HOW DO BUSINESS INQUIRIES AFFECT CREDIT SCORE - Fix Your Bad Credit

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Tuesday, 11 February 2014

HOW DO BUSINESS INQUIRIES AFFECT CREDIT SCORE


HOW DO BUSINESS INQUIRIES AFFECT CREDIT SCORE

Even if you have a very good credit score too many credit inquiries can prevent you from qualifying for new loans or other forms of credit as a high number of credit inquiries can negatively impact your credit score
SO WHAT IS BASICALLY A CREDIT INQUIRY-A credit inquiry means that whenever you make an application for new credit to any lender, car dealer or mortgage lender you are indirectly authorizing the lenders to obtain a copy of your credit report from the credit bureaus. Such forms of inquiries appear in your credit report.Credit inquiry is a small but very  important factor considered in measuring your total creditworthiness.
The reason why credit inquiries affect your credit score is because lenders prefer giving credit to those who possess lesser risk and are in the financial capacity to repay the credit. If you have applied for or opened too many credit accounts in a short time span .you represent as a high risk to the lender and the lender is not likely to grant any new lines of credit to you. You are more of a defaulter for the lender as they may presume that you will not be in a position to pay off the credit.
How does a credit inquiry affect credit score? The impact of the credit inquiry on the credit score varies from individual to indiviual.The effect a credit inquiry will have is directly related with the payment history. A credit inquiry will have a deeper impact on an applicant with a shorter payment history. The larger the number of credit inquiries the higher the risk for the lender. More than 4-6 credit inquiries can drastically bring down a person's credit score and their appearance in the credit reports might even declare an individual bankrupt.
IS THERE A WAY TO REDUCE THE IMPACT OF BUSINESS INQUIRIES ON MY CREDIT SCORE
Yes there is a way to reduce the impact of credit inquiries. In case you need a new line of credit, try to go for rate shopping (rate shopping means applying for credit to several lenders to get the best possible interest rates within a very short period of time)
Do not grant permission to any lender to acquire a copy of your credit report from the credit bureaus until you are ready to make a purchase. Continue to build your credit score with making regular payment of bills on time, having a low debt load and keeping low credit utilization and applying for new credit only when necessary.






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