How Does Opening A New Credit Account Affect Your Credit Score?

Your credit history is one of the factors that will determine how your credit score will be impacted by a new credit account. Ten percent of your credit score is determined by new accounts. When you open a new credit account, this inquiry will show up on your credit report. This may not have an effect on your credit score. However, it can cause your credit score to go down slightly.

 

The number of inquiries that you have on your credit report and the type of inquiry will determine the impact that the new account has on your credit score. The more inquiries that you have, the lower your score will be. If you apply for multiple accounts, then lenders may think that you are trying to use your credit accounts to supplement your income.

 

A new credit account will also make your credit age younger. Keep in mind that a new credit account can benefit your credit if it is different from all of the other accounts on your credit report. For example, you have multiple credit cards on your account, and you take out a car loan. This benefits your credit score because you have diversified your credit history.

 

Adding new credit can also reduce your credit utilization. This is the balance to the limit ratio. If your credit score does drop, then you can get your score back up within a few months. Keeping balances low and paying bills on time will also help your credit.

 

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