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When you apply for a new credit card, the issuer checks your credit score through a process known as a hard enquiry. Let's take a closer look at how applying for credit card can affect score.
There are generally two types of enquiries that are triggered whenever you apply for a credit card in the United Arab Emirates. These are soft inquiries and hard inquiries.
These are the inquiries raised by credit card companies that are making promotional offers or your existing credit card issuers at the time of checking your credit accounts periodically. Further, these inquiries can also be triggered whenever you take a look into your credit report or use a credit report monitoring service for the same. Note that the soft inquiries do not affect your credit score as they are not involved in the score calculations.
Inquiries that appear on your credit report and are seen by potential credit card issuers are triggered as a result of applications made by you for credit. These inquiries are used for credit score calculations.
Whenever you apply for a credit card in the UAE, the potential credit card company will take a look at your credit report as a part of the process. A hard inquiry displayed on your credit report indicates that the company asked for it. This is where you might notice a small decrease in your score. However, a single hard inquiry has a negligible impact on your score.
Also note, that these inquiries don't have any fixed points. The total number of points hard inquiries will have on your credit report depends entirely on your credit card activity and history. If you have a healthy credit history and you have been paying your credit card bills promptly, then the impact of applying for a new credit card will be minimal.
While the inquiries stay on your credit report for up to two years, their impact starts fading after a couple of billing cycles where there will be a new credit account that represents the credit risk. Moreover, a hard inquiry can never be the reason behind the decline of your credit card application. They only cause a problem when your credit score is already in bad health.
When applying for a credit card, it is advisable not to apply for multiple cards within a short span of time. The reason behind this is simple: on seeing multiple credit card applications within a short span, your potential issuer will get the hint about your financial crisis, which will impact your credit score.
Also, if you're planning to take out a loan or make a major transaction using your credit card, then delay applying for a new credit card until you get the desired credit you need. Moreover, always clear off your outstanding credit bills before applying for a new credit card.
Does applying for a credit card affect score? — We hope you got the answer to this question. Applying for a credit card is not a tough process if you keep in mind the things we've discussed above.
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