Hurting Your Credit Score by Applying For a Credit Card
Do you realise that you have the potential to hurt your credit card simply by applying for a credit card? Many consumers fail to realise that with every application for a credit card, the inquiries made by the credit card company into their credit reports result in up to 5 points being deducted from their credit score! Now, that’s food for thought in case you are unaware and are contemplating applying for another credit card to add to your credit card collection.
Why they do take away points from your credit score when you apply for a credit card? The answer is simple. By applying for a credit card, you are essentially applying for a credit line. Having multiple credit lines show a tendency towards excessive credit usage and thus, increases the risk of an uncontrolled spending trend and this in turn, increases the chances of your defaulting in your credit.
So, are we dealing with hard and fast rules here? Not exactly. The “consolation” one gets is that the dent in the score is likely to be repaired in a matter of months if you are able to keep to your payments religiously. Moreover, when your credit card application is successful, there is a potential upward trend in your credit score as this new line of credit boosts your personal credit. The converse is also true. If your credit card application is rejected, you risk further decrease in your credit score. And when you then start applying for other credit cards hoping to get lucky, you might end up severely depleting your credit scores if those application are also refused.
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