Tips to improve financial credibility in 2017 | Grant Barra Illinois

Having a sound credit score is of utmost importance as it not only increases your chances of availing credit in future but also increases your credibility. Oftentimes, credit inquiries are carried out on your credit report, which are legitimate requests that are made by business entities so that a check can be carried out on your credit report.

Types of credit inquiries

Basically, there are 2 types of credit inquiries that can be requested on your credit report, namely, hard inquiry and soft inquiry. An important aspect that you ought to keep in mind is that while soft inquiries will not impact your credit report, hard inquiries impact your credit report in a negative manner.

Examples of soft credit inquiry

  • Checking for past track record as in the case of employment
  • If you want to know your own credit score
  • Credit card(plastic card) loan offers that are usually pre-approved

Examples of hard credit inquiry

  • When you are planning to apply for an auto loan, personal loan, student loan, or mortgage
  • Applying for business loan
  • If you plan to avail plastic cards

Why credit inquiries are carried out?

Soft inquiries are carried out only to check your credit for availing promotional offers by debit/credit card companies, for checking your own credit and FICO score, and by business entities with whom you have dealt already for services or goods.

Hard inquiries on the other hand are specifically requested by prospective lenders so that they can assess your credibility and decide whether or not you qualify for availing credit. The hard credit inquiries are usually carried out also to find out whether or not you have availed any credit before, which includes auto loans, mortgage, and so on.

In order to find out more about soft and hard credit inquiries, you can visit AAA Credit Guide to learn how long a credit does inquiry stay on your credit report here.

Reasons hard credit inquiries impact your credit score

Why is it that soft credit inquiries do not affect your credit report but hard inquiries do? Let us find out. Having too many hard inquiry requests on your credit report will cause your credit score to backslide a little. If at any one point of time a single hard inquiry is carried out, it may not affect to a great extent. However, if there are too many requests for hard inquiries on your credit report, it directly questions your credibility. It implies that you are financially not responsible enough to handle your finances and this is why you have time and again applied for loan for various reasons. As such, it is best to restrict hard inquiries as much as possible and ideally, you should have just one or at the most 2 hard credit inquiry in a year.

How can you avoid requests for hard credit inquiry?

If at all you have to avail credit, first and foremost, build up your credit score. This will take some time so plan well beforehand. Another advantage of having a great credit score is that you will be able to enjoy the best rates, terms and conditions on the loan that you intend to avail. Read more