Many people take having credit for granted but don’t truly realize the importance of a credit card. When you have credit, it opens a variety of doors for you and can impact your life in different ways. Your credit score is a crucial tool that can determine whether you can qualify for a loan, buy a car or even buy a house. However, you might wonder if a credit card can disturb your score.

Applying Adds Hard Inquiries

So, does applying for a credit card hurt your credit? It depends.. Whenever you apply for a new card, there is always an inquiry into your credit. If you find out that you are preapproved for a credit card and apply, it could result in a soft inquiry. As professionals at SoFi say, “soft inquiries don’t affect your credit score no matter how often they occur.”

On the other hand, if you apply for multiple cards at once, there will be hard inquiries made on your credit report. Lenders want to ensure that you’re a good risk to lend money to, so they will perform a hard inquiry, which can lower your credit score. However, although an inquiry stays on your credit report for two years, your credit score is only affected for a few months.

Having Multiple Credit Cards Increases Your Credit Mix

Credit cards are considered to be revolving credit, which allows you to continuously borrow when making purchases as long as you pay your bills with at least the minimum payment. Other forms of credit like loans are paid off in installments. If you have credit cards and loans, this increases your credit mix, which can benefit your credit score: Your credit score is made up of a variety of factors, but your credit mix makes up 10% of your FICO score.

Getting a New Card Can Impact the Average Age of Your Accounts

The longer your credit account is open, the better it affects your credit score. As long as you keep your accounts open and active and make timely payments without missing one, it can benefit you. However, when you apply for a new card, it can cause the age of your accounts to take a hit. The average age of your credit accounts decreases, which will then cause your credit score to lower. At the same time, this also helps your credit utilization.

Paying Your Bills Can Affect Your Score

Paying your credit card bills responsibly affects your credit score positively. If you pay on time and in full whenever a bill is due, it will reflect on your report and keep your score in the good to excellent range.

On the flip side, paying your bills late or missing payments altogether can disturb your credit score by lowering it. If you make a regular habit of this, your score will definitely suffer.

Having Too Many Cards Can Affect Your Score

If you have too many credit cards, it can also negatively affect your credit score. However, there is no way to know an exact number for what that means. It’s believed that this can vary depending on each person.

Knowing what can impact your credit score can help you to be more responsible. It could help you maintain a good score and even improve it.