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A Common Misconception About Credit Enquiries

May 24, 2008
It is commonly believed that any enquiry on your credit rating negatively affects your credit score, as a result most people hold off even finding out what their credit score is just in case that action hurts their credit score.

This notion isn't entirely accurate however, there are different types of enquiries; Hard enquiries which can reduce your credit score and Soft enquiries which have to effect on your credit score.

Hard enquiries
A hard enquiry is an occasion where a person's credit report is pulled for the purpose of giving credit; this can be during the process of applying for a loan, a mortgage, a credit card or when increasing a person's credit limit on an existing credit card.

The exact number of points a hard enquiry affects you by is a closely guarded secret for credit reference bureaus but it is believed to be a few points which can be recovered in a relatively short time.

Soft enquiries
A soft enquiry is what you might characterise as an inquisitive enquiry whose sole purpose is to inform the enquirer and may lead to nothing else.

These are instances where you individually pull your credit rating for your own knowledge or in some cases inquiries pulled by third parties such as a prospective employer.

Soft enquiries will not hurt your credit score although credit bureaus will in many cases charge you for them. You can avoid paying for credit reports by signing up to the free introductory periods offered on various websites.

So as you can see, learning about your credit score does not hurt, applying for credit multiple times might although the damage is minimal. It is highly encouraged that you to know your credit score so that you can make informed decisions when applying for credit. If you have a bad credit history, it is important to keep in mind that credit scores change every month, knowing your credit score will help you find ways to improve it over time.
About the Author
Jesse R. is a writer in the finance area, her work includes tips on getting a credit card with bad credit amongst many other credit tips.
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