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Apple Card is poised to become the Apple Music of credit cards for anyone that has an iPhone - the service people sign up for by default since it's built into the software. While Apple Card does bring solid rewards and impressive money management tools, it will also affect your credit report when you apply for it.
When you apply for a credit card, no matter who the card provider is with, the potential lender will request information from a credit bureau like TransUnion, Equifax, or Experian, to determine your creditworthiness. The request that they submit is results in either a soft or hard inquiry and gets recorded on your credit report.
Apple Card is handling this a little differently than most other credit cards. The industry norm is to record a hard inquiry whether you are approved or declined for a card. Apple and Goldman Sachs are going a different route. You will only be hit with a hard inquiry if you are approved and accept your Apple Card offer. Any other situation (you are declined, or you are approved but decline the offer) will only result in a soft inquiry on your credit. Soft inquiries have no impact on your credit score no matter where they come from or how many you get.
If you are approved and accept your Apple Card offer, will a hard inquiry affect your credit? The truth is yes, but by how much is completely different from one person to the next. That is because your credit score is made up of 5 categories:
- Payment history: 35%
- Credit utilization: 30%
- Length of credit history: 15%
- Credit mix: 10%
- New credit: 10%
As you can see, payment history and credit utilization make up almost 2/3 of your credit score while new credit, which hard inquiries fall under, only make up 10%. The reason that a hard inquiry affects everyone differently is that everyone's credit situation is different. For example, if someone has only one credit card that is relatively new with a lower limit, a hard inquiry will affect that person more. They would be lacking a payment history, their credit utilization could be high since they only have the one card, and the length of credit history would be low, so a new credit application could have more of an effect on their credit.
On the other side of the coin, someone who has had credit cards for a long time, have kept low balances, and always paid on time would barely notice the effects of a hard inquiry as they most likely have a much stronger credit score. That said, don't go out and start to apply for a ton of cards at the same time. There are plenty of exceptions that will flag anyone who starts to hit the credit bureaus multiple times within a short period, with very few exceptions.
The best thing you can do to make sure accepting your your Apple Card offer doesn't affect your credit score in a substantial way is to have a solid credit score built already. Always pay your bills on time, keep low or no balances on your cards (pay off your balance every month), and don't apply for a ton of cards around the time you want to also apply for Apple Card. If time travel was a thing you could go back and open a card earlier in life so you could also have a longer credit history, but since that isn't possible (outside of Hot Tub Time Machine), that one is going to be whatever it is.
Credit card companies and third-party services like Credit Karma offer free credit reports online and through apps so make sure to take advantage of them so you can, not only understand your score, but also take action to improve it. Once you have it in a good place, you're set to apply for Apple Card with confidence!
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