How many points does your credit score go down when you get a new card?

Impact of New Credit Card Applications on Credit Score

Applying for a new credit card is a common financial decision, but many individuals are unaware of its potential impact on their credit score. Understanding the consequences of a new credit card application can help consumers make informed choices about their credit management.

Temporary Dip in Score

When an individual applies for a new credit card, the lender performs a hard inquiry on their credit report. This inquiry can lead to a temporary dip in the credit score. The reduction in score is typically around five points, although the exact amount may vary depending on the individual’s credit history and the lender’s evaluation criteria.

Factors Affecting the Dip

Several factors can influence the extent of the credit score dip, including:

• Existing Credit Score: Individuals with high credit scores may experience a smaller dip than those with lower scores.
• Credit Utilization: Applying for a new card can increase the proportion of available credit used, which can negatively impact the credit score.
• Number of Recent Inquiries: Multiple credit inquiries within a short period can raise concerns about excessive credit seeking, leading to a greater dip in score.
• Other Credit Factors: The lender’s evaluation of the applicant’s overall credit history and financial situation also plays a role in determining the impact of the application.

Temporary Nature of the Dip

It is important to note that the dip in credit score caused by a new credit card application is usually temporary. Over time, the negative impact will subside as the hard inquiry ages and falls off the credit report. Regular on-time payments and responsible credit management can help restore the credit score to its previous level.

Recommendations

To minimize the impact of new credit card applications on their credit score, consumers are recommended to:

• Consider their credit score before applying for a new card.
• Only apply for cards that they genuinely need.
• Limit the number of credit applications within a short period.
• Maintain a low credit utilization ratio.
• Make on-time payments and avoid high levels of debt.

By following these recommendations, individuals can make informed credit decisions and protect their credit scores from unnecessary fluctuations.