Dang, sorry to hear that. How much did your score dip? Anything around 25, maybe up to 50 points is probably not a critical issue. Dips like that, and especially ones that relate to credit checks (like when you're shopping for a loan or a new card) go away in a couple months (I'm not sure about your case. Without active credit utilization you're an "unknown" factor, which is risky to the lenders). I'm not even sure why your score dips when someone does a hard credit pull - overall my frustration with the system is the lack of transparency and the fact that there's zero regulation or accountability for the credit bureaus.

Best practice is to open a no-fee card with points/cash back that aligns with your normal spending habits, use it for general purchases that you already make today, and pay the balance off in full every month after you get your statement.

As long as you don't carry a balance it won't cost you a penny in interest, and you'll reap the card benefits and improve your score by establishing and maintaining a good credit history.

The thing is, MOST people carry a balance. That's why credit companies are able to afford giving you 5% cash back, travel bonuses, etc etc - just the fact that those things exist, on top of all the overhead required to maintain/issue credit cards tells you just how many people are carrying a balance and giving interest to the companies.

If you have the discipline to not charge more than you earn and to not miss payments, you'll get all the benefits without any of the costs. On top of having card bonuses (5% on groceries adds up!) you get several other benefits, some of which I will list here:

-your money is shielded in part by the credit company. When you charge a card, you're not spending YOUR money (yet), you're spending Capital ONE/Chase/whoever's money. What that means is that if a business does wrong by you (sells a faulty product, doesn't provide the service you paid for) you can issue a charge-back. That's a pretty serious thing, if companies get a high number of charge backs they can lose their ability to receive credit payments. (Chargebacks can be useful but they're not always the best option). Also, and maybe more importantly, your BANK account information is shielded from all the businesses that suck at keeping your information safe. Your credit card gets compromised, you see your statement and somebody's buying gas and fast food with your credit card, the company will remove the charges and issue you a new card - if someone gets hold of your debit card or your bank login, it's MUCH harder to get your money back, if not impossible.

-in case of an emergency you can carry a balance - it offers some cushion from financial ruin. The downside is that now you're paying interest, but if it's a choice between paying interest for a couple months vs not having a working vehicle, or not being able to pay for an emergency vet bill, the interest is worth it imo.

-cards have all kinds of benefits besides the flagship cash back/points. Extended warranties, concierge services - every card comes with a booklet of other benefits that most people don't read, but you really should. I've used extended warranties several times alone when for example something breaks 26 months after I bought it, but the warranty expired at 24 months and the card extends the warranty a 3rd year.

If you do get a card you will probably have a fairly low balance at first. Couple thousand dollars, so it's really easy to get over that 20% utilization fast if you're not paying attention - which can hurt your score! Utilization doesn't carry nearly as much weight as paying your bills on time and the length of your credit history, but it does matter. So be mindful of that. If it's working out for you then six months later open another card that gives you different benefits (a card for utilities vs one for groceries, or one for travel, etc) and start breaking your bills up so you can maximize benefits. Some cards give you a cash bonus if you spend a certain amount within 90 days, so if you know you're going to make a big purchase then you can open a card, put that big purchase on it, get the $200 back or whatever, and pay it off.

Unfortunately there's no way to avoid the credit system in the USA, you're SO disadvantaged if you try to do so. Housing, loans, job applications, security clearances (Federal work), all take it into account. Best thing you can do is to make the system work for your benefit.

I don't pay anything in interest and I pay pretty much everything on credit, because I live within my means. My credit score is ace because I've been doing it for years.

If you have any questions let me know, happy to discuss.