I’m wondering how much my credit score will drop if I apply for a new credit card. I’ve currently got three credit cards, but I want to apply for a new one so I can get the sign up bonus. I’m wondering how much my score will go down because of this. – Alex, Tennessee
Thanks for the question, Alex. We’re going to assume that you’re talking about your FICO credit score in this question, as that’s what lenders generally look at. An application for new credit will usually cause your score to drop by less than 5 points.
Some people have reported drops of over 10 points. FICO has stated that people will thin credit files (e.g, not much credit history) will have their score affected more than those with thick credit files (e.g a lot of credit history).
When you apply for new credit, the lender will pull your credit report. This pull is called a hard inquiry, it stays on your report for a period of two years but only affects your score for the first twelve months. Most people find their score has recovered the small point lose within 3-6 months.
It’s also important to note that when you’re approved for a new credit account the AAoA (average age of accounts) will also drop, which can cause a decrease in your score as well. This is most noticeable for people with few credit accounts.
Thanks again for the question, Alex. If you have a question, get in touch and contact us. If something in our answer to this question wasn’t clear, answer below.