If you need to improve your credit score you may consider adding in a new credit card. Or not.
There are actually some advantages and disadvantages. Either way if you add in a new credit card you must be responsible with it or it can have detrimental effects.
First off, when you apply for a new credit card it is a ?hard inquiry? on your credit report. That is an automatic ding on your report and score. However, if you get the card and use it responsibly the benefits will override any negative ding from the inquiry.
For one thing, a new card will improve your debt to available credit ratio, so long as you do not charge more than about 20% on it. If you had 2 cards with a $5000 limit on each, and each had a balance of $1000.00 you would have a credit limit of $10000.00 with a balance of $2000.00 which is about 20% but it you add in another $5000 limit, your credit limit goes up to $15000.00 with the same amount of debt your ratio goes down to 13%. Since your debt to available credit ratio is a large factor in your credit score the new card will make your credit score go up.
But you need to make sure that you use it responsibly.
Now for the negatives, if you had your old credit cards for a long time, say 10 years and 8 years, your average age of credit rounds out to 9 years. But you add in a new card and your average credit age drops to just 6 years. The length of your credit history is also important, however, the increase in your debt ratio should override that.
But the most important thing is to use all credit, new and old, responsibly. And remember, good credit is something you need for your own financial peace. Your own budgets and financial plans are the most important thing when it comes to making the decision to get new credit or not. Right now the new rules for credit scoring and credit reports are favoring the credit card companies and the lenders, so remember that your own finances come first. Look out for yourself.
