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It’s easy to get sucked in to welcome bonuses, promotional bonus earn rates, maximizing your credit card rewards, and low interest…but it can also put you in a tricky spot with your credit score.

But can applying for a credit card actually lower your credit score? Are you making a credit card mistake?

The short answer – any hard inquiry will lower your credit score by a few points, but soft inquiries won’t. Unfortunately, when you’re applying for a credit card, a hard inquiry is placed on your credit report.

How applying for a new credit card affects your credit score

Opening a new credit card can be exciting and make things feel shiny and new again. But it also adds more responsibility and will kick your credit score a little bit.

Does the bank know how many credit cards I’m applying for?

Yes, a credit card issuer will see how many inquiries have been made on your account.

Too many inquiries in a short period of time can look like a sign of financial crisis to a bank, so make sure to space your applications out a little bit, or you’ll have a harder time getting approved.

How does getting approved for a new credit card hurt my credit score?

There’s a good and a bad side to getting a new card.

Let’s start with the good.

Getting approved for a new credit card helps your credit score because it lowers your credit card utilization ratio – meaning the amount of credit you have available is higher, improving your score.

Unfortunately, getting approved for a new credit card also lowers your average credit age, which will have a temporary effect on your credit score. Keep the card in good standing, don’t close the account, and this small dip will bounce back easily.

Will getting denied for a credit card hurt my credit score?

There’s a lot of people that say getting denied will hurt your credit score – but that’s a myth. Nobody inquiring on your account will ever be able to see that you were denied for a credit card.

In fact, even though your credit report shows that you applied, it doesn’t even show whether your application was approved or denied. Anyone making an inquiry has no way of retrieving that information.

Before you apply for a credit card – and what affects your credit score

Just because applying for a credit card only takes a few minutes these days, it doesn’t mean you need to go credit card crazy.

Here are a few tips before you decide to add some shiny new plastic to your wallet.

Make sure your credit score is already strong

If your credit score isn’t strong, you might want to work on improving it before applying for another card. Wondering what your score means?

Here’s how credit scores in Canada are classified:

  • 760 – 900: Excellent
  • 725 – 759: Very Good
  • 660 – 724: Good
  • 560 – 659: Fair
  • 300 – 559: Poor

Wondering what your score is? Here’s how to find out your credit score in Canada.

If you’re really set on getting that new card and you’re willing to put the work in to improve your credit card score, here are a few tips:

  • Pay your credit card bills on time, every time.
  • Keep your credit utilization (the percentage of your credit you use) under 30% – start going above that, and your score starts to decline as it can be seen as a sign of financial stress.
  • Make more than the minimum payment every month.

Related: How To Increase Your Credit Card Limit

Check your credit report – there could be mistakes

We all make mistakes, even the credit bureaus.

Make sure there are none on your credit report or your account, and that all purchases made were by you.

Take yourself on a personal finance date and go through your accounts carefully. You earned your money fair and square – it’s your responsibility to take care of your accounts.

Related: Credit Card Fraud: 5 Things I Wish I Knew

Don’t carry too much of a balance

Speaking of taking care of your accounts – don’t bite off more than you can chew.

If you’re carrying a large balance and not paying it off every month, chances are you’re spending more than you’re bringing in.

Make smart money moves by budgeting your spending and putting only what will bring in extra rewards on your credit cards.

Make sure to pay your bills on time, every time

Set up a reminder on your phone, download a bill reminder app – anything to make sure you pay your bills on time.

No one wants to be put in the dog house when it comes to the bank, or any biller for that matter.

Make sure to pay your bills on time every month. If you can, pay more than the minimum payment to make sure you’re working at paying off the card and not just the interest.

Keep your cards in good standing (and don’t cancel them)

Making sure your cards are paid on time and your balance isn’t too high is part of keeping your cards in good standing, but it’s also a good idea to hold onto your oldest credit card.

Yes – even that old low-rate card you got when you were a student trying to build your credit.

Keeping cards like those show good character and makes you seem like less of a risk to the bank. As long as it’s no fee and you put a couple payments on it per month, it can actually help your score.

Don’t lie about your income

The easiest way to get denied for a credit card? Overstating your income.

Look at your last T4 and go from there. Even adding on a couple thousand could stand in the way of you and your new card.

Plus, while the bank does care how much you make (since it shows your ability to pay off your balance), they also care about your character. Things could look fishy if you’re lying about how much you make.

Cards with great welcome bonuses

If you’ve gone through all of our tips and have no adjustments that need to be made, chances are you’re still interested in a great new card.

Here are a few of our favourites (with great welcome bonuses!) to start you off.

Annual Fee Welcome Bonus Earn Rates Apply Now
American Express Cobalt $120, charged $10 monthly (terms) Up to 30,000 points when you spend $500 every month * 5x the points on eligible eats and drinks in Canada, including groceries
* 2 points for every $1 spent on eligible gas, travel, and transit purchases
* 1 point on every other $1 spent
Apply Now
BMO Air Miles World Elite Mastercard $120, first year free (terms) * 2,000 bonus miles when you spend $3,000 in the first 3 months * 1 Mile per $10 spent Apply Now
TD Cash Back Visa Infinite $120, annual fee rebate in the first year (terms) 10% cash back on all purchases for the first 3 months, up to a total spend of $2,000 * 3% cash back on all eligible grocery, gas, and recurring bill payments
* 1% cash back on all other purchases
Apply Now

It’s our favourite credit card, and for good reason.

Other than earning up to 30,000 rewards points as a welcome bonus in the first year when you spend $500 every month, the will earn you:

  • 5x the points on eligible eats and drinks in Canada, including groceries
  • 2 points for every $1 spent on eligible gas, travel, and transit purchases, plus
  • 1 point on every other $1 spent.

For a $120 annual fee charged out as $10 a month, this card is a pretty sweet deal.

Crowned the best Air Miles credit card in Canada, the will get you 2,000 bonus miles after you spend $3,000 in the first 3 months – that’s enough for a short-haul flight.

Not enough Miles for you? You’ll also be getting 1 per every $10 spent on all credit card purchases, and you’ll also save 15% on the Miles needed to redeem for flights within Canada and to the U.S. This definitely makes the $120 annual fee worth it.

A strong cash back card, the will earn you 3% cash back on all eligible grocery, gas, and recurring bill payments – and that’s not the only thing that makes this card sweet.

For a limited time, you’ll also get 10% cash back on all purchases for the first 3 months, up to a total spend of $2,000.

For all other purchases, you’ll earn 1% cash back. For an annual fee of $120, this could be the card for cash back lovers.

We want to hear from you

What’s your opinion on hard inquiries?

Ever applied for too many credit cards in a row?

Let us know in the comments below.