Credit Cards

Should you always take pre-approved credit cards?

  • Last Updated:
  • Mar 18th, 2022 1:44 am
Jul 16, 2019
237 posts

Should you always take pre-approved credit cards?

Should you always take pre-approved credit cards and credit increases?
I was just offered an HSBC card with 5% cashback for 180 days / $2000 in purchases.
If I take it what affect will there be on my credit score?
2 replies
Jun 8, 2020
43 posts
If you open a new account, it will be added to your exiting accounts which brings the average account age down. This temporarily impacts your core as the average age of the credit file is factored into the score. However this drop is usually temporary and always depends how old your file is. If you file is one year old, a new account might lower your score more than it would if your credit file is say 5+ old.
A new account increases your overall credit (and thus decreases credit utilization) and can have many positive impacts. If you have use for the card, go for it.

Then HSBC can also perform a HP, which lowers your score temporarily.
Jr. Member
Jan 19, 2020
111 posts
A new credit card will impact your credit score in a few ways.

It will impact the average age of your credit lines, and may drop your score a little. This is not a big deal in the larger scheme of things. It will likely impact your credit utilization ratio (how much credit you use).

Since credit utilization is a huge factor in credit score calculations, this could help significantly if your do not have a lot of credit. The more available credit you have, the easier it is to keep usage under 30 or 10 percent. The lower your credit usage, the better it is your credit score.

There are also long-term benefits of building your credit portfolio. Creditors want to see a demonstrated history of good credit management. Having several credit lines and different products helps build a narrative of credibility. Said another way, someone with a thin credit profile will have a harder time getting a mortgage they want. .