How many points will my credit score go down if I open a new card?

Impact of Opening a New Card on Credit Score

Opening a new credit card triggers a hard inquiry, which temporarily affects your credit score. This inquiry is used to assess your creditworthiness and determine your eligibility for the card. While it can impact your score, the reduction is typically minor and short-lived.

Extent of Score Decrease

The exact number of points your credit score will decrease by varies depending on your credit history and the type of card you apply for. However, most hard inquiries result in a decline of less than five points. This temporary decrease is typically offset by other factors that influence your score, such as payment history and credit utilization.

Temporary Effect

The impact of a hard inquiry is brief. Your credit score usually starts to recover after a few months. The inquiry will remain on your credit report for two years, but its influence on your score diminishes over time.

Impact on FICO and VantageScore

The two major credit scoring models, FICO and VantageScore, treat hard inquiries differently. FICO places less emphasis on hard inquiries than VantageScore, meaning the impact on your FICO score is likely to be smaller.

Factors to Consider

When deciding whether to open a new credit card, it’s important to weigh the potential benefits against the temporary score decrease. Factors to consider include:

• Credit need: Is the new card necessary to meet your financial goals?
• Interest rate: Can you secure a card with a low interest rate to minimize potential charges?
• Rewards and perks: Do the benefits outweigh the potential score impact?

Conclusion

Opening a new credit card can lead to a minor and temporary decrease in your credit score. However, this impact is usually less than five points and is short-lived. By considering the need for the card and weighing the benefits against the potential score reduction, you can make an informed decision that aligns with your financial goals.