It is a big mistake to think that simply making a request for your credit report will hurt your score.
Basic inquires have a small impact
Credit agencies consider inquiries carefully because not all inquiries are related to credit risk.
If you are looking for a new car and the dealership requests a report, for most people, this will have a minimal negative effect of about minus 5 points.
But if you are request additional credit all over town like:
- Loan companies
- Store cards
- Credit cards
... this may indicate greater risk and hurt your score.
Studies have show that people with six or more inquiries on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries.
Some inquiries are ignored
1) Your score is not affected if you order a credit report for yourself.
You are entitled to one FREE credit report each year from each of the big three reporting agencies:
- Experian
- Equifax
- TransUnion
This WILL NOT hurt your score!
2) If a lender (credit card company for instance) makes a request for your credit report in order to see if you qualify for a "pre-approved" credit offer, it WILL NOT hurt your credit score.
3) If an employer (or in the last few years, an insurance company) makes a request for your credit report, this WILL NOT hurt your score.
Multiple inquiries or "rate shopping" is not counted as a negative on your credit score
When looking for a mortgage, student loan or an auto loan, you will most likely want to check with several lenders to get the best rate.
Of course, this will cause multiple lenders to make inquiries for your credit report, but the credit reporting agencies make a distinction between a search for a single loan and a search for many new credit cards or loans!
But, if you are shopping for the best rate for a car, student or home loan, you should do so in a short period of time, say two weeks or less to avoid the appearance of trying to get too much credit too fast!
If your credit score is too low to qualify for the loan you are seeking, DON'T CLOSE DOWN OLD ACCOUNTS!
It is a mistake to think that closing accounts will help, when actually it can hurt your credit score!
Late payments or accounts that have been charged off won't disappear from your credit report just because you closed them.
BEWARE OF FALSE CLAIMS BY CREDIT REPAIR COMPANIES!
Long established accounts are a positive factor of your credit score because it shows you manage credit well. Don't close these down!
Having available credit that you don't use DOES NOT LOWER your score. You may have other reasons for closing down old accounts, but don't do it thinking it will improve your score.
If you have too much credit and are having a difficult time keeping up, there are several programs that can help you eliminate the debt and improve your score!
Why not request a FREE CREDIT ANALYSIS.
Got Questions? We've Got Answers
1-877-492-4109
photo by: Kristian D.
