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Will a new credit card hurt my credit score?

July 12, 2012: 5:30 AM ET

My credit score is 770. I have two credit cards and always pay them on time and don't spend more than 10% of my total credit limit. I'd like to open an additional credit card that offers points for gas and other cash back promotions. Will that hurt my credit score? — Name withheld

First off, congratulations on your 770. One of the reasons your score is so good is the fact that you keep your credit card balances to such a low percentage of your credit limits, explains John Ulzheimer, president of consumer education for SmartCredit.com.  That percentage, often called the debt utilization ratio, is an important component of your FICO credit score. The lower the percentage the better, explains Ulzheimer.

Opening a new credit card is perfectly fine. In fact, it will make it easier to keep that overall debt usage percentage low because you'll have a larger amount of unused credit limit thanks to the new card. It's true that inquiries for new credit can impact your credit score, but Ulzheimer says because this is only one card, that's not a problem in your case. It will only show up on one of your three credit reports and inquiries are only worth 10% of your score. Inquiries remain on credit reports for 24 months but are only considered by the FICO scoring model for the first 12 months, he explains.

— Walecia Konrad

Got a question for the Help Desk? Send it to helpdesk@cnnmoney.com.

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