Understanding how credit works can be tricky. One good example? Credit inquiries.
What Is a Hard Inquiry?
A hard inquiry occurs when an individual applies for any type of credit. So why should you be concerned about a hard inquiry? This type of credit report check will lower your credit score. Multiple credit inquiries, or certain types of recent inquiries may get a borrower flagged as a greater potential credit risk.
Are You Rate Shopping for Loans?
If you shop around for the best interest rate and fill out forms with several lenders, your credit rating is not affected. The credit scoring systems allow people to shop for the best rates on loans without having a negative impact on their credit scores. They do so by counting all inquiries within a given period of time, or buffer period, as a single inquiry. This “buffer period” is given when an individual is rate shopping for automobile and mortgage loans.
Credit Card Inquiries
How many times have you been tempted by a retailer to apply for their store card based on a discount offered at the checkout counter in exchange for your application? The rules are different when you apply for credit cards. It’s important to know that there are no buffer periods for you when it comes to credit card applications.
It’s easy to give in to this temptation when you don’t know that every time you apply for one of these cards, a “hard inquiry” is registered on your credit report. So, next time a retailer offers you a 20% discount, consider if it is worth the risk of lowering your score.
Does a Denial Still Hurt Your Credit?
Did you get denied for a line of credit? A hard inquiry affects your credit regardless if you get approved or not. This is a requirement of the application process and shows up on your credit report either way.
With these issues in mind, it’s easy to see that applying for credit shouldn’t be done lightly. The hard inquiry issue makes it critical for borrowers to think carefully about the timing of new credit, especially when preparing to apply for a major loan such as an auto or home.
Consult a credit counselor to improve your credit score
Are you preparing to apply for new credit? Having your income in line is not the only factor that will help. Having an optimal credit score will also make for a smoother process. If you’re unsure where your credit is at, it’s always a good idea to consult with a credit counselor or credit expert. MSI Credit Solutions assists consumers with credit services, real estate services, and lending resources.
Call MSI Credit Solutions today at 866-217-9841 and receive a FREE consultation.
MSI Credit Solutions provides superior credit restoration and comprehensive consulting services that are reliable and affordable. Call today for your free credit repair consultation! Contact us at (866) 217-9841.
*The information in this article has been provided strictly for educational purposes.