How Credit Inquiries Can Affect Your Score

There are two different types of inquiries that may appear on your credit score. One is the soft inquiry, which is a look at your credit report for any other reason besides a purchase. This could be your own inquiry into your credit score, a potential employer’s inquiry, or for pre-approval purposes. A hard inquiry is a credit score check for the purposes of making a purchase. These hard inquiries will appear on your credit score, and a rejection can adversely affect your report.

All inquiries are recorded on your credit report, even the inquiries that you make for yourself. If you have several hard inquiries on your credit report, then potential lenders may believe that you are attempting to spend outside of your current means. This does not mean that you cannot shop around for a loan. Though all inquiries show up on the credit report, those that are similar and take place around the same time will end up grouped together as one hard inquiry.

Another benefit of having each inquiry reported is that you can receive early warning if someone attempts to apply for credit with your name. If you regularly receive credit reports, you can easily spot any unusual activity. This is why it is a good idea to subscribe to credit monitoring programs, though you can keep an eye on your score without outside help.

You need not worry that unauthorized individuals can receive your credit information. According to the Fair Credit Reporting Act, only legitimate business entities can access your credit reports. These inquiries will remain on your credit report for up to two years from the original placement. You can dispute any inaccuracies, but they will not be removed without hard proof that the report is incorrect.

It is very important that you keep a close eye on your credit report and scores. You will need good credit for many more things than you might imagine, and maintenance is the easiest way to ensure that you receive no surprises when you are preparing for large purchases. Keep the hard inquiries to a minimum, if at all possible, and remember that inquiries to certain credit reports will only appear on that particular credit report. For instance, if your car loan lender only checks the TransUnion credit report, then your inquiry will not appear on the other two reporting services.

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The Importance of Good Credit

Even if you are not planning a major purchase, such as a house or a car, in the near future, your credit score is still important. Many businesses and service providers are relying more and more on good credit scores before offering goods and services. You may find yourself in need, without anywhere to turn.

You must have good credit to find a place to live. You may not be interested in buying a home, but landlords will check credit scores, too. Your landlord will want to be sure that you have a history of paying your bills on time, and a bad credit report will tell them everything they need to know. Without good credit, you may be denied the house or apartment that you wish to lease.

If you are applying for a new job, it may surprise you to know that your potential employer will want to check your credit. This is especially true in positions with fiscal responsibility, because your employers will want to know that you can demonstrate financial responsibility. In addition, the employer may want to know if your level of debt is too high for the salary that your intended position offers.

You may also find that you are without certain utilities if you have poor credit. Utilities companies believe that each month of utilities that they provide could be considered a loan, which you pay at the end of each month of service. If you do not demonstrate good payment practices, utilities companies may be less likely to offer their services. You may be able to come to an agreement that will allow you to use the water, gas, phone, or cable services, but you will probably have to offer a sizeable deposit before you can use the services.

These are all excellent reasons for cleaning up and maintaining your credit score. You will find that the fastest way to improve your credit score is to make your bill payments on time, every time. When you know that there will be a problem with your monthly payment, it is in your best interest to contact your creditors and make them aware of the problem. A little bit of communication can go a long way to protect your credit standings. By taking responsibility for your finances, you can begin to show your creditors that you are worth the risk that they will take.

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What Credit Card Debt Does to Your Credit Score

Credit card debt is known by most people as one form of bad debt. It's really the type of debt that no one should have but in an emergency. A credit card is something that gets a very high interest rate, which is one reason to avoid this type of debt. Unlike a car loan, too, you aren't steadily paying off a credit card. Instead, you can run up more and more debt until you reach your maximum limit. Then, you can just pay it down and start all over again.

Besides this, credit cards normally have very high payments. This is because they have ridiculously high interest rates. Even if your payments are high, though, making minimum payments can often land you in debt for literally years to come. Even if your original debt isn’t that large, credit card interest rates can cause your payments to drag on for months and months on end. Eventually, you can even end up paying twice as much as you originally put on your credit card all because of compounding interest!

Another reason to avoid credit card debt, though, is that it can also cause your credit score to suffer seriously. Because this is high risk debt, the credit reporting bureaus mark it very unfavorably on your report. Having a load of credit card debt is probably the surest way to get your score down other than making none of your monthly payments on time.

The main way that credit card debt is scored isn’t necessarily, though, by how much total debt you have. You can have $10,000 of credit card balances and still have a great credit score. Mainly, the companies who make your score actually adjust it based on how much debt you have compared with how much credit you have available.

If you have $10,000 worth of debt but have a $100,000 credit limit, your score will still be really high. If you have $2,000 worth of debt and have only a $2,500 limit, your score will take a huge hit. The closer you come to maxing out your cards, the worse your credit sore suffers.
This is why the quickest way to repair your credit is to pay down credit cards. As soon as you see that your score is starting to suffer, work on getting those balances down. You’d be surprised just how quickly this can turn your score around!

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Don’t Allow Bad Credit to Haunt You

Bad credit can seriously affect your life, from an inability to make small purchases to losing a coveted job prospect. Many business check credit reports for insight on your responsibility with financial matters, and a bad score will tell them everything they need to know. You don't have to allow your bad credit to haunt your daily life, though. With some time and effort, you can begin to repair your credit rating.

First of all, you need to obtain a copy of your credit report. You can get a free credit report once per year from a few different websites. A quick Internet search will find those sites for you. Once you have the report in hand, look over it for any possible credit reporting errors. These may be classed as a mistake when reporting late or missed payments, reports for someone with a similar name, or accounts opened by an identity thief. You may be surprised at the number of errors that appear on your credit report, but you can dispute the charges by calling the creditor. Most creditors will be happy to work with you to have those charges removed.

