How CareCredit May Affect Your Credit Score

Using CareCredit can impact your credit score, much like any other credit card. Understanding this process is key to managing your financial health while covering necessary medical or veterinary expenses.

1. The Initial Application: When you apply for a CareCredit card, the issuer performs a hard inquiry on your credit report. This can cause a temporary, minor dip in your credit score.
2. A New Line of Credit: Once approved, the new account appears on your credit report. This can lower the average age of your accounts, a factor that might slightly decrease your score initially.
3. Credit Utilization: How much of your available credit you use is crucial. A high balance on your CareCredit card can increase your credit utilization ratio, which may negatively affect your score.
4. Payment History: Your payment record is the most significant factor. Consistently making on-time payments will help build a positive history and can improve your score, while missed payments will have a substantial negative impact.

How Much Will CareCredit Affect Your Credit Score?

Like any credit card, opening and using a CareCredit account can impact your credit score in several ways. Here are the key factors to consider before you apply.

• Hard Inquiry: Applying for CareCredit triggers a hard inquiry on your credit report. This can cause a small, temporary dip in your credit score for a few months.
• Credit Utilization: This measures how much of your available credit you use. A high balance on your CareCredit card can increase your utilization ratio, potentially lowering your score.
• Payment History: Consistently making on-time payments helps build a positive credit history. However, late payments are reported to credit bureaus and will negatively affect your score.

How You Can Avoid CareCredit Affecting Your Credit Score

Make Timely Payments

The most crucial factor is consistently making on-time payments. Late payments get reported to credit bureaus and can significantly lower your score. Setting up automatic payments is a great way to ensure you never miss a due date and maintain a positive payment history.

Manage Your Credit Utilization

Strive to keep your balance low relative to your total credit limit. High credit utilization can negatively impact your score, even with timely payments. Using less than 30% of your available credit demonstrates responsible management and is viewed favorably by credit bureaus.

Understand Promotional Financing

Be mindful of deferred interest promotions. If the full balance isn't paid by the end of the term, you'll be charged all accrued interest. This can unexpectedly increase your balance, raise your credit utilization, and potentially harm your credit score.

Choose the Right Card to CareCredit

Your credit score is a dynamic number, not a permanent grade, meaning it's always possible to improve your credit score. With consistent, positive financial habits, most people can see meaningful changes within just a few months.

• Monitor your credit reports. Obtain free reports from the three major bureaus and dispute any inaccuracies you find to ensure your score is a true reflection of your history.
• Establish automatic bill payments. Your payment history is the most significant factor in your score, so setting up automatic payments ensures you never miss a due date.
• Reduce your credit utilization ratio. Aim to keep your balance below 30% of your total credit limit by paying down debt or requesting a credit limit increase.
• Become an authorized user. Being added to the credit card of someone with a strong payment history can help build your own credit profile, as their good habits reflect on you.
• Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as revolving credit (credit cards) and installment loans (car loans, mortgages).
• Limit hard inquiries. Avoid applying for too much new credit at once, as multiple hard inquiries can temporarily lower your score.

The Bottom Line

Applying for CareCredit involves a hard inquiry that can temporarily lower your credit score. Like any credit card, your payment history and balance will impact your credit score over time.

Frequently Asked Questions

Does applying for CareCredit involve a hard or soft credit inquiry?

Applying for a CareCredit card typically results in a hard credit inquiry, which can temporarily lower your credit score by a few points.

Will closing my CareCredit account impact my credit score?

Yes, closing your account can negatively affect your credit utilization ratio and the average age of your accounts, which may lower your overall score.

How does CareCredit report my payment history to credit bureaus?

CareCredit reports your payment activity to major credit bureaus. Consistent, on-time payments can help build your credit, while late payments can harm it.