temporarily, other factors can also contribute to a low credit score.

High credit card balances

If you recently made large purchases and only paid the minimum due on your credit card bill, this can increase your debt-to-credit ratio, which may hurt your credit score.

Missed payments

If you missed a payment on one of your cards or paid your mortgage late, you could see a significant drop in your credit score. Payment history is usually one of the most important factors in calculating credit scores.

Closing an old credit card account

Like opening a new credit card decreases the average age of your accounts, closing an older account could also lower the average age of accounts. If an old credit card you don’t use has no annual fee, it may be more helpful to keep the account open and use it often enough so the issuer doesn’t close the account.

Does pre-approval for a credit card lower your credit score?

Whether you get a pre-approval offer or fill out a form for pre-approval, your credit score is usually not affected since pre-approval uses what’s known as a soft inquiry, which doesn’t affect your credit score. This means the card issuer checks your credit history but doesn’t complete a hard inquiry until you formally apply.

Can opening a credit card help your credit score?

With responsible use, new credit accounts can help build a good credit history over time.

For example, your credit score is made up of a few components. According to myFICO.com^®, five factors affect a credit score: payment history, amounts owed, length of credit history, new credit, and credit mix.

Amounts owed typically make up 30% of your FICO^® Score. This component addresses your debt-to-credit ratio or credit utilization rate. This is a measure of how much of your credit limit is being used and paid off. Experts recommend keeping a low credit utilization rate below 30% and ideally even lower than that because it helps show you can handle credit responsibly.

For example, if you have a credit card with a $2,000 credit limit, and you use about $1,000 per month, your credit utilization ratio is 50%. If you’re approved for a new credit card with another credit limit of $2,000, your total available credit is now $4,000. If you maintain the same spending per month ($1,000), your debt-to-credit ratio will drop to 25%.

Did you know?

A new credit card could positively impact your credit utilization rate, and allow you to earn rewards for the purchases you regularly make.

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Whenever possible, you should try not to use all your available credit. It’s important to use credit responsibly and only charge what you can afford. If a higher credit limit tempts you to spend more than you can pay back, it could ultimately hurt your credit score.

Open new credit accounts wisely

Before opening a new credit account, consider how it might impact your credit score. New cards could increase your total credit limit across accounts, build credit history, and improve your credit score long term. But initially, your credit score could be affected upon opening a new card. The key is to use credit cards responsibly as you build credit history.

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