Will Applying for a Credit Card Lower my Credit Score?

Most credit card companies will check your credit reports when you apply for a card. The credit check is recorded as an inquiry on your reports--allowing other creditors to see that you have been shopping around for new credit. A large number of inquiries over a short time could cause your credit scores to drop, making it tougher for you to be approved for another credit card or loan.

Hard Inquiry

When a potential creditor pulls your credit report, it's considered a "hard inquiry" or "hard pull." On the other hand, when you view your report, it is considered a soft inquiry. Soft inquiries do not affect your credit score, but excessive hard inquiries can, according to Bankrate.com. It's impossible to say just how much a hard inquiry can cause your credit score to drop because so many other factors are involved. The FICO credit scoring system will take into account the number of previous hard inquiries along with your current debt load and repayment history. But generally speaking, one application for a credit card should have a negligible impact on your credit score.

Excessive Inquiries

Excessive hard inquiries are a red flag on your report and should be avoided, according to Bankrate.com. Multiple applications for credit cards in a short time could be interpreted by creditors as a desperate attempt to add credit. Generally, apply for credit only a few times within a year, Bankrate.com advises.

Considerations

Credit score problems caused by excessive hard inquiries are a good reason to carefully consider when to apply for credit cards. For example, applying for a gas station credit card will result in the same hard inquiry as applying for a full-featured MasterCard or Visa. That means it might be wiser to apply for the bank card since it can provide additional features and perhaps a larger credit limit. Guarding against hard inquiries is also why you should think twice about applying for "instant" credit card credit at checkout counters and online.

Credit Reports

You can see the hard and soft inquiries on your credit reports. Get copies of your reports from the website AnnualCreditReport.com. Or call 877-322-8228 to order by phone. The three nationwide credit bureaus--TransUnion, Equifax and Experian--established the site to provide free reports as required by law. You're entitled to three free reports every 12 months, one from each of the credit bureaus.

Exceptions

Some credit card applications won't affect your credit score at all--or result in a credit inquiry. Some banks offering credit cards for people with bad credit advertise that the cards can be obtained without a credit check. In those situations the cards often feature very low initial credit limits of around $200, along with staggering interest rates and exorbitant fees.