Most consumers do not realize that just applying for a credit card can hurt credit scores.

Every time a creditor analyzes and underwrites your credit card application a copy of your credit report is pulled causing an inquiry which can drop scores 2-5 points. If many, or a series of credit card applications are made it can be viewed as extreme inquiry activity and scores can drop even more.

Once the application is approved, the mere opening of the account can reduce scores over 80 points depending on the actual credit profile, score, and age of credit. Therefore, making an educated choice and having a strategy before applying can cost less in damage to credit while filling more needs for the consumer. Consideration of your credit score, credit card needs, and timing of short/long term goals is essential before taking any action.

For example:

Janet has three credit cards with a total balance of $20,000. During the course of a year there are many months she can charge balances of up to $50,000, due to business expenses. Since she has a substantial amount of travel charges she felt it would benefit her to have a high bonus and reward card so she can gain more from her spending. On the surface it sounds like a good idea but let’s look a little deeper at Janet’s situation.

Her current average interest rate on her balances is 18%. We know she keeps a running balance of $20,000 on her personal cards and also uses one of them for business (charging up to $50,000 some months). Much of her charging is for travel related expenses which includes both business and personal pleasure. Janet’s current Fico scores (www.myfico.com) are 750 which is excellent credit and will afford her some of the best deals.

Here is a great card for what Janet felt would benefit her most. It offers great bonus and points for her dollar and much of the focus is on travel.

Chase Sapphire Card-
• Earn 40,000 bonus points after you spend $3,000 in the first 3 months- that’s $500 toward travel rewards!
• 2 points per dollar spent on travel and at restaurants & 1 point per dollar spent on all other purchases.
• Get 20% off airfare, hotels, car rentals and cruises when you book through Ultimate RewardsSM
• No foreign transaction fees
• Receive a 7% annual dividend on all new points earned – even on points already redeemed
• 1:1 point transfer to participating frequent travel programs
• Direct access to expert service advisors anytime
• No Annual Fee for your first year – A $95 value

However, based on her revolving credit balance she would be better served to find a credit card that offers low balance transfer rates plus good points and travel rewards as well.

Venture One Rewards Credit Card from Capital One-
• 1.25 miles per dollar on every purchase, every day and no annual fee
• One-time bonus of 10,000 miles once you spend $1,000 dollars in the first 3 months, equal to $100 on travel.
• Redeem miles for airline tickets, hotel rooms, car rentals and more
• No limit on the miles you can earn and miles don’t expire
• Fly on any airline, any time with no blackout dates
• 0% intro APR on purchases until June 2013
• No foreign transaction fees

With the Capital One card she can transfer her high $20,000 balance over to enjoy a zero percent interest rate after an initial transfer fee of 3%, saving about 15% in interest for the year. The savings comes to over $1600 in interest if she paid the debt off during the year period while enjoying the benefit of the bonus and rewards for all her traveling. With this option the credit card is addressing two different issues and benefiting her well.

To find varied credit cards based on credit score and type visit www.creditcards.com or use WalletHub’s database of 1,000+ cards to find the best offer for your individual credit situation.

Feel free to visit our website at www.northshoreadvisory.com and for more credit tips follow @tracybecker