Will a Credit Card Application Hurt My Credit Score?

Closeup of a credit card application
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Your credit score is a three-digit number that's used by creditors and lenders to approve your applications. These new applications, including new credit card applications, could affect your credit score.

What Happens When You Apply for a Credit Card

Part of the process to approve your credit card application involves a peek into your credit history. The card issuer wants to see how you've handled your credit cards and other debts, the amount of accounts you have open, whether you've paid on time or have serious delinquencies, and the balance you're carrying across your credit cards and loans.

Whenever a business, a credit card issuer for example, checks your credit report as a result of your application, an inquiry is placed on your credit report to show that someone's checked your credit. Ten percent of your credit score is based on the number of inquiries into your credit history within the past 12 months.

How Applications Affect Your Credit Score

Since new applications for credit is 10% of your credit score, simple math indicates your credit score could stand to fall as much as 70 points if you have a 700 credit score. Fortunately, it's not likely that you'll lose that many points over a single credit card application because there's much more information included in your credit score that will "absorb" the impact of one credit card applications. However, making multiple applications in a short period of time can cost more credit score points. The exact impact to your credit score depends on the other information in your credit report.

Even if your credit score isn't hurt by the additional inquiries, a card issuer might deny your credit card application simply because you've applied for several other cards recently. Too many recent applications can be perceived as desperation for credit and desperation is almost always a turn off.

Or, it could indicate that you're taking on too many accounts in a short period of time, a move that could make it difficult to afford all your new monthly payments.

Whether your application is approved or denied doesn't affect your credit score, not directly at least. If you're approved, opening a new credit card could cost you points in the "age of credit history" area because it lowers your average age of credit history. Being denied, on the other hand, won't impact your credit score.

How Long Will the Application Count Against You?

The good news is that only credit inquiries made within the past 12 months are used to calculate your credit score. And after 24 months, the inquiries fall off your credit report completely. That time limit only applies to credit inquiries. Other negative credit report information will remain on your credit report for longer.

Why Apply for a Credit Card if It Can Hurt Your Credit?

Applying for a credit card can hurt your credit score in the short term which is why you should avoid making new applications if you're preparing for a major loan like a mortgage or auto loan, especially within the next 6 to 12 months.

As long as you're responsible with your credit card and your other financial accounts, your credit score can rebound from any points lost with a new credit card application.