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. More of your score is based on your payment history and your utilization of credit. You can minimize the impact from new credit accounts.
Open a cash management account
A cash management is an account that lets you manage your money and make deposit without opening a checking account. These accounts don't usually have fees but you will need to pay fees if your money needs to be withdrawn early. Cash management accounts provide simplicity and solid returns on your cash, as opposed to dedicated accounts. They might not have all of the features of dedicated accounts but they are a good choice if you don't have much time to manage your money.
Avoid opening a credit card with a new company
Opening a new credit card account can negatively affect your credit score. This will reduce the average age in your credit history by 15%. You may also appear less risky to lenders if you have a new credit account. This is because you may not have enough cash to pay your bills. Before applying for a credit card, it is best to wait until your credit history has improved.
Do not open a new checking or savings 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 assess your credit score and approve you for the account. While a "soft pull" will not affect your credit score, a "hard pull" (or hard inquiry) can have a negative impact on your credit score for as long as 12 months. To avoid a hard inquiry, contact the bank prior to opening an account.
Avoid overdrawing a checking account
You might be tempted to spend more on a new checking account than you have. A checking account with a generous excess fund policy is the best way to avoid this. It's a good idea also to keep track all electronic transactions. This way, you'll know when you have funds available and when you're close to reaching zero.
Refrain from applying for a brand new credit card
Although it may seem appealing, applying for credit cards can have a negative impact on your credit score. You can help your credit score recover by responsibly using the card. Avoid applying for multiple cards at one go. This will prevent you from getting a hard inquiry on your loan application. WalletHub's free credit score calculator is a great way to find out how your new application will impact your credit rating.
Avoid late payments on credit cards
You can prevent late fees from happening with your credit card. Sometimes it is easy to forget to pay the minimum amount, but late payments not only hurt your finances, but they also affect your credit report and score. If you haven't missed a single payment before you can ask for a waiver.