26 September, 2024 | 16:01 IST
In recent years, India has seen a boom in the credit cards segment driven by consumers’ growing spending power. As most lenders use credit score as the key parameter to approve a credit card, maintaining a healthy credit report helps in getting a quick approval for a new credit card. Amid a booming credit card market, the card issuers have also designed customised credit cards to cater to specific needs of various groups of customers.
While getting a credit card is not tough these days, you should take into account whether opening a new credit card or loan account can hurt your credit score.
Understanding the implications of adding new credit accounts is crucial for managing your credit health effectively. Let’s find out how new credit card applications and loan accounts can affect your credit score and how to manage the impact to maintain a healthy credit profile.
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A credit score is a numerical representation of your creditworthiness, calculated based on your credit history and financial behaviour. It usually ranges from 300 to 900, with higher scores indicating better credit health. This score is important for lenders to assess your eligibility for new credit products. A high credit score often means availability of better terms on loans and credit cards, while a low score can lead to higher interest rates or rejection of credit applications.
You can check your credit score for free on digital platforms like the Moneycontrol app and website. Moneycontrol provides free access to credit score and a detailed credit report, helping users stay informed about their financial standing.
When you apply for a new credit card, the lender performs a hard inquiry or hard pull on your credit report. This inquiry, while necessary for assessing your application, can have a temporary negative impact on your credit score.
Credit score impact can also be seen while opening a new loan account, though the impact varies depending on the type of loan and your credit behaviour. Here’s are the key points to consider
ALSO READ: What Affects Your Credit Score & How To Build a Healthy Credit Score
To minimise the negative impact of opening new credit cards or loan accounts, consider adopting the following strategies:
In conclusion, while opening a new credit card or loan account can have a temporary impact on your credit score, understanding and managing these effects can help you maintain and even improve your credit health. For detailed insights and real-time updates on your credit score, check the Moneycontrol app and website, where you can track your credit score and stay informed about your financial standing.
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