Place the cream cheese on a microwave-safe plate. Soften it in the microwave, about 10 seconds per side. Place the softened cream cheese in a medium bowl. Using a spoon or a rubber spatula, mix it to further soften and make it fluffy.
Add the sour cream, Dijon mustard, garlic powder, onion powder, smoked paprika, and cayenne pepper. Mix to combine.
Mix in the shredded cheese and bacon bits.
Serve immediately, or allow the dip to rest at room temperature for 30 minutes before serving.
Video
Notes
Since we won't heat the dip and melt the cheddar, it's best to use finely shredded cheese.
The dip is delicious right after you make it, and you can serve it immediately. But if you have time to let it sit and rest at room temperature for 30 minutes, it will be even better because the flavors will have a chance to meld.
You can keep the leftovers in an airtight container in the fridge for up to 5 days. Remove the portion you will use and let it stand at room temperature for 30 minutes before serving.
I don't recommend freezing this dip. Its texture won't survive freezing and thawing. It becomes watery after being thawed and is not as smooth and creamy as it should be.