Will a Credit Card Application Hurt My Credit Score?

Will a Credit Card Application Hurt My Credit Score

To approve your applications (or may deny it sometimes), the lenders and creditors use your credit score that is a three-digit number. Every time to approve your application your credit score is pulled by the business and in this way, your credit score is affected.

What Happens When You Apply for a Credit Card?

To approve your application the credit card issuers quickly review your credit history. The card issuers want to know the details like how you are handling your credit cards, other debts, how many accounts you have opened, are you making the payments on time or have serious delinquencies, and about the balance, you are having in your credit cards and loans.

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To get such information your credit report is the best source.

To make a quick decision for your application and to set the terms and prices after being approved the creditor and lenders check your credit score rather than reviewing your full credit report.

An inquiry is placed on your credit report which will indicate that someone has checked your credit whenever a credit card issuer or any business checks your credit report because of your application.

Within the past one year, 10% of your credit score is based on the number of inquiries mentioned in your credit history.

How Applications Affect Your Credit Scores?

FICO uses one of the most common credit-scoring models. As with the new applications up to 10% of your FICO score is made, for example, if you are having a credit score of 700 then it math indicates that your credit score could stand to fall as much as 70 points.

Luckily, it’s not like, that over a single credit card application you will lose those earned points because there is a lot of information in your credit report that will cover the aftermath of one credit card applications.

However, in a short period if you will make multiple applications then this may cost you more
credit score points. In actual your credit score is affected by the other information given in your credit report.

The credit card issuer may deny your card application simply even if with the additional inquiries your credit score is not hurt because recently you have applied for several other cards.

Too many current applications can be considered as desperation for credit and always the desperation is turned off almost. This will show that in a short period you are carrying too many accounts that will make it difficult for you to afford all the new monthly payments.

Some credit card issuers also deny people who appear to be a churning credit cardholder as they open credit cards frequently just to get the signup bonus.

The approval and denial of your application will not affect your credit score, at least not directly. If your application is approved then on opening a new credit card will charge you the points in the credit card history area because it will result in lowering your average age of credit history. If your application is rejected then it will not affect your credit score.

How Long Will the Application Count Against You?

The best thing is that to calculate your credit score only the credit inquiries made within the past one year are used. After the period of two years, the inquiries are dropped from your credit report completely.

At that time only on credit inquiries, the limit is applied. The other negative credit report information will continue to exist on your credit report for a long time.

Why Apply for a Credit Card If It Can Hurt Your Credit?

In short-term if you will apply for a credit card then this may hurt your credit score hence you should keep yourself away from making new applications if you are getting yourself ready for a big loan such as auto loan or mortgage, mostly within coming 6 to 12 months.

Once you are responsible with your credit cards and other financial accounts than with the new credit card application, your credit score can be rebound from any points, which you have lost.

However, make one thing clear as there is a chance for your credit score to be affected by the new credit card application but there is no guarantee that it will happen.

If any new inquiry drops your credit score then rest assured it will be temporary. With the new application your credit score will be recovered as long as you will handle your new and current obligations responsibly.