Is opening a brand new account going to hurt your credit score when it comes down to credit scores? However, opening a new account can have a negative affect on your credit score. Only 10% of your total score is affected by new credit. More of your score is based on your payment history and your utilization of credit. There are ways to reduce the impact on new credit accounts.
Open a cash management account
A cash management account allows you to manage and deposit money without opening another checking account. These accounts do not usually have any fees, but fees may apply if you withdraw funds early. Cash management accounts offer simplicity, a steady return on your cash, and are less expensive than dedicated accounts. They might not have all of the features of dedicated accounts but they are a good choice if you don't have much time to manage your money.
Avoid opening a credit card with a new company
The opening of a new card account with a credit company can have a negative impact on your credit score. Your credit score will be affected by the age of your credit history. This is 15% of your overall score. A new credit line will make you look more risky to lenders because you may have less money to pay your bills. Wait until you have a better credit score before applying to a new credit line.
Avoid opening a new checking account
It's possible to think that opening a checking account will not affect your credit score, but it isn't true. Some banks will require you to have a credit check before they approve you for an account. A "soft pull" does not hurt your credit score, but a "hard pull" or "hard inquiry" can negatively affect your credit score for up to 12 months. You can avoid a hard inquire by calling the bank before you open an account.
Avoid overdrawing your checking accounts
It is tempting to spend more money than you have when opening a new check account. You can avoid this by selecting a checking bank with an expansive overdraft policy. It is a good idea, too, to keep track of any electronic transactions. You'll be able to see when funds are available and when they're getting close to zero.
Applying for a new card is a waste of time
Credit card applications may sound appealing but they can adversely impact your credit scores. You can help your credit score recover by responsibly using the card. Moreover, you should avoid applying for multiple new cards at one time. This way, you won't risk getting a hard inquiry just before an important loan application. In addition, using WalletHub's free credit score simulator is an excellent way to learn how your new application will affect your credit score.
Don't make late payments for credit cards
You can prevent late fees from happening with your credit card. It is easy to forget about paying the minimum amount. However, late payments can not only affect your finances but also your credit score and credit report. You can request a waiver of fees if you have not missed a payment in the past.