Is opening a brand new account going to hurt your credit score when it comes down to credit scores? While new credit has a negative impact, new accounts make up only 10% of your total score. Your payment history and credit use make up more of your score. There are many ways to reduce the impact of credit accounts opening.
Open a cash management account
A cash management account is an account that allows you to manage your money and make deposits without having to open a separate checking account. These accounts do not usually have any fees, but fees may apply if you withdraw funds early. Compared to dedicated accounts, cash management accounts offer simplicity and a solid return on your cash. They may not offer all the features of dedicated accounts, but they are a good choice for people who have little time to manage their money.
Do not open a new credit line
A new credit card account could negatively impact your credit score. Your credit score will be affected by the age of your credit history. This is 15% of your overall score. Also, a new credit card account will make you seem riskier to lenders, as you may have less available cash to pay your bills. It's best to wait until you have a longer credit history before applying for a new credit card.
Avoid opening a new checking account
While you might think that opening an account with a bank will not negatively impact your credit score, it's actually false. There are banks that will verify your credit score before you apply for the account. A "soft pull", while not affecting your credit score can affect it for up to 12 month. However, a harder pull or hard inquiry can adversely impact your credit score. You can avoid a hard inquire by calling the bank before you open an account.
Avoid overdrawing your checking accounts
When opening a new checking account, it can be tempting to spend more than what you have on hand. A checking account with a generous excess fund policy is the best way to avoid this. It is also a smart idea to keep track and log all electronic transactions. You'll be able to see when funds are available and when they're getting close to zero.
Do not apply for a new credit line
It is tempting to apply for a credit line, but it can also negatively affect your credit score. Your credit score will recover if you use the card responsibly. Moreover, you should avoid applying for multiple new cards at one time. This way, you won't risk getting a hard inquiry just before an important loan application. WalletHub offers a free credit score simulation that will help you see how your new application might affect your credit score.
Avoid late payments on credit cards
You can prevent late fees from happening with your credit card. You may forget to pay the minimum amount. Late payments will not only harm your finances but also negatively impact your credit report. If you haven't missed a single payment before you can ask for a waiver.