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Why Credit Inquiries Hurt My Score
The credit report is very important to every person because on it depends your being able to get loans. Creditors would use it to gauge your credit worthiness. A better credit report gets you better chances of getting your loan. A bad credit report, on the other hand, disqualifies you from many loans or really ups your interest rate that you will pay.
Credit reports are usually pulled out when one is trying to obtain a loan. And usually people would also get hold of it so they can check its accuracy and try to correct it if there is an error. Potential employers would also typically get your credit report as a part of their employment process. Some businesses would try to solicit accounts from you. But before they do they would check your credit first. Even existing creditors would get your credit report too.
Among these inquiries the only ones that would affect your credit score are the inquiries made by potential creditors. The logic behind this is that the more creditors checking on your credit report means that the more creditors you have been talking to for a loan. This is a sign of desperation on your part. Meaning, you must have a bad credit that you would need to apply for loan from many people.
But then some would argue that it’s only a part of shopping for the best loan. This can be true so a line was drawn when it would be seen as loan shopping and when it would consider you as a distressed borrower desperate to obtain a loan. Inquiries made by auto and mortgage within 14 days wouldn’t affect your credit score. Even if 40 inquiries are made as long as it’s made within this 14-day period, scorers would consider them as one inquiry. FICO has extended this to 45 days. However, lenders may still use the old 14-day rule so to be safe shopping should be done within this period only. And while personal inquiries, those made by employers and businesses seeking to do business with you, every inquiry made by credit card companies would always be counted.
If you are concerned about hurting your credit score, you should take note of this rule. More importantly, you should always be on time in paying your bills. And you should never take a loan that you do not need and you cannot afford.
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