In Store Credit Card Offers

Credit Mistake: Excessively Applying for Credit

Whenever you apply for credit your application gives the lender permission to access your credit reports. When they pull your credit reports, it automatically posts an inquiry in your credit record. This is called a “Hard Inquiry” and creates a record of who pulled your credit report and the date it occurred. Hard inquiries can slightly lower your credit score and will typically stay on your report for two years. Soft inquiries, on the other hand, typically occur when employers access your report to look for signs of risk or you check your own credit report or score from sites like Credit Karma.

Credit scoring models use hard inquiries to determine if and when you shop for credit. Statistics show that consumers who have more inquiries are higher credit risks than those with fewer inquiries. It is for this reason that the more inquiries you have, the more points you lose in the credit score calculation. The exact point value of inquiries is a much-argued topic and is impossible to give an exact point value because it really depends on all of the other information included in your individual credit file. The best strategy would be to only apply for credit when you absolutely need to. This means that you should avoid those in store offers of “10% off” in exchange for applying for a store credit card. This may sound like a great idea but the reality is that while you may save a few bucks on your purchase; those inquiries could end up costing you a lower credit score which could result in higher interest rates on auto or mortgage loans in the future.

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