How Much Does Getting Approved for a Credit Card Increase Your Credit Score?

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Getting approved for a credit card might mean it's easier for you to shop, but your credit score doesn't get a boost automatically, because there are no bonus points for simply getting approved. However, if you use your credit card responsibly, your approval can be the start of an upward trend for your score.

Credit Utilization

When you get a new card, your available credit increases by the amount of your new card's credit line. No, that doesn't mean you should go out and spend it right away. However, that does bring down your overall credit utilization ratio, which helps your credit score. According to the Chicago Tribune, you should keep your credit utilization under 30 percent, with lower scores being the best. For example, say you have one card that has a $2,500 balance and a $5,000 limit, putting your credit utilization at 50 percent. If you get a second card that has a $5,000 limit, but don't charge anything to it, you're now down to 25 percent, which is good news for your credit score.

Payment History

Even more important than your credit utilization ratio is your payment history, which counts as 35 percent of your credit score. If you've made late payments in the past, there's no shortcut to magically improve your score. However, when you get your new credit card, you've got a clean slate, and you can build a positive credit report by paying at least the minimum on time every month. Of course, if you want to avoid interest and other charges, paying in full is the way to go, and, contrary to some rumors, it won't hurt your credit score.

Credit Mix Diversification

If you haven't had a credit card before, getting approved for your first one will also help the 10 percent of your credit score that comes from the mix of credit you've used. When you have experience with a variety of credit types, such as installment loans, mortgages, credit cards and retail cards, you're a better credit risk, so your credit score goes up.

New Card Drawbacks

Getting a new credit card isn't without its credit score drawbacks; however, they they are usually very minor. First, to get the card you had to apply for it, and when you apply for it, an inquiry goes on your credit report. Each inquiry docks your credit score a couple of points, according to personal finance website Second, opening up a new credit line, unless it's your first, lowers the average age of your accounts, which can lower your credit score, but not by much.