Q: I was thinking about applying for a credit card that would give me more points and rewards for all the money I charge. What should I consider before doing this in regard to my credit scores?
A: Most consumers do not realize that simply applying for a credit card can hurt their credit scores. Every time a creditor analyzes and underwrites your credit card application, a copy of your credit report is pulled. This causes an inquiry, which can drop scores 2-5 points. If multiple or a series of credit card applications are filed, it can be viewed as extreme inquiry activity, and scores may drop by even more. Once the application is approved, the mere opening of the account can reduce scores by more than 80 points, depending on the actual credit profile, score, and age of credit. Therefore, making an educated choice and having a strategy before applying can help minimize damage to your credit while filling more of your needs as a consumer. It’s essential to consider your credit score, credit card needs, and the timing of your short and long term goals before you take any action.
Based on the little I know about your specific credit, my advice to you would be to buy your Fico score and then browse credit.com to find the right credit card, or the one that you know will be approved based on your current Fico score. However, one more thing to consider is if you plan on getting financing in the next year or two, you might want to wait, since opening the new account will drop your scores.
