Applying for a credit card can indeed affect your credit. In fact, practically anything you do involving payments or credit inquiries will have some effect on your credit score, whether it might be good or bad.
Any time there is a “hard inquiry” on your credit report, you will lose points on your credit score. A hard inquiry is when a company requests a copy of your credit report so they can make a decision regarding approving you for credit.
By knowing how certain things like applying for credit cards actually affects your credit score, you will be better equipped to make good decisions in terms of protecting your credit score to the best of your ability. Small fluctuations in your credit score are normal and happen to everyone. It is the big fluctuations that you want to avoid.
Factors that Worsen the Impact of Applying for a Credit Card
There are many things that can make the fact that you are applying for a credit card much worse than it is. If you have a strong and long credit history, you will not see a big change in your credit score by applying for a new credit card. However, if you have a short credit history, no credit history or poor credit, you will find that every credit card inquiry that shows up on your credit report will do it serious damage.
If you apply for multiple credit cards at once, your credit score will go down more significantly than if you apply for only one. It is important to be judicious in the choice of credit cards you want to pursue in order to keep your credit score in good shape.
The time between your credit card inquiries will also impact your credit score. Inquiries remain on your credit report for a period of one to two years. Therefore, potential new credit issuers can see them. If you want to apply for a credit card, make sure enough time has elapsed since previous applications.
How Credit Card Inquiries Look to Credit Issuers
A credit issuer will examine your credit report, as well as look at your credit score when making a decision as to whether or not to extend you credit. If he sees an abundance of credit card inquiries within a short period of time, for example in the past six months, he will assume that you direly need the credit. This is a good reason to assume that you might be a poor credit risk and turn you down. If you are planning to apply for new credit, it is to your advantage to not apply for other credit frivolously in the six months or so, leading up to it.
The Issues Concerning Credit Card Rejection
If you are rejected for a credit card, you will want to act carefully in order to avoid potential problems with your credit report. Do not immediately apply for multiple other cards with the idea that someone is bound to accept you. That is often not the case. Apply for one other card only. If you are rejected by two issuers, chances are you will be rejected by any you try. Wait six months or more before you apply for another credit card to give your credit score a chance to improve and to lessen the impact of the rejection.
If you have been rejected for a credit card, the company is required to notify you that you have the right to a free copy of your credit report. This will allow you to review your report to make sure it is correct and free of errors. If there are errors, you will want to correct them as soon as possible. If not, the report should shed some light on why your credit score is not as high as it should be. Take the steps necessary to improve it before applying for another credit card. A higher credit score will ensure that you are not only accepted, but that you are eligible for better rates and cards with various rewards programs and other perks.
When you are ready to apply for a credit card, the best place to start is by using our free credit card comparison chaser tool. Our tool will help you find the type of card that best fits your needs and your credit report. You will be able to easily compare the different cards out there, so you know which is the ideal one for you. Get started now using the free credit card “Chaser” tool on our home page to find the best credit cards now!
