We check things all the time. We check our cell phones for text messages, access our email all day long and look at our bank account to make sure there’s enough cash for that trip to Hawaii. You can view your credit report, too, but if you do that you can put your credit at risk.
How so? Some instances of checking or pulling your credit report can hurt your credit and make your score drop by a few points. That doesn’t sound that damaging, but consider this. A few points taken from your score can be the difference between you saving a few thousand dollars on your mortgage or not. Understanding about inquiries can help you be more mindful of your credit.
The Basics of Credit Inquiries
Each and every time your credit report is accessed, your score can drop. These are called credit inquiries and happen every time you apply for a credit or someone accesses your report, such as when a lender pulls your credit report to see if you are qualified for a credit card. That seems harmless enough, but it can actually cost you points. There are two types of inquires, called soft and hard inquiries, and each one has different affects on your credit.
Soft Inquiries
Soft pulls, or soft credit inquiries, do not affect your credit and are the inquiries you are most likely to be familiar with. This type of inquiry provides you with information regarding your credit history, management of your debt, payment history and negative marks. Examples of a soft inquiry include the following:
- Checking your credit score
- An employer checking your credit
- Receiving a pre-approved credit offer in the mail
- A lender reviewing your credit account
Hard Inquiries
This type of inquiry provides the same information as a soft one, such as your payment and credit history. However, unlike a soft inquiry, a hard inquiry can cost you.
A hard inquiry happens when a lender accesses your credit report after you have applied for a loan, such as a car loan or a credit card. So if you decide you need a new credit card and fill out an application, just know that a hard inquiry will show up on your credit account. According to FICO, this is the only inquiry that can impact your credit score in a negative manner.
As this can hurt your credit, it is important that you understand facts about this inquiry. For example, a hard inquiry costs you a maximum of 10 points, although it may be less. The inquiry itself can be seen on your credit report for up to two years, although it only has an affect on your credit for one year.
Tips To Keep Your Credit From Dropping
It’s natural to be worried about your credit score dropping from hard inquiries, but there are some tips you can use to prevent that from happening, or minimize it at the very least. For example, applying for credit cards often means there will be multiple hard inquiries. So if you apply for five credit cards, you’ll have five inquiries. As such, you could lose up to 50 points on your credit score, which can make you drop from a fair to poor ranking depending on where you started.These deductions from your score can add up quickly, so be careful what you apply for and how often you apply.
If you are looking around for a new credit card or loan and are applying for several, do it all within a two-week timeframe. Why? Because multiple inquiries within a short period of time may be counted as only one inquiry, rather than several. That means that even if your account is hit with a hard inquiry, it is a single inquiry that won’t cost you too many points.
You should also keep an eye on your score, as simply checking it is a soft inquiry and won’t affect your report. Monitoring your credit should be a regular occurrence anyway, so this adds another preventative measure.
Protect Your Account Against Inquiries
Inquiries can harm your credit, but not all of them. If you are looking for ways to boost your score after damage from inquiries, contact Coast Tradelines to find out how tradelines can help you re-establish your credit and boost your score.
