- Whether or not you receive approval for the new credit card, the inquiry into your credit will harm your score. Whenever a creditor runs a check because of an application you put in, it always dings your score a few points. How the credit card affects the rest of the factors in the FICO formula is another story.
- Any new line of credit lowers the average age of your accounts unless you are a new borrower and have no other accounts. If you had a single line of credit for 10 years, for example, a new line of credit would reduce the average age to five years. Credit history counts for 15 percent of your credit score, according to the Fair Isaac Corporation.
- Acquiring a credit card when you have no other accounts is positive because you establish a credit history. When you only have an installment account and then add a credit card, it increases your variety of credit accounts -- 10 percent of your score. When you have several accounts, nobody can say what kind of effect a credit card has on your credit score. The FICO scoring model has so many factors that pinpointing the effect of any one item is nearly impossible.
- Go over your contract for the credit limit and any fees on your account. Retail credit cards, for instance, are notorious for having low limits and high fees that could drastically increase your credit utilization as soon as you activate the account. Credit utilization is the percent of your card's limit you use. A card with $250 in fees and a $500 limit, for example, starts off with a utilization of 50 percent -- high for any account. Also, limit the number of credit cards you apply for each year because more than six hard inquiries in a year is extremely negative.
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