Does Applying for an Amazon Credit Card Hurt Credit Scores? The Definitive Answer

Yes, applying for an Amazon credit card, like any credit card, can indeed temporarily hurt your credit score. This is primarily due to what’s known as a hard inquiry on your credit report. However, the impact is usually minor and short-lived, especially if you manage your credit responsibly.

Understanding the Credit Score Impact of Applying for Credit Cards

Applying for a credit card, including an Amazon one, triggers a process. That process includes the issuer pulling your credit report to assess your creditworthiness. Let’s break down why this happens and what you need to understand.

The Hard Inquiry Explained

When you apply for a new credit card, the issuer (in this case, the financial institution backing the Amazon card, like Chase for many of their cards) requests your credit report from one or more of the major credit bureaus (Experian, Equifax, and TransUnion). This request is recorded as a hard inquiry.

Hard inquiries signal to lenders that you are actively seeking new credit. While a single hard inquiry generally has a minimal impact, multiple inquiries within a short period can raise a red flag. This is because it could suggest you are desperate for credit or overextending yourself.

The Temporary Dip in Your Score

The impact of a hard inquiry on your credit score is typically small, often around 5 points or less. The drop is more pronounced if you have a limited credit history or already have several recent inquiries.

The good news is that the effect is temporary. Hard inquiries usually affect your credit score for about 12 months, and they completely fall off your credit report after 24 months. So, the impact fades relatively quickly, especially if you are maintaining good credit habits.

The Bigger Picture: Responsible Credit Use Matters Most

While the hard inquiry is a factor, it’s crucial to remember that responsible credit card use is the most significant determinant of your long-term credit score. Opening an Amazon credit card and using it responsibly, by making on-time payments and keeping your credit utilization low, can ultimately improve your credit score over time.

Credit utilization refers to the amount of credit you’re using compared to your total credit limit. Ideally, you should aim to keep your credit utilization below 30% on each card and overall. High credit utilization signals to lenders that you might be struggling to manage your debt.

Is the Amazon Card Worth the Credit Score Dip?

Whether the temporary dip in your credit score is worth it depends on your individual circumstances. Consider the benefits of the Amazon card – such as rewards points on Amazon purchases, cash back on other spending categories, and potential financing options. If you shop frequently on Amazon and can benefit from these perks, the small, temporary impact on your credit score might be a worthwhile trade-off.

However, if you are planning to apply for a mortgage, auto loan, or other major credit product in the very near future (within a month or two), you might consider postponing the application until after you have secured the loan to minimize any potential impact.

Amazon Credit Card FAQs: Everything You Need to Know

Here are some frequently asked questions about Amazon credit cards and their impact on your credit:

1. Will checking my eligibility for an Amazon credit card hurt my credit score?

No. Checking your eligibility for an Amazon credit card, or any credit card for that matter, usually involves a soft inquiry, which does not affect your credit score. Credit card companies often provide tools to pre-qualify or check your eligibility. These tools use soft pulls to evaluate your credit profile without impacting your score. The hard inquiry happens only if you proceed with the full application.

2. How long does it take for a hard inquiry to disappear from my credit report?

Hard inquiries typically remain on your credit report for 2 years (24 months). However, they generally only affect your credit score for 12 months. After 12 months, their influence diminishes significantly.

3. Is it better to apply for multiple credit cards at once or spread them out?

Spreading out credit card applications is generally recommended. Applying for several credit cards within a short period (e.g., a week or two) can raise concerns for lenders and potentially lower your credit score more significantly. If you’re planning to open multiple cards, space out the applications by at least a few months.

4. Can I dispute a hard inquiry on my credit report?

Yes, you can dispute a hard inquiry, but only if you believe it was made without your permission. If you legitimately applied for the card, the hard inquiry is valid and cannot be successfully disputed. To dispute an inquiry, contact the credit bureau that is reporting the inquiry.

5. Will closing my Amazon credit card affect my credit score?

Closing a credit card, including your Amazon card, can potentially impact your credit score, especially if it lowers your overall available credit. This can increase your credit utilization ratio, which can negatively affect your score. It’s generally better to keep the card open, even if you don’t use it regularly, as long as there are no annual fees. If you do close it, consider the impact on your overall available credit.

6. Does using my Amazon credit card responsibly improve my credit score?

Absolutely. Responsible use of any credit card, including an Amazon card, such as making on-time payments, keeping your credit utilization low, and avoiding maxing out your credit limit, can significantly improve your credit score over time.

7. What credit score is needed to get approved for an Amazon credit card?

The specific credit score requirements vary depending on the type of Amazon credit card you’re applying for. Generally, you’ll need a good to excellent credit score (typically 670 or higher) to be approved for the Amazon Prime Rewards Visa Signature Card. The Amazon Store Card, which is a closed-loop card usable only on Amazon, may have slightly less stringent credit requirements.

8. How often does Amazon report my credit card activity to credit bureaus?

Amazon typically reports your credit card activity to the major credit bureaus monthly. This includes your payment history, credit utilization, and other relevant information.

9. What are the benefits of having an Amazon credit card?

The benefits of having an Amazon credit card can be significant. They include:

• Rewards points or cash back on Amazon purchases.
• Cash back on other spending categories, such as gas, restaurants, and drugstores (depending on the card).
• Special financing offers on select Amazon purchases.
• Purchase protection and other cardholder benefits.

10. Can I get an Amazon credit card if I have a limited credit history?

It might be more challenging to get approved for an Amazon credit card with a limited credit history, but it’s not impossible. Consider starting with a secured credit card or becoming an authorized user on someone else’s credit card to build your credit history. After several months of responsible use, you can then apply for an Amazon card.

11. What should I do if my Amazon credit card application is denied?

If your Amazon credit card application is denied, you will receive a letter explaining the reasons for the denial. Review the reasons carefully. Common reasons include a low credit score, a limited credit history, too many recent credit inquiries, or a high debt-to-income ratio. You can then take steps to address these issues, such as paying down debt, disputing any errors on your credit report, or waiting a few months before reapplying.

12. Does the type of Amazon credit card affect my credit score differently?

No. The type of Amazon credit card (e.g., Prime Rewards Visa Signature Card vs. Amazon Store Card) doesn’t inherently affect your credit score differently. The impact on your credit score comes from factors such as the hard inquiry, your responsible use of the card, and the overall effect on your credit utilization. The key is to use any credit card responsibly.