Why is my credit score low after getting a credit card?

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    Geoff Massanek
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    #8744
    Team StellarFi
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    Any new credit application such as a credit card can cause a dip in your credit score because it involves what is known as a hard inquiry. In a hard inquiry, your credit score drops by a few points because most credit scoring models see how recently and how often you have applied for credit. If you apply for multiple credit cards in a short period of time, it results in multiple hard inquiries and the pulling of your credit reports by lenders. The negative impact is more if you have a short credit history and only a few credit accounts. Hard inquiries remain on your credit report for up to two years and may affect your credit score for up to one year.

    In the long run, having a credit card helps build a positive credit history as long as you continue to pay your bills on time and maintain a low credit utilization rate. An alternative is to look for a pre-approval option that takes a soft inquiry before formally applying for a card. Soft inquiries (a review of your credit file and credit accounts) do not impact your credit score. Note that this does not guarantee credit card approval.

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