Does opening a new Credit Card lower my Credit Score?

Does opening a new Credit Card lower my Credit Score?

No, this is a common misconception – see below.

Do you ever ask yourself WHY you think something is true? For example, I thought it was a certainty, a universal truth, that in-state college tuition was cheaper than out-of-state. Period. Guess what? Not true. Then you start to question…where did I hear that? Was it a magazine? Was it my uncle who’s never wrong? Is this a universal truth? Hmmm… And the result is that, in many instances, our reasons for thinking something are illogical and what’s worse, those ideas that we thought to be true create a fear inside us and keep us from acting in such a way that might just be very beneficial for us. This is the case for the common misconception that opening a new credit card (or miltiple) will lower your credit score…

I opened over 10 new credit cards and my score went up 133 points in 8 months

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Disclaimer: This is not the only reason my credit score changed: correlation not causation

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My FICO Score as of 5/24/2016

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I am going to argue that #1 and #2 below are given:

credit score

Establishing and improving credit is important and the FICO scoring system is dominant

  1. FICO, a credit scoring system used by 90% of lenders in America, determines approval odds on a mortgage, auto loan, and credit card
  2. FICO is also used to determine how much money we get approved to borrow and our interest rates on the money we borrowed (if approved).
  3. It is unlikely that lenders will get traction on a new dominant scoring system anytime soon, but if anything else does become mainstream I’ll be sure to update you here first


credit score

There is a major misconception among American’s that applying for new credit cards will “hurt” or lower one’s credit score

  1. What’s more, in THIS USA Today article from April 2015, creditcards.com reports that 36% of Americans between the ages of 18 and 29 have never even had a credit card
  2. Do you fit into either of these categories?
  3. Bottom line: If you do not use credit, you will not have a credit score


*I go into great detail about Credit Scores, the FICO scoring system, and what it means for you and me in the FAQ section of my website.


For this blog post I want to focus on one thing:

Debunk the myth that opening a new credit card (or multiple) will result in a lower credit score

I am going to keep this as simple as possible, and I’m happy to discuss in more detail in the comments section below

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First: Let’s understand how your FICO Credit score is determined:

credit score


Summary: 65% is determined by your payment history and available credit.

What does that mean for purposes of- Does opening a new Credit Card lower my Credit Score?

  • It means that establishing credit, using credit cards, and paying off credit card balances in full each month IMPROVES your credit score.
  • It means that a $5,000 balance on a $20,000 credit line (25%) is worse than a $5,000 balance on a $50,000 credit line (10%).
    • The best way to increase your credit line from $20,000 to $50,000? Open a new credit card

That’s it.

  • Doing those 2 things GREAT is 2/3 of the factors used to determine your score, which, outweigh the other 1/3 (2:1).
  • So, even if you did everything wrong with the other 35% (3 factors) you would still be at 2:1 improve/help your score over lower/hurt your score.

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