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Have you come across any new credit card promotions lately? Yes. What? You just finished watching an ad?
Hah, you might as well say that every new day brings a new card your way.
Have you ever been tempted by the bonus to the point that you almost clicked to sign-up for the card?
We totally get you! Some offers are too good to be true that you can’t help but try using them to see their authenticity.
But can you really do that? What if it hurts your credit score? What if it affects your credit history?
Here’s what you need to know before applying for a new credit card.
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There’s no simple answer to that. Yes. Literally!
In fact, it won’t be wrong to say that the chances of a new card hurting your score are 50-50.
Let’s understand what happens when you apply for a new card:
This is usually marked as a soft or hard inquiry on your credit record. The effect on your credit score depends on the type of inquiry made.
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See: Credit card terms Part-I & Part-II to know what’s a hard and soft inquiry. |
In fact, inquiries may reduce your Equifax credit score by five points or even less.
However, this is not something to ditch the appealing credit card offer. Here’s why:
Yes, the payment history accounts for 35% of your credit score. So, if you can be a good card user for a few months, you can get your credit back on track.
Note: We do not in any way imply that you should only be financially responsible temporarily.
Trust us, developing budget-friendly money goals will only improve your credit profile for the best.
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As we explained earlier, the chances are 50-50.
It can be good to increase your credit score quickly on the one hand and lower your credit age on the other hand.
If you are applying for a new card to help rebuild your score, it’s definitely a good choice.
In fact, it will also support you in managing your finances better, thus lowering your credit utilization ratio.
You are no longer relying on one card to make all your purchases.
You can now use a high credit limit on multiple cards without worrying about exceeding your limit.
You might also get the advantage of maintaining a good payment history with your new card.
All these points will play an important role in improving your credit score for the better.
However, every coin has two sides. Let’s see the other one. :p
A new credit card means a new financial responsibility.
Sometimes, handling multiple credit cards can be too overwhelming.
You might end up overspending just to avail yourself of all the welcome bonuses the cards offer.
Getting new credit cards will also cause a dip in your average credit age which in turn might lower your credit score a bit.
However, continue to use the card responsibly, and it will work in your favor.
See: Impact Of Inactive Credit Cards On Your Credit Score!
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The answer is yes!
You can apply for a new card without hurting or affecting your credit score.
Well, if we elaborate, the process is called “pre-qualification for the card!”
The key is to understand where you stand.
This is the only way to save your credit score and history from ruining.
Also, a credit preapproval or prequalification form initiates a soft inquiry that won’t affect your credit report.
Here are some helpful tips for a smooth pre-approval:
Have you ever received a message or mail saying: Congratulations! You have been preapproved for the card.
Well, that’s a pre-screen offer right there.
Top credit bureaus of Canada might put your name in a list that says: these consumers fall in the good user category.
Creditors or lenders utilize these lists to send their ideal users an email or a call for pre-screening.
Because the moment you apply for the card, whether or not you are accepted, your credit report will show a hard or soft pull record.
Yes, you can increase your approval chances by directly asking the lender whether you qualify for the card.
Or, you can contact the company to know their terms and conditions for a profile like yours.
Here’s an easy comparison to help you understand better:
What should you do to avoid any hard inquiries? Simple, make your decision wisely!
You get the point, right?
Your goal should be getting the new card with the least damage to your credit report and history.
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If you want a direct answer, then yes, of course, you can!
However, as far as your credit score is concerned, you shouldn’t be doing that. Want to know why? Here you go:
And multiple inquiries in a short time won’t look good for your credit score.
Moreover, it will signal to the bank or card service providers that your business is in trouble. Or, your personal finances aren’t up to the mark.
Now the question arises, how long to wait between credit card applications?
Forbes says it all - 90 days!
Yes, that’s true, you can apply for many cards at once whenever you please, but it’s better to take at least a 3 months gap between your applications.
Do you want to get two new credit cards but worry it might permanently hurt your credit score? Yes? This guide is for you!
Getting a new card won’t always hurt your credit score.
In fact, often, it might help you build your bad history and work on your poor credit score.
But, of course, you can’t avoid a little dip in your credit score when you get multiple cards at once.
Don’t worry. It’s not as bad as you think!
Yes! Your credit score might drop temporarily, but that’s about it. There’s nothing you can’t recover with good money habits and responsible card usage.