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When Credit Check May Hurt Your Scores

The increased delinquencies rates and stressed lending industry made banks more choosy and careful accepting new applications. The essential point for the bank's approval/denial decision is still the customer's credit score contained in his/her credit report. The three-digit expression of your creditworthiness plays a factor when you take out any loan and apply for a plastic card. The better the score, the better the card rates as usual.

You may have heard that ordering credit report, which is essential to do if plan to apply for a loan, may lower your score. That sounds as if you shouldn't have any credit report checks to preserve a good FICO score. While this is true, there are some exceptions.

A personal credit check, or personal inquiry, does not affect your the score. You need to regularly order the report from the three national bureaus - Equifax, Experian and TransUnion - to stay informed of any changes or inaccuracies that may show up and affect your eligibility for a major loan or a good bank card. Credit score tracking agencies can also access your report without affecting the scores.

Credit report check to obtain a loan or a plastic card (also knows as hard inquiry) drops your FICO scores by a few points. While it is a slight drop, several applications within a short time period may take down chances for best interest rates and terms. If you've found an attractive card offer online and like to make an application, make sure the last hard inquiry was at least 3 months ago.

Note top 10 card issuers offering application services online: Bank of America, American Express, Capital One, Chase bank, Citibank, Discover, HSBC, US Bank, Wells Fargo and Washington Mutual. All of them will pull the bureau report as you send in an application. If the bank rejects you due to limited payment history or bad payments with previous issuers, your FICO scores will get a more significant hit. Applying with several banks at a time will also pull the score down. A good strategy to keep the score least affected is to shop for a bank card within a short period of time, preferably 14 days, according to myFICO.

Credit report check to pre-approve you for a credit card (or soft inquiry) is harmless, though it shows up in the list of inquiries. There may be lots of soft inquiries on your report but it does not affect the scores.

Other types of inquiries, such as those made by employers and landlords to evaluate risk, do not damage scores if the inquiries are recorded as employer searches.

These are the major reasons to access your report and ways it can affect your FICO scores. You see that hard inquiries pose the greatest risk to the score, so be careful shopping and applying for your next loan or card. Good credit score will help you qualify for lowest rates, balance transfers, great credit rewards and other benefits regardless of the tougher lending requirements caused by the credit crunch.

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