How to Shop for a Credit Card and Minimize the Impact to Your Credit
Shopping for a credit card helps you land the best fit for you. Here's how you can safely shop for a credit card and minimize the impact to your credit.
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Losing several FICO® Score points after applying for a credit card is not uncommon. This happens because a new credit application usually triggers a credit inquiry, which accounts for 10% of your FICO Score.
To get the best credit card deal, it's important to shop around and compare offers. Naturally, you also want to protect your credit during this process—losing too many points could affect your chances of getting approved. Here are a few tips to shop for a credit card while minimizing the impact on your credit.
Know Where You Stand
Credit cards have different FICO® Score requirements. While most issuers don't publicize the exact score ranges, being familiar with your score can give you a general idea of the kinds of credit cards you may qualify for. For instance, you typically need excellent credit to qualify for top-tier rewards credit cards. On the other hand, if you have a low score, you may focus on secured credit cards to begin rebuilding your credit.
Checking your FICO® Scores before you start shopping can help you narrow your search to the cards you're most likely to be approved for.
Shop Before You Apply
There are several kinds of credit cards to choose from: cash back, travel, balance transfer, low interest rate, and new to credit, to name a few. Understanding your financial goals and spending habits can help you hone in on the credit cards that are tailored to your needs.
As you review credit cards, consider fees, interest rate, benefits, and rewards for each card and note your favorites. By narrowing your choices to your ideal credit cards, you can keep your credit card applications to a minimum.
Take Advantage of a Preapproval Offer
Your credit card might choose you first. Some card issuers prescreen potential customers and, if they think you're a good match, they'll send a preapproved offer to invite you to apply. Approval isn't guaranteed, but you do have a higher chance of being approved.
Don't jump at the first card offer you receive. Review the benefits, rewards, costs, and other terms to determine whether the card might be right for you. It also helps to check similar credit card offers online to be sure you're getting the most competitive deal.
Get Prequalified
Most major credit card issuers offer an online tool that shows whether you prequalify for one of their credit cards. The prequalification tool only does a soft pull on your credit, so you can submit multiple prequalification requests without hurting your FICO® Scores.
As with prescreened offers, getting prequalified doesn't guarantee approval. It simply means the card issuer thinks you have a high likelihood of being approved. Once you complete and submit the full application, the card issuer will do a full credit check to evaluate your application.
Minimize Your Credit Card Applications
Use these tips to shop for a credit card and narrow down your credit card options so you only have to make one or two applications. This keeps your new credit inquiries at a minimum and limits the impact to your credit. The fewer credit cards you apply for, the better it is for your credit.
Get your FICO® Score from FICO, for free. No credit card required.
LaToya Irby is a financial writer with over 14 years of experience. She's been quoted and published as a credit expert in several major publications including USA Today, U.S. News and World Report, TheBalance.com, and The Chicago Tribune.