Next, you will need to focus on the accounts that have several late or missed payments. These reports will fall off of your credit report after approximately two years, but only if you manage to bring your account current and continue to make timely payments. Do not make the mistake of believing that one missed payment will not affect your score. It may only drop the actual score a few points, but the late or missed payment will be recorded for all future lenders to see. This can be the detail that causes you to be denied new credit.

If you have a loan default or a bankruptcy on your credit report, there is nothing you can do to make it disappear. Your best chances to bounce back are to continue to make timely payments to your creditors to show them that you are determined to better your credit history. You can apply for smaller credit cards, but do not use them for large purchases. Instead, make one small purchase per month and pay it off immediately when the bill arrives. This will help to build a better credit rating for you by showing that you can be responsible, but also by improving your debt to available credit ratio.

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Credit Education for College Students

College students these days have plenty of experience with credit. The average student graduates with tens of thousands of dollars worth of student loan debt, and many students even have credit card debt upon graduation. The problem, though, is that many students have absolutely no credit education. They can have degrees in anything but still know absolutely nothing about their credit and the problems it could cause for them later in life.

It's important, then, for parents and other adults to educate college students about credit. There are lots of different ways to go about this. One of the most effective, though, is to simply run the numbers. Like most people, college students are inherently logical, and they'll respond better when something is right in front of their faces. Most students are pretty poor, and they know the value of the dollar. This means that they will respond well if you give them an illustration of exactly what can happen if they go on taking out credit.

One way to do this is to use an online credit calculator. It can show you just how much interest you'll pay on even a small debt over time. You can also use these to show how long it will take to pay off a debt at a certain rate or how much money you'll pay in interest by paying minimum payments. Many students assume that it's okay to make minimum payments, for instance, on student loans. They just don't realize how much more money this will cost them over the life of a loan.

Another way to work with credit education with students is to let them know how much a bad credit score can cost them. Many students aren't even aware that they have credit scores, even if they've had credit cards for years. Talk to your college student about how a poor credit score can affect them before they start to create a terrible score that's too hard to dig out of.

Most college students graduate with big dreams. They want to get good jobs and buy beautiful homes and cars. What they don't realize is that a bad credit score can keep them from getting the job of their dreams, as many employers look at credit scores to get an overall idea of how responsible someone is. Also, a bad credit score can keep someone from getting a home or car loan, so the decisions college students make now can affect their entire lives.

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Don't Let These Credit Mistakes Happen to You

There are so many different ways that you can make mistakes on your credit report. In many cases, the mistake might not even be one that you made. If you are not diligent in keeping up with your credit history, then your credit score and purchasing power can suffer greatly. There are many mistakes that you can make that you should never want to appear on your credit report, however. These might happen because you just do not realize how negatively they might impact your life. Keep in mind that a bad credit score won't just earn you a credit rejection, but it might cost you a coveted job.

If you miss a payment for more than six months for a particular lender, chances are that the creditor will choose to write off the account. This means that the lender has deemed your debt as uncollectable. You might feel the relief when the calls cease, but you are in for a nasty surprise when you check your credit report. These charged off accounts will remain on your credit report for seven years, and every potential lender that checks your credit history will see that you allowed an account to reach default status.

You may also find that the creditor has turned your charged off account to a debt collector. This means that the debt collector has purchased your debt from the original account. For this reason, debt collectors will try even harder than the lender to collect on debts, because this is how they recoup their investment. Not only will the phone calls begin again, but the debt collector will have the power to report negative entries on your credit report, as well. This means that you will have twice the bad press for only one charged off account.

You can keep this from happening to you. If you believe that you will be late making a payment, be sure to contact the lender or creditor to let them know. Many creditors are happy to work with you until you are able to get back on your feet again. If you have had a life-changing event that could prevent you from making payments for several months, then you should definitely alert your creditors. There are often payment plans and other programs in place to help customers get through hard times, and you can get back on top without affecting your credit score.

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Why You Need to Know Your Credit History

Your credit history is basically a summary of your entire financial life up to this point. Until you started taking out credit, you didn’t have a credit history at all. Once you start this, though, you can easily create a bad history for yourself with just a few wrong moves. It’s like a game where bad moves take away more points than good moves add! Over time, though, your goal should be to build a good credit score, which is done by having a history of being financially responsible and using credit wisely and well.

If you don't know anything about your credit history, now is the time to start learning. There are many reasons to learn more about your history of credit. Here are just a few reasons to look at your credit report sometime soon so that you can start learning more about your personal financial history.

For one thing, knowing your credit history can help you see where you've made mistake in the past. Maybe you took out too large of a car loan at some point and ended up with very high payments. Maybe you have a history of using credit cards poorly so that you have a high balance all the time. This is a terrible blow to your credit score, and it can keep you from getting loans you really need in the future.

Another thing that knowing your credit history can do is to help you take note of possible identity theft. If you know where you’ve been with your own credit, you can see when other people are trying to take out credit in your name or when they have already done it. Your best defense against identity theft is to catch problems as soon as they occur. This is why you need to know what your credit history is and to check your credit report often.

For these two reasons, you really need to know what your credit history is like. Knowing where you come from can help you set a new course for the future. If you've done well with credit in the past, you'll be able to see what you should do to continue doing well in the future. If you haven't done so well, you'll be able to change your behaviors so that you can create a better financial future for yourself.

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