 TITLE: Does Adding a Credit Card Improve Your Credit Score? CONTENT: How Does Opening a New Credit Card Affect Your Credit Score?\n------------------------------------------------------------\nFirst, let's look at how a new credit card might help you improve your credit score:\n*   **Increase available credit**: Opening a new credit line increases your available credit, which can positively affect your credit score. The key is to keep the balance relatively low so your available credit stays high. This is known as your credit utilization rate, and it's best to keep your overall credit usage under 30%. For the best impact on your scores, keep your credit utilization as low as possible.\n*   **Improve credit mix**: Your credit mix refers to the different types of accounts you have in your credit file. There are many types of debt accounts and two broad categories: installment credit and revolving credit. Installment credit refers to loans you take out and repay a single time, such as mortgages, car loans and personal loans. Revolving credit refers to accounts you can charge a balance on, repay and reuse, such as credit cards and home equity lines of credit. Credit mix makes up 10% of your score, so opening a new credit card may be helpful if most of your existing accounts are installment loans. That said, avoid opening a credit card solely to diversify your credit accounts.\n*   **Opportunity to establish strong payment history**: Payment history comprises 35% of your credit score, making it the No. 1 influence on your credit. When you open a new credit line, you have a chance to build up a history of on-time payments by paying your bill by the due date every month.\nNow that you know the possible perks of opening a new credit card, let's consider some ways it might harm your credit:\n*   **Hard inquiries**: When you apply for a credit card, the card issuer will do a hard inquiry (also known as a hard pull) to access your credit report. This allows lenders to take a look at things like your payment history and how much debt you're carrying. Hard inquiries stay on your credit report for two years, but they'll usually only lower your scores for a few months following your application, if at all. If you have good credit otherwise and you don't have too many hard inquiries on your report, applying for one new card shouldn't impact your scores severely, and might not affect you at all. It won't be held against your scores if your credit card application is rejected, but it's still a good idea to avoid unnecessary hard inquiries. Before you apply, do your research to find a card for which you're likely to be approved.\n*   **Age of credit**: The length of your credit account history comprises 15% of your FICO® Score☉ . That means that the longer your cards have been open, the more positive an impact they'll have. A new card reduces the average age of your credit accounts. Still, on-time payments and credit utilization play much bigger roles in your score than credit age, so it shouldn't necessarily deter you from opening a new account.\nThe bottom line is that opening a new credit card might cause your score to dip initially. But over the long term, it can help you improve your credit history and raise your credit score. END