 TITLE: Will a New Credit Card Affect My Mortgage Application? CONTENT: How Applying for a Credit Card Affects Your Credit\n--------------------------------------------------\nUltimately, getting a new credit card account and managing it well is a prime opportunity to build good credit. But applying for and opening a new account can cause minor ups and downs with your credit score, which are important considerations if you're also getting ready to apply for a mortgage.\n*   **A new credit application can ding your credit score.** When you apply for credit, the card company reviews your credit score and report, resulting in what's called a hard inquiry. Hard inquiries can knock a few points off your score and will stay on your credit report for two years. The effect of hard inquiries typically diminishes after a few months.\n*   **New credit activity can lower your score.** Credit scoring company FICO looks at how many recent inquiries appear on your credit report as well as how recently you've opened new accounts. Applying for or opening a flurry of new accounts can come across as risky behavior, and this could affect your score. Recent credit activity accounts for 10% of your score.\n*   **A new account lowers your average age of accounts.** The length of your credit history and the average age of your accounts make up 15% of your credit score.\n*   **More available credit can improve your credit utilization.** Credit utilization is the amount of revolving credit you're using divided by your total available credit. Here's a quick example: Say you have $2,000 in revolving debt (typically credit card balances) and $8,000 in available credit. In this case, your credit utilization is 25%. If you add a new card with a $5,000 limit and a zero balance, your credit utilization drops to around 15%—good news, since amounts owed on your accounts make up 30% of your FICO® Score☉ . But beware: If you max out your new card to buy $5,000 worth of furniture, credit scoring models will consider the utilization on that single card (100%) and across all your cards (53%)—in both cases, that's high enough to damage your credit score and possibly raise a red flag with your lender. In general, it's best to keep your credit utilization under 30% at all times, and the lower, the better.\n*   **You may add to your credit mix.** If your new account adds diversity to your credit portfolio, your credit score may improve. Credit mix speaks to how many different types of credit you manage, such as revolving credit cards and installment loans, and it accounts for roughly 10% of your credit score.\n*   **Good payment history helps your score, eventually.** Payment history accounts for 35% of your FICO® Score, which makes it the most influential factor. But a new credit account doesn't have a payment history to report. For that reason, a new account may even lower your score temporarily. Making your monthly payments on time will raise your score eventually, but this can take a few billing cycles or longer. END