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Does Getting a New Credit Card Hurt Your Credit?

Does Getting a New Credit Card Hurt Your Credit?
Jason Steele
Jason SteeleUpdated December 14, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
If you’re considering a new credit card, but worry that applying for it might hurt your credit, you’re not alone. Many people share this concern. So does getting a new credit card hurt your credit? Opening a new credit card account could affect your credit temporarily. But it may not hurt your credit in the long term. Here are the facts you need to know.

How Getting a New Credit Card Affects Your Credit

When you open a new credit card, your credit may be affected due to the following five factors.

Credit Utilization

Getting a new credit card can impact your credit utilization ratio, a measure of how much debt you have, which is an important factor in your credit score. Your credit utilization is the amount of credit card debt you have compared to the total amount of credit you’ve been extended. Most experts recommend keeping your credit utilization ratio below 30%, and lower is generally better.Opening a new credit card account will increase your available credit, which could decrease your credit utilization ratio and be beneficial. On the other hand, canceling credit cards you don't use will lower the amount of available credit you have, which may raise your credit utilization ratio. Recommended: Can You Reopen a Closed Credit Card? All You Need to Know

Lower Average Age of Credit Accounts

You might wonder, why is my credit score low after getting a new credit card? One of the factors that affect credit scores is the average age of your accounts. People with a longer credit history and a longer average account age will typically have a higher credit score. However, opening a new account will lower the average age of your accounts, and could hurt your credit. If you have many accounts a new account will have less of an impact than it will if you have just a few. 

Hard Inquiry

When you’re applying for a credit card, the card issuer will determine your creditworthiness by checking your credit report, which is known as a hard inquiry. This is one of the important credit card terminologies you should know. Having numerous hard inquiries in a short period of time might be interpreted as a sign of potential financial trouble. It may give the impression that you need to borrow a lot of money. A hard inquiry could cause your credit score to drop a few points. The impact should fade over time, but it’s something to keep in mind as you’re choosing a credit card.

Increased Credit Card Limit

Opening a new credit card will increase your overall credit limit. As long as your spending stays the same and you don’t take on a lot of new debt as you’re using a credit card, this could help lower your credit utilization ratio.

Credit Diversity

Another factor in your credit score is the mix of credit you have. Having different types, such as credit cards, a home mortgage, and a car loan, shows you can manage different kinds of credit. If you don’t have a credit card, or you only have one, applying for a new credit card may be beneficial. 

Why Your Credit Score May Be Low After Getting a New Credit Card

There are many factors that might affect your credit score. For instance, if you apply for several new credit accounts in a short period of time, numerous hard inquiries could lower your credit score. And if you have a limited credit history, a new credit account might reduce your average age of accounts, which could also hurt your credit. Finally, if opening a new credit card account causes you to incur a lot of debt, that may also hurt your credit. 

How Many Credit Cards Should You Have?

There is no one right answer for everyone. But in general, you should never have more credit cards than you can manage. That means paying your bills on time and carrying as little debt as possible. There may be some advantages to having more than one credit card. First, having a few credit cards, and managing them responsibly, might have a positive impact on your credit history. Also, having more than one credit card will increase your available credit, which may reduce your credit utilization ratio. And different credit cards can offer different rewards and benefits, which is one way how credit cards work

The Takeaway

Getting a new credit card may impact your credit in the short term. But in the long run, if you manage the new credit card account responsibly, your credit could benefit. Understanding how your credit might be affected can help you make the best decision for you. If you do decide to open a new credit card, Lantern by SoFi can help you find one that meets your needs. In our online marketplace, you can quickly compare offers from multiple credit card issuers all in one place.  

Frequently Asked Questions

How much will my credit score go down by applying for a new card?
How long does opening a new credit card affect your credit score?
Does applying for too many credit cards hurt your credit score?
Photo credit: iStock/RgStudio

About the Author

Jason Steele

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
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