Credit Inquiries: How They Affect Your Credit History
Before you qualify for a loan or a credit line from any source, the lender will be sure to check your credit history. When you receive "pre-approved" credit card offers in the mail, you can be sure that the company offering you the card has checked your credit first. If credit check s or inquiries are run too often on you, however, it can damage your credit history and limit your ability to borrow money or be charged a low interest rate.
There are two types of credit checks or credit inquiries and only one of them has any effect on your credit history. Those credit inquiries that you authorize (when you apply for a loan, mortgage, or revolving credit) appear on your credit report and affect your score.
Your credit score will get lower each time you apply for credit. Since credit inquiries can affect your credit score negatively, you should try to keep the number of credit applications you fill out to a minimum.
That does not mean that you shouldn't shop around for the best loan opportunity. Similar credit inquiries (like for a mortgage or auto loan) that are pulled within a particular time frame, around 30 days, will be counted as just one inquiry. Companies finally realized that shopping around was a good thing and they quit penalizing the smart consumer because of it.
The other credit inquiries are those made by business that you have not authorized to get your information. Anyone with a permissible purpose (defined by the Federal Fair Credit Reporting Act) has the ability to check your credit history ? without you even knowing about it.
Credit card companies, retail stores, and many other businesses that have a "permissible purpose" and want you to take money from them (for the right price) will pull your credit history to determine if you are eligible for one of their pre-approved opportunities. These inquiries will not affect your credit history or hurt your credit score, but they will show up on your report so that you will know who is looking into your business.
Another credit check that does not do any damage to your credit history is a check done by a prospective employer before they choose to hire you.
Any time a business pulls your credit history, it is marked on a report for you to view. These credit checks or credit inquiries can ultimately hurt your credit score, but only those credit inquires that you request will affect you in the end.
There are two types of credit checks or credit inquiries and only one of them has any effect on your credit history. Those credit inquiries that you authorize (when you apply for a loan, mortgage, or revolving credit) appear on your credit report and affect your score.
Your credit score will get lower each time you apply for credit. Since credit inquiries can affect your credit score negatively, you should try to keep the number of credit applications you fill out to a minimum.
That does not mean that you shouldn't shop around for the best loan opportunity. Similar credit inquiries (like for a mortgage or auto loan) that are pulled within a particular time frame, around 30 days, will be counted as just one inquiry. Companies finally realized that shopping around was a good thing and they quit penalizing the smart consumer because of it.
The other credit inquiries are those made by business that you have not authorized to get your information. Anyone with a permissible purpose (defined by the Federal Fair Credit Reporting Act) has the ability to check your credit history ? without you even knowing about it.
Credit card companies, retail stores, and many other businesses that have a "permissible purpose" and want you to take money from them (for the right price) will pull your credit history to determine if you are eligible for one of their pre-approved opportunities. These inquiries will not affect your credit history or hurt your credit score, but they will show up on your report so that you will know who is looking into your business.
Another credit check that does not do any damage to your credit history is a check done by a prospective employer before they choose to hire you.
Any time a business pulls your credit history, it is marked on a report for you to view. These credit checks or credit inquiries can ultimately hurt your credit score, but only those credit inquires that you request will affect you in the end.
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posted by Credit Counseling at
5:01 AM
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