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Why Is My Credit Score Low After Getting a Credit Card?

Why Is My Credit Score Low After Getting a Credit Card?

You just got a new credit card, and now your credit score is lower. Discover why this happened and whether it matters in the long term.

When applying for a credit card, the issuer makes a hard inquiry on your credit report. This type of check and new credit affect 10% of your FICO score, leading to a slight drop in your credit score. This should be temporary, though.

Learn more about why getting a new credit card pulls down your credit score, as well as why you may want to get a card anyway. You will also learn how your habits with your new card matter more than the fact that you got it.

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Why New Credit Cards Lower Your Credit Score

You have been paying the same bills for some time and are continually keeping up on loan and credit card payments, yet you see your credit score changing from month to month. What may be impacting it that you are unaware of? Is there anything you can do about it? Your new credit card may be to blame.

Why Does a Credit Score Matter?

Before getting into how a new card affects your score, make sure you understand the importance of your credit score.

Your credit score is a number used by lenders to determine how likely you are to repay something you have borrowed. This is particularly important when trying to buy a house. It will play a large part in banks deciding whether or not you get the home loan and how good of a rate you receive.

This score is calculated based on your history of payments, the amount you owe, how old your credit history is, if new credit has been added, and the type of credit you have. A change in your score means one of these things has changed.

Why Did the Score Go Down If Nothing Changed?

Some scores will change based on factors you have no control over. Generally, however, your

behavior affects your score, just not in obvious ways.

This includes when you open a new credit card. But why does your score drop when you get a new credit card?

How Much Does Your Credit Score Go Down After Applying for a Credit Card?

Many people falsely believe that applying for new lines of credit permanently and negatively affects their credit score. This is only the case if you are reckless about it and abuse your new lines of credit. Examples would include carrying large balances and interest as well as missing payments.

However, just opening an account doesn't have a long-term impact on the score.

To better understand the impact, make sure you understand how your score is calculated.

What Goes Into Your Credit Score?

There are several factors to consider when determining your credit score. These include:

Payment History

This factor makes up 35% of your credit score. This is why it may feel that it gets over-emphasized to pay your bills on time. This is single-handedly the best thing you can do to improve your credit score.

This is also why the long-term changes to your credit score after getting a new card depend more on how you use it than the fact that you got it. If you make your payments on time consistently, you may notice a boost to your score. However, if you miss payments, your score will drop.

Amounts Owed

The other large portion making up your credit score is what you owe. This factors in at 30% and is referred to as your credit utilization rate. This is the total balance on your cards divided by the credit limit you have.

Assuming you don't change your spending habits drastically, this means that getting a new credit card without closing an old account can boost your credit score. After all, you will have a higher total credit limit but the same total balance.

However, if you keep a balance on your new card, it could potentially worsen your credit utilization rate. That is part of the reason it is important to carefully evaluate your finances before getting another line of credit or card.

Credit History

This is a portion that makes up 15% of your credit score. This is the average length of time you have had your accounts open for. The longer your credit history, the higher the score is.

If your credit history is still very young or non-existent, getting a new card can help it in the future. But you will have to wait for that newly opened card to get older for it to make a difference.

Credit Mix

Another factor that is considered when tallying your credit score is what your credit mix looks like. This is what kinds of credits you have. Is it a variety of cards, mortgages, student loans, and personal loans? This factors in at about 10%.

That means that if you didn't previously have a credit card but had another type of credit or loan, getting a credit card can boost your credit mix. If you already have a different credit card, you shouldn't notice a difference.

Your New Credit

This area makes up the final 10% of your credit score. It accounts for new inquiries into your credit report. This is why you will sometimes hear that pulling your credit or applying for a credit card can pull your score down.

This is the biggest factor affecting your score drop when you get a new card.

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Do Credit Cards Drop Your Credit Score?

While it is true that opening a new credit card can ding your credit score and drag it down, it is usually only a temporary change. This is in large part because when you apply for a credit card, the creditor looks at your history, and it is considered a "hard pull." Whether or not you are approved, you may experience a slight drop in your credit score.

Do not confuse these hard inquiries with a soft inquiry. If you check your credit report or your employer checks it as part of the hiring process, this is only a soft pull. Soft inquiries do not affect your credit score.

Other Ways a New Credit Card Potentially Hurts Your Credit

While the act of applying alone can cause your score to drop a bit, a new card may result in larger drops if you have a lot of available credit on the new card and use too much of it. This is also true when you only have a couple of cards, and your credit history is new.

Higher balances also play a key role in your credit score. When a new credit card helps you make a large purchase or transfer of balance, you have higher credit utilization. This is weighted heavily to your score. It is calculated overall as well as per card. It is recommended by credit experts that you utilize only 30% or less of your available credit for the top scores.

You should remember to get an overall picture of your finances before deciding whether or not to apply for that credit card. If transferring your balance to a new account with a 0% interest will help you with your debt, it may be worth it.

You may also experience a lower average account age, which will affect your score. In the case of fewer credit cards, you will notice a larger impact than when you have many cards.

It can also adjust the length of your credit history. It is a minor factor in your credit score but does count for about 15% of your credit.

How Long Does It Take for Your Credit Score to Go Up After Getting a Credit Card?

The exact impact will vary from case to case. Generally speaking, your score can drop about five points every time you apply for another credit card. This will largely depend on your current credit history and score.

It is also worth noting that a single hard inquiry has a very small impact, but if you have several of them, this may hurt your score to a greater extent. That said, your credit inquiries only account for about 10% of your FICO score. In other words, if the rest of your history is good, you shouldn't notice a major issue.

Keep in mind that hard inquiries can stay on your credit report for as long as two years. While they may stay on the report that long, they have a lesser impact later on during that period.

Benefits of Opening a New Card

Even with the slight drop in your score, it is frequently worth opening a new credit card. That is because there are some definite upsides to opening a new line of credit.

Improved Credit Utilization

This new card will increase your overall credit limit while keeping your credit usage similar, assuming your spending stays the same. This can make your credit utilization lower overall, helping your credit score.

Improved Payment History

For those trying to build credit, a new account allows the opportunity for on-time payment history. Make sure you pay on time, every time, and this will give you a consistent track record going forward.

Credit Diversity

Your credit scores also award points for showing you are capable of managing more than one type of credit. If you have installment loans as well as credit cards, it will imply that you are more responsible at managing your funds.


The process of applying for a new credit card involves a hard pull or hard inquiry. This can cause a temporary drop in your credit score. It's important to note that change is temporary. How your new credit card affects your score in the long term depends on numerous factors, including your credit history before you got it and whether you make on-time payments.

Also Read: What To Know About The Petco Credit Card