By George Reed on April 3rd, 2017
There is a myth that a new credit card can ruin a credit. People are cautious about opening a new credit card as they are afraid of its negative influence in future. Experts can’t give an exact answer about the influence. Every situation is unique and answering definitely is complicated.
Still, there exist certain variants of a succession of events. Our installment credit service has made a list of the circumstances when credit card registration can influence your credit. Check it out and be cautious about your credit!
There is only one situation when credit card opening won’t influence your credit. And it’s your first credit card opening. It won’t influence your score as people usually don’t even have a credit. Here are 3 most common ways of credit card negative influence:
Every Inquiry Costs a Couple of Credit Score Points
Indeed, additional inquiries can lower credit score up to several points. People, who apply for loans, credit cards, and other kinds of financial help, usually suffer from their active intentions. Financial institutions apply to their report to find out information about their creditworthiness. All it reflects on credit score and sometimes ruins it!
A single case won’t change an overall picture radically. But you should keep in mind that your inquiries will be displayed in credit report even in the case of rejection. Here are the ways to bulletproof your credit score.
Credit Card Lowers Your Overall Credit Age
Every mature person, who deals with finances, knows that their candidacy in the business world has a credit age. It reflects the amount of experience of your credit usage. In a simple word, the longer you build a credit, the better your score will be.
Credit age represents 15% of credit score. This indicator has two influencing factors: the age of the oldest account and the average age of all accounts. Every new account, especially credit card one, will lower the average age of all accounts. This slight change will lower credit as well. Again, there won’t be a radical change in your credit score. Of course, if you don’t open new accounts regularly.
You Make Substantial Charge at the First Day
The higher you raise credit utilization, the lower falls your credit. Credit utilization is the ratio of your credit card balances to their credit limits. You should remember that the amount of credit you use complies 30% of your credit. It means that by charging a balance that makes up too much of a credit limit, you simply boost credit utilization.
It especially refers to a stock credit card. They usually have small limits. So, people simply forget about strict limitations and keep on purchasing by credit card hurting their credit.
How to Boost Credit with Credit Card
The good news is that the situation isn’t hopeless. It’s possible even to boost or maintain credit with the help of credit card. You can control yourself and not make big purchases with the help of your new and old credit cards. It can last at least for a dangerous period. When you improve the situation, you can keep on disposing of your cards.
You can get points for an appropriate attitude to managing different types of credit. Unfortunately, this trick won’t work with the stock credit cards. Still, don’t forget that opening a new credit card and managing it rationally will definitely help to boost your score or at least save it from dropping.