Every major retailer is offering an additional instant discount if you arewilling to apply for their branded credit card.On the surface, it sounds like a great idea….I buy $100 worth of stuff and they give me an instant 20% off. Twenty bucks and I had to do was apply for a credit card…..This is GREAT!

Not so fast!NAGI! (Not A Good Idea)

Let’s look at what happens in the background to my credit report and credit score. There are two major negative impacts that will result:
1. Inquiry – Even though an application takes only minutes they all result in a “hard” inquiry, whether we get approved or not. A hard inquiry, depending on your present credit score, will cost you points on your credit score.
a. “Hard” inquiries are any credit inquiry used to justify the giving of credit.
b. “Soft” inquiries are credit reports pulled directly by the consumer.
2. Length of credit history - is how long you have had credit. At face value, this seems like something you couldn't really do anything to fix. However, there are ways you can hurt yourself here. Applying for, and being approved for, new credit is the quickest way to negatively affect this ratio. If I have 2 cards with 6 years of history on them and then acquire a new card, my average length of credit history moves from 6 years to 4 years. This recalculation could again result in a lowering of my credit score.

Bottom Line: The quick application for a credit card could cost you a lot more money on your next major purchase i.e.: Mortgages, Refinancing you present mortgage, auto purchase. The negative effect on your credit score could end up knocking you out of the “special” financing offers on vehicles and mortgages costing you a whole lot more than the initial $20 we saved.

Author's Bio: 

About the Author - Kim Carpentier is Owner and General Manager of Valley Credit Builders ( www.valleybusinesscredit.com ). He is using his 35 years of successful business ownership, and transition, to help small business owners build business credit so they can separate the financial responsibilities between business and personal credit. He specializes in helping business owners establish excellent business credit scores and then leverages those scores to access cash and credit for their businesses without their personal guarantees. The Business Credit and Funding Suite is the leading business cash and credit access system in the world today.
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