How to apply for credit card without affecting credit score?
Credit score is a number that represents a person’s credit worthiness. This is used by lenders and creditors to decide whether the person qualifies for loan and at what interest rate and credit limit. Here we will discuss on; does applying for new credit card hurts my credit score and how to apply without affecting credit score.
Applying for a Credit Card
When you apply for credit card the issuer looks into your credit history. Actually the issuer wants to know how well have you handle your prior credit cards, debts, whether you were able to pay off the bills on time, balance you owe on other credit cards and loans and the number of accounts you have opened.
When you apply for credit card; issuer checks your credit report, an inquiry is placed on credit report that shows that your credit has been checked by someone. Depending on the number of inquiries done on your credit history, ten percent of credit score is based on this.
How do these applications affect your credit score?
As you know it now that every new application is ten percent of your credit score, this means that your credit score goes down by 80 points if you have had 800 credit score. However it is not so that you will lose all that point on one single application. But if you apply multiple times in a short period of time then it may cause you more credit score.
May be credit score is not mush affected by the application but the card issuer may reject your application just because you have applied for too many cards recently. Applying for too many cards may make you look to desperate for the card which is always create bad impression. It may also make issuer feel that as you are applying for too many cards in a short period of time you may not be able to pay all your payments on time.
Approval or rejection of the application does not have any effect on your credit score. If your application is approved and a new credit card is issued, it costs point in age of credit history as it minimizes average age of credit history. However, denial of your application for the new credit card will not have any effect on your credit score.
For what duration of time does application count against you?
Only the inquiries made in last 12 months are used to calculate your credit score. Also, after around 24 months the inquiry falls off entirely from credit report. This time limit is applicable to credit inquiries only. Other than credit inquiries other negative reposts will remain in your credit reports for long time.
Hence it is clear that applying for credit card can hurt your credit score and so you should avoid applying the same if you need to take loan or mortgage or auto loan, for some time.
Remember to be responsible with your credit card and other financial accounts. By doing so you can make your credit score high and tackle any point lost due to applying for the new card.
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