Does opening a new credit card hurt your credit?

When you apply for a credit card, you might see a brief dip in your credit scores. But if you use the card responsibly, it could give you the opportunity to boost your credit in the long run.

What you’ll learn:

• Applying for and opening a new credit card account may cause your credit scores to go down temporarily. 
• A new credit card might help reduce your credit utilization ratio and improve your credit mix, which could positively impact your scores.
• Paying your monthly credit card bill on time is another responsible habit that could help you raise your credit scores.
• Checking whether you’re pre-approved for a credit card typically requires only a soft inquiry, which won’t impact your credit scores.

Applying for and opening a credit card can affect a few credit-scoring factors. So it might help to think about them separately.

First, applying for a new card triggers a hard inquiry, which involves a lender looking at your credit reports. According to credit-scoring company FICO®, a hard inquiry can cause a slight drop in your credit scores. Hard inquiries usually stay on your credit reports for two years. But FICO says it doesn’t consider hard inquiries that are more than 12 months old.

If you’re approved for and open a new card, the average age of your credit might drop. But it could also affect your credit in a few helpful ways if you’re using the card responsibly. 

Here’s a closer look at how opening a new credit card and using it responsibly could benefit your credit.

Lenders use payment history to help determine how likely someone is to pay back debt. Payment history is also a major factor in how credit scores are calculated. Always paying your credit card bills on time can help you build a positive payment history. And that can help improve your credit scores.

When you open a new credit card, your available credit increases. This could improve your credit utilization ratio. This ratio refers to how much of your total available credit you’re using. As you use the card, the Consumer Financial Protection Bureau (CFPB) recommends keeping your credit utilization ratio below 30%.

Having a mix of revolving credit accounts, like credit cards, and installment accounts, like a mortgage, can show lenders that you can manage different types of debt. If a new card adds to your credit mix, that could be a positive. 

If you’re thinking about applying for a new card and want to minimize the effects on your credit scores, here are things you might consider doing:

• Apply only for the credit you need. Each new credit application typically results in a hard inquiry that can slightly lower your credit scores. And applying for multiple credit cards in a short time can impact your credit even more.
• See if you’re pre-approved. Checking for card offers before you apply could help you avoid unnecessary hard inquiries. And if the pre-approval process involves a soft inquiry, it won’t affect your credit scores to check. If you get pre-approved, you can compare cards by looking at things like rewards, interest rates, fees and bonus offers.
• Consider your full finances. If you’re thinking about applying for a loan, such as a mortgage, the CFPB says it, “results in an additional inquiry that can lower your scores, so try to avoid applying for… other types of credit right before getting a mortgage or during the mortgage process.” 

Check out these frequently asked questions for more about how opening a new credit card could impact your credit scores.

Opening a new credit card account may cause a temporary dip in your credit scores. But making consistent on-time payments and avoiding high balances could positively impact your scores over time.

If you’re thinking about applying for a new card, you could compare Capital One credit cards and check for pre-approved card offers before you apply. Pre-approval is quick and easy, and it won’t harm your credit scores.