How Does Opening a New Credit Card Affect Your Scores?

You’ve probably heard it said that applying for a new credit card can have some negative effects on your scores. In addition to the “hard pull” credit inquiry that will likely result in a small score penalty, the age of your credit can be dragged down by a new account. Well, this week, I got to see first hand how temporary these minor hits can be and how opening a new card really impacts your credit score.

Before I get into it, I need to make clear that these are just my personal experiences — as they say, your mileage may vary. With that disclaimer out of the way, let me explain exactly how my credit cards were affected by my new credit card.

Last Thursday, I ended up applying and getting approved for the Uber Visa. When that happened,  my Transunion score dropped by six points according to Credit Karma. That dip was to be expected but what surprised me was what happened next.

While Barclay only pulled my Transunion report to make their decision, they reported my new account to all three major bureaus. Once this happened, my TransUnion score not only rebounded but exceeded what it was before and my other scores saw decent bumps as well. In fact, Barclay quoted my FICO at 800 in their first update to me, but that rose to 811 in their next update. The reason for this has to do with how different credit factors are weighed under the credit system.

Although credit inquiries and age of credit do affect your scores, these only represent  10% and 15% of your score respectively. Meanwhile, my credit utilization — which makes up 30% of your score — decreased overall since I now have a few thousand extra dollars in available credit. So, while my scores may dip a bit when I actually start using my card (the current $0 balance is boosting my utilization), it seems I may come out ahead on this one.

The moral of the story is, because of how your credit scores are calculated and the factors that go into them, applying for a new credit card may not affect your credit scores the way you’re expecting. If my experience is anything to go by, you may see a small dip to begin with but see benefits overall. The key is just to continue to your good credit habits with your new card, including making timely payments and keeping your utilization low.

Author

Kyle Burbank

Kyle is a freelance writer and author whose first book, "The E-Ticket Life" is now available on Amazon. In addition to his weekly "Money at 30" column on Dyer News, he is also the editorial director and a writer for the Disney fan site LaughingPlace.com and the founder of Money@30.com.

Other Articles by Kyle Burbank

collage of Discover It Q2 2024 bonus categories

Here's What Discover It Customers Can Earn 5% Back on in Q2

It's March 1st, and you know what that means: time for Discover to announce its second quarter bonus categories! Oh, that wasn't what you were thinking? Well, then. Regardless, continuing a tradition they began last year (prior to that, they'd just announced the full quarterly calendar before the new year),...
grey Moderne Gentlemen Travel Duffle Bag

Travel Tuesday: Moderne Gentleman Travel Duffle Bag Review

As someone who not only travels with some frequency but also enjoys reviewing products, I'm always on the lookout for interesting travel accessories and the like. That's why I was excited when I found the clever Halfday garment duffle a few months ago. Well, after seeing that review, the people...
SiriusXM logo

Another Bill "Negotiation" Win! Cutting Our Sirius XM Fee

Earlier this month, I shared the story of how I managed to instantly save money on my Adobe Creative Cloud subscription. Basically, by going through the steps to cancel, I was presented with a deal that I could live with. Well, just today, I had a similar experience with another...

Leave a Reply

The "Email" field is empty, you must enter some text to proceed.The text you entered in the "Email" field appears to be invalid, please edit it and try again
Get Posts in Your Inbox
Featured Articles
collage of Discover It Q2 2024 bonus categories

Here's What Discover It Customers Can Earn 5% Back on in Q2

It's March 1st, and you know what that means: time for Discover to announce its second quarter bonus categories! Oh, that wasn't what you were thinking? Well, then. Regardless, continuing a tradition they began last year (prior to that, they'd just announced the full quarterly calendar before the new year),...
grey Moderne Gentlemen Travel Duffle Bag

Travel Tuesday: Moderne Gentleman Travel Duffle Bag Review

As someone who not only travels with some frequency but also enjoys reviewing products, I'm always on the lookout for interesting travel accessories and the like. That's why I was excited when I found the clever Halfday garment duffle a few months ago. Well, after seeing that review, the people...
SiriusXM logo

Another Bill "Negotiation" Win! Cutting Our Sirius XM Fee

Earlier this month, I shared the story of how I managed to instantly save money on my Adobe Creative Cloud subscription. Basically, by going through the steps to cancel, I was presented with a deal that I could live with. Well, just today, I had a similar experience with another...

Everything You Need to Know About Flying Allegiant Air in 2024

When my wife and I moved to Springfield, Missouri almost a decade ago, one of the selling points (or at least what kept it in the running) was that there was a nearby airport that served a decent number of destinations. Unfortunately, while it is convenient, flying out of such...