Getting a deal at the register has hidden costs down the road!
- The new account penalty is about to drop your credit score 15–30 points.
- New accounts do not build your credit score for many months, until the system sees you making on-time payments.
- The new account is often maxed out the day you get approved — this further drops your credit score by as much as 85 points, since it looks like you got a new card and maxed it out on day one.
- Beware of hidden charges — 0% interest offers have a time limit; if you don't pay off the full balance, the card companies retroactively add back all the interest at their rack rate, often close to 30%.
- You will have another hard inquiry, dropping your score another 5 points.
- Your score could drop over 100 points simply from opening a new card and getting a credit limit that's maxed out on day one!
Why Is Reporting Your Rent So Much Better?
- Because you are reporting all of your past history and it is not a new account!
- Rent is the fastest way to improve your credit score, and it reports in days not months.