Your three-digit FICO score is key to obtaining a credit card at the best possible rate, but the act of applying for one can hurt your score. Fortunately, the bruising from a credit card application is slight as long as it does not look like you are trying to prepare for a financial meltdown.
Identification
Applying for credit hurts a credit score by one to five points, according to the website Bankrate. A credit card application does not qualify as rate shopping. The credit rating agencies count the inquiries for most loans -- such as education, auto and mortgages -- that occur within a short period as a single inquiry, because these types of credit are traditionally associated with several applications to get the best rate.
Potential for Harm
If you have too many hard inquiries on your credit report, the damage from an inquiry increases exponentially. A hard inquiry occurs when a credit checks your file because you have applied for credit. Consumers with an excessive number of hard inquiries -- usually six or more -- have an eight times greater chance of declaring bankruptcy, according to the Fair Isaac Corp. Inquiries stay on a report for 24 months, but the FICO model only factors them into credit scores during the first 12 months.
Pre-Approved Offers
Credit card offers do not hurt your credit score if you do not apply for one. Promotional offers, also called "pre-approved credit cards," are a common loan that comes with a "soft inquiry." Lenders cannot see how many soft inquiries you have, but once you accept a promotional offer it will count as a hard inquiry.
Tip
Try to apply for a credit card when you are not looking for other loans. Good borrowers usually have no more than one hard inquiry every six to 12 months. If you want to avoid losing any points on your credit report, you could get a credit card without ever putting in an application by finding someone willing to put you down as a joint account holder.
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