Filling out credit card applications can affect your credit score. 10% of your FICO score is related to the number of inquiries made for your credit report. These inquiries can include credit cards, car loans, or any other type of loan that you are trying to obtain. Credit inquiries are placed on your credit report every time a business requests information from the credit bureaus.
These credit bureaus document these types of applications to get an idea if someone is searching for credit. The impact on your credit score can be minimal if you are only applying for a few credit cards. If you are filling out 10 applications and are searching for other forms of credit then your credit score can be dramatically affected.
Types of Credit Inquiries
When you review your credit report you may see a few inquiries that appear. Some of these inquiries do not affect your credit report. In some cases businesses can check your credit report offer you certain types of goods and services. Preapproved credit cards are a great example of these types of inquiries. Because you did not ask for these types of inquiries they will not have any ill effect on your credit score. Only the credit card applications that you fill out yourself will have an effect on your credit history.
How can Credit Card Inquiries Affect your Credit Score?
Inquiries on your credit report can indicate how much of a risk you are to a certain borrower. Too many inquiries can cause lenders to become worried that you may be in some sort of financial trouble. This may cause them to turn down your credit card application as you have become a high risk. A few inquiries are not going to affect your credit and adverse way. Just make sure that you keep them limited to credit cards that you really want.
Try to spread out your credit card applications to keep your score from falling. Credit report inquiries will remain on your credit report for only one year. This is also how long they can affect your credit score calculation.
How Credit Card Inquiries are Different From other Loans
If you are applying for a mortgage or auto loan your potential lender will have to check your credit score. These inquiries have an effect on your credit score. The effect of these inquiries is quite different than those that are used for credit card applications.
If you shop around for the best available mortgage and try a few different companies it will only affect your credit score like it was a single inquiry. This also applies for auto loans. Credit card applications affect your credit score much differently as each application is applied as a separate inquiry. They are not bundled together like car loan applications or home mortgages. This is why they can have such an adverse affect on your FICO score.
If you are looking for credit you should have no problem applying for certain credit cards without it having any serious affect on your credit score. Make sure that you use common sense when filling out your applications. Fill out one or two credit card forms to see if you get approved. If you are denied then you may want to reconsider applying for more. Most credit card companies determine their approvals the same way. If you are continuously denied for a credit card you may want to fix your credit before you fill out any new applications.
