When you apply for a new credit card, the application triggers a hard credit inquiry. This happens when a lender checks your credit report to assess whether to grant you access to credit. A hard credit inquiry can lower your score by a few points for up to a year, though it stays on your credit report for up to 2 years.
Let’s explore how credit card pre-qualification impacts credit, what happens to your credit when you open a new credit card account and when it makes sense to apply for a new card.
Can you apply for a credit card without affecting your credit score?
Although the actual credit card application process does require a hard credit inquiry, there is a way to check your approval odds without impacting your credit score: pre-qualification.
Credit card pre-qualification can mean that a card issuer has identified you as a good candidate for a credit card. Often, you qualify via a soft credit inquiry. That allows the issuer to review your credit and credit score to get a sense of how you’re managing debt. While soft credit inquiries can appear on your credit report for up to 2 years, they do not affect your credit score.
If you apply for a card using that pre-qualified offer, however, you may be subject to a hard credit inquiry as part of the application process.
Can opening a new credit card help your credit?
A new credit card may help you build credit in a few ways:
- Your new credit card’s limit can help decrease your credit utilization ratio (the amount of revolving credit you’re using), which is an important credit scoring factor
- Adding a credit card to your file can improve your credit mix, which may help boost your credit score by showing that you’re able to handle multiple types of credit
- Making on-time payments can help you establish or extend a positive payment history, showing that you’re a responsible borrower
Deciding whether to apply for a new credit card
Your financial situation and needs will be important factors in deciding whether to apply for a new credit card.
For example, if you want to consolidate credit card debt and save on interest, a balance transfer card with a low intro APR might make sense if those benefits outweigh the potential credit impact and the associated fee. You may also consider your spending habits and any perks and welcome offers that come with each card. If you’re looking for a new credit card, Citi offers a range of cards with different benefits, including rewards for purchases.
If you decide to move forward, remember that while applying for a single credit card usually has a minimal and temporary effect on your credit score, applying for multiple credit cards or different types of debt in a short period can be a red flag to lenders. It may look like you’re taking on more debt than you can handle. When available, take advantage of credit card pre-qualification to help you narrow down your options.
Understanding what you want in a new card, as well as the potential impact on your credit score, can help you navigate the application process and make smart financial decisions.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
