Is My Credit Report Affected by Inquiries?

There comes a time when you have rebuilt your credit to the point that you think it is finally safe to apply for a new credit card. When you do this, the credit card company runs a hard inquiry on your account. You already know this will show up your credit report, but how much will it affect your overall rating? What happens if you are turned down and want to apply for another credit card?

There are two different types of inquires: hard and soft. Hard inquiries will generally stay on your credit report for two years. These are inquiries made by credit card companies, banks, or other creditors checking your credit history to establish if you are eligible for a credit card or loan.

Having a hard inquiry on occasion will not affect your credit rating very much. However, you want to be sure to try to limit it to no more than three hard inquiries on the report at any given time.

Soft and Single Enquiries

Soft inquiries have no affect on your credit rating at all. This type of inquiry is what is done when you check your own credit report. This can be done at any time with a paid or monthly service. In addition, if for any reason you are turned down for credit, you are able to use the declination letter to obtain a free report to show you the reason why the application was denied.

credit enquiriesAs stated earlier, a single inquiry will do very little to your overall credit rating. In most cases, each inquiry will deduct about five points from the overall score. The danger here is in having multiple inquiries hit the account all at the same time. When this happens, red flags start to go off with creditors. There are several reasons this could happen.

The obvious reason is the initial application was turned down and you are simply trying to apply for another card, hoping to be approved. This in and of itself is not necessarily a bad thing. A problem arises, or the red flags start to go off, when your debt to credit ratio is high and rapid-fire applications are being filled out. This is generally a sign that a person is financially in trouble and is applying for more credit as a way to attempt to bail themselves out of it.

If your credit is already shaky and you have a high debt to credit ratio, it is unlikely that your application will be approved. Instead of risking the hit to your credit, try to wait around for a pre-approved offer. The inquiry will obviously still show up on your report, but you have the luxury of knowing you are applying for a card that will be approved.

With solid credit, you really have nothing to worry about if you are applying for a new credit card, or even two at the same time. Your report will take a small hit, but it is nothing that will scare away a potential creditor. However, before applying for any type of new credit, it is always wise to pull your own credit report to ensure nothing negative is on it and that the report is current with all activity.

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