Here's Exactly How Applying for a New Credit Card Affects Your Credit Score

By Nathan Hamilton Markets Fool.com

One of the most common credit score questions relates to how applying for a new credit card will affect your credit score. This is important to understand as hard inquiries in the past 12 months influence 10% of your FICO credit score.

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In the previously recorded Facebook Live segment below, Motley Fool analysts Michael Douglass and Nathan Hamilton tackle this topic head on with a real-life before-and-after credit score comparison of how applying for a new card affects your credit score.

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Michael Douglass: How many points does your credit score drop with every inquiry?

Nathan Hamilton:
I have a good answer, actually.

Douglass:
Go ahead!

Hamilton:
Weactually didn't cover it in here, but about two months ago,I went ahead and reorganized all my finances alltogether. That meant ditching some old credit cards andgoing for some of the new, better offers thatI'm going to be using for the next few years.

Douglass: Andhere at The Motley Fool, we're in these jobsbecause this is the kind of stuff we love to do. I'mhaving a great weekend with my spreadsheets, you know what I mean? So,I'm not at all shocked that this is part of your spring cleaning.

Hamilton:
And a long time ago, I thought to myself,I want to know exactly how much my credit score decreases witheach inquiry. I had threecredit score inquiries. My score before it was 814 on a FICO. After those three inquiries, it was down to 795. I checked two days ago to see what it's at, and it's at 804. So,there was that temporary drop of 20-ish points.

Douglass:
19.

Hamilton:
Yep. But,back above 800. You can seein that short time frame --

Douglass: Andthat was for three different inquiries.

Hamilton:
Three inquiries, three credit card approvals.

Douglass:
So,that averages out to about seven points. Of course,your mileage may vary, but that should give you a sense of the scale -- single, low double digits, not 100 points or something like that.

Hamilton:
Yeah.I would generally say, to be safe, five to 10 pointsis what you're going to get dinged with an inquiry.

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Nathan Hamilton owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.