Applying for a new card may trim a few points from your credit score, but it shouldn’t last — as long as you use the new card wisely
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Dear Credit Score Report,
I have a credit score of 750. If I apply for a credit card, how many points roughly could my credit score drop? Cheers. — Joe
Applying for a new card may trim a few points from your robust credit score, but such a decline is unlikely to have a large or long-lasting impact on your borrowing.
Based on your credit score alone, I can’t give you an exact number of points you’ll lose — but neither can FICO. When a new account gets opened, the points shaved off a consumer’s FICO score “tends to vary according to other pieces of information on the credit report, such as payment history, the length of time the person has been using credit and the number of recently opened accounts,” says Barry Paperno, consumer operations manager at myFICO.com. We can, however, come up with a rough estimate: According to FICO’s website, for most borrowers, one additional credit application will result in a loss of fewer than five points.
So what does a loss of that size mean to a borrower with a FICO score of 750? Not much. Even if you lose five points, your credit score will remain within a range that allows you to qualify for the best rates on a 36-month auto loan and a 15-month home equity loan, as well as nearly the best rates on 30-year fixed mortgage, data on myFICO.com shows.
Meanwhile, your score should experience a speedy recovery. While the new credit inquiry will appear on your credit report for two years, “its impact in terms of scores diminishes within a matter of a few months,” says Rod Griffin, director of public education with credit bureau Experian. You can help the process along. “To ensure the quickest possible recovery of any points lost due to the opening of a new account, the best advice is to make all payments on time, keep account balances low and avoid opening any additional new accounts,” Paperno says.
But with a score of 750, I’m sure you already know about responsible borrowing.
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