Does Opening a Credit Card Hurt Your Score?

Does Opening a Credit Card Hurt Your Score? article image.

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Dear Experian,

I have one credit card that I use as my main card most of the time. I also have two airline cards that I rarely use. I'm contemplating opening another card for the travel benefits and points. My credit score is pretty good. Will opening another account hurt my score?

- BSB

Dear BSB,

Any time there is a significant change to your credit history, such as opening a new account, you may experience a temporary dip in scores until your credit history stabilizes. Just how much a score will change and for how long depends on the score being used and the person's unique credit history.

How a New Account May Affect Your Credit Scores

When you apply for the card, the company will check your credit report. A record of that review, called a hard inquiry, will appear on your report. It's called a hard inquiry because it represents a potential new debt that doesn't yet show in the report as an account. That unknown debt represents possible risk, so can effect credit scores.

A single inquiry is not likely to have a substantial effect on scores, but you might see a slight drop temporarily, especially if you have had multiple inquiries recently. In most cases, scores tend to rebound within a few months, assuming everything else in the credit history is in good shape.

Generally speaking, new accounts come with new risk. If you are approved for the account, you may also notice a dip in scores when the account first appears in your credit report. However, if you keep your balances low and make all your payments on time, your scores should rebound.

Deciding When to Apply for New Credit

If you know you will be making a major purchase in the next three to six months you may want to hold off on opening any new accounts until after you have completed that transaction.

While it's true that some credit scoring systems may look at the number of accounts you have open, the real focus will be on your payment history and utilization rate as true indicators of how well you manage your accounts. If you use your new account responsibly, you should soon see your credit scores return to normal.

Thank you,
The "Ask Experian" Team

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