7 Ways to Wreck Your Credit – Applying for New Credit RepeatedlyPosted on October 14, 2009

New credit doesn’t mean a shiny new credit card; it means a lower credit score, at least in the long run. Here is why:

First, new credit accounts lower the average age of your credit history. If you’ve had one credit card for 20 years and then you open five new store cards because you got a 10% store discount, it may cost you! The credit score is going to take the one account you’ve had for 20 years (240 months) and the five accounts that you’ve had for one year (60 months). The average for all those accounts together is four years.

Applying for credit causes a “hard inquiry” on your credit report. Inquiries aren’t extremely damaging to credit scores, but multiple hard inquiries in a short time period can look like desperation or illegal activity. Most banks or credit card companies avoid consumers in these situations. Credit scores do take smart loan shopping into account. When shopping for products such as auto or home loans, consumers are not dinged for each individual inquiry within a 45-day window.