A new credit card is reported to the credit bureau by the card issuer and will appear on your credit report. Your payment history accounts for 35 percent of your FICO score. Negative payment history remains on the report for seven years, and positive history can remain for up to 10 years. If you don't make charges on the credit card, however, that credit card can still impact your FICO score in a number of ways.
Credit Utilization
The creditor will report the credit limit of the card as well as how much of that line of credit is used. Thirty percent of your score measures how much debt you have, according to the Fair Isaac Corp, which calculates credit scores. The score measures your credit-utilization rate, which is the amount of debt you have relative to the amount of credit you have. The more debt you have, the higher this rate and the lower your credit score. If you don't use the credit card, the more available credit you have. This available credit present on your report will help lower your credit-utilization ratio and increase your FICO score.
Credit History
Fifteen percent of your credit score is the length of your credit history. This percentage averages the age of all of your credit accounts. When you get a new credit card, that card will reduce the average age of your credit history, whether or not you use it. So you may initially see a drop in your score due to this; however, as the account remains on your report, it will continue to age and thus the average age of your credit history will lengthen, increasing your score over time. The longer your credit history, the higher your score.
Credit Mix
Even if you don't use the card, the mere presence of it can improve your credit score. Another 10 percent of your FICO score reflects the mix of credit types on your credit report. For the best score, FICO encourages variation among the types of accounts on the report. This means the report should reflect different kinds of installment loans, like a car loan and a mortgage, and revolving credit accounts, such as credit cards, charge cards and store cards. FICO warns, however, not to take on more credit than you need in order to improve your credit mix. Only apply for credit if it is necessary.
Inquiries
Most credit card issuers will pull your credit before approving you for a credit card. This will be a hard inquiry and will remain on your credit report for two years. Hard inquiries impact your credit score. The more hard inquiries you have in a small span of time, the more of a chance those inquiries will drop your score. Whether or not you use the card, the fact that you applied for the card means the inquiry will appear on your credit report. Although the inquiry remains on your report for two years, FICO only considers inquiries from the last 12 months when calculating your credit score.
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