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TRENDING BASIC MONEY MANAGEMENT TIPS
11.04.2020 / Borrowing « Back to all articles
Managing Inquiries into Your Credit Score
Your credit score is an essential factor in determining whether you should receive a credit line. So, it makes sense that as you apply for a loan or line of credit that the lender should want to look at your credit score and report.
When a lender requests your credit report from a credit bureau, this is called a “hard inquiry.” Unfortunately, the more recent hard inquiries you have on your report, the less likely you are to be approved for a loan. Because of how inquiries affect your credit score, it's essential to understand their importance.
What Is the Difference Between a Hard and Soft Inquiry?
There are a couple of different ways that hard inquiries differ from soft inquiries. Hard inquiries occur when you apply for a new form of credit or loan. The lender pulls your credit report from your preferred agency, and it’s reviewed to determine your creditworthiness.
On the other hand, soft inquiries occur when you request to review your credit score or when a lending agency is looking to send out preapproval offers. Soft inquiries should not affect your credit score, so don't be deterred from regularly checking your credit score.
How Do Excessive Credit Inquiries Affect Your Credit Score?
When you apply for multiple loans in a short time it can indicate that you are expecting to take on significant debt. As you take on more debt, it can become more difficult to pay it back. Therefore, hard inquiries can sometimes lower your credit score slightly.
Most credit experts agree that the best time to apply for lines of credit or credit cards is when you don’t need them. This can help create a valuable safety net without being forced to apply to multiple credit cards in quick succession during times of financial emergencies.
How Many Credit Inquiries Is Too Many?
There’s no hard and fast rule for how many inquiries is too many, as each lender factors this differently. Generally, though, lenders will not lend to anyone with six or more inquiries in the past 24 months.
However, lenders also understand that consumers want to shop around when they're applying for loans. Take an auto loan, for instance. You may end up applying for an auto loan at several dealerships or financial institutions to see who offers the best rates. Credit bureaus should see this pattern and report the multiple inquiries as only one on your report if they all occur within a couple of weeks of each other.
What’s the Bottom Line?
The number of recent hard inquiries into your credit can be a determining factor in whether a lender will lend to you. You should always keep an eye on your credit report to see who’s reported a hard inquiry. If the inquiry was due to identity theft, you may be able to dispute the inquiry and have it removed from your report.
Credit Talk
11.04.2020 / Borrowing « Back to all articles
Managing Inquiries into Your Credit Score
Your credit score is an essential factor in determining whether you should receive a credit line. So, it makes sense that as you apply for a loan or line of credit that the lender should want to look at your credit score and report.
When a lender requests your credit report from a credit bureau, this is called a “hard inquiry.” Unfortunately, the more recent hard inquiries you have on your report, the less likely you are to be approved for a loan. Because of how inquiries affect your credit score, it's essential to understand their importance.
What Is the Difference Between a Hard and Soft Inquiry?
There are a couple of different ways that hard inquiries differ from soft inquiries. Hard inquiries occur when you apply for a new form of credit or loan. The lender pulls your credit report from your preferred agency, and it’s reviewed to determine your creditworthiness.
On the other hand, soft inquiries occur when you request to review your credit score or when a lending agency is looking to send out preapproval offers. Soft inquiries should not affect your credit score, so don't be deterred from regularly checking your credit score.
How Do Excessive Credit Inquiries Affect Your Credit Score?
When you apply for multiple loans in a short time it can indicate that you are expecting to take on significant debt. As you take on more debt, it can become more difficult to pay it back. Therefore, hard inquiries can sometimes lower your credit score slightly.
Most credit experts agree that the best time to apply for lines of credit or credit cards is when you don’t need them. This can help create a valuable safety net without being forced to apply to multiple credit cards in quick succession during times of financial emergencies.
How Many Credit Inquiries Is Too Many?
There’s no hard and fast rule for how many inquiries is too many, as each lender factors this differently. Generally, though, lenders will not lend to anyone with six or more inquiries in the past 24 months.
However, lenders also understand that consumers want to shop around when they're applying for loans. Take an auto loan, for instance. You may end up applying for an auto loan at several dealerships or financial institutions to see who offers the best rates. Credit bureaus should see this pattern and report the multiple inquiries as only one on your report if they all occur within a couple of weeks of each other.
What’s the Bottom Line?
The number of recent hard inquiries into your credit can be a determining factor in whether a lender will lend to you. You should always keep an eye on your credit report to see who’s reported a hard inquiry. If the inquiry was due to identity theft, you may be able to dispute the inquiry and have it removed from your report.
