The Effect of Credit Inquiries on a Credit Rating
It is a well known fact that credit inquiries can have an adverse effect on a credit rating, but not all inquiries weigh equally. Moreover, some credit inquiries actually have no impact on the credit rating at all, while others have the potential to seriously weigh it down, even to the point of having the credit rating slip by a quite a few points. A credit rating is defined as the sum total of all bits and pieces of information that are contained in the credit record. As such, it is made up of any derogatory and also positive notations on the credit profile, late payments, public records like bankruptcies or repossessions, the number of open credit accounts, the ages of the various accounts, and also the number of inquiries from potential new creditors checking out the customer’s credit profile.
A credit inquiry occurs each time a consumer applies for new credit, such as a loan or credit card, but there are also other times that a business may make an inquiry into the consumer’s credit. For example, a person who opens a utility account usually has to undergo a credit check. Landlords will check a potential tenant’s credit profile before deciding to rent a property to her or him. In some cases, even employers pull the credit files on a prospective employee, especially if their company is involved in the financial field or engages in business that involves fiduciary duties to clients or high level of security requirements of various workers.
When evaluating the potential for impact on your credit score, there are some inquiries into your credit that do not harm the credit rating. If a creditor with whom you have already established credit does check your credit report, there is no harm to be found and it will not adversely affect your credit rating. This reveals that only inquiries by new creditors can actually decrease your credit score by a point or so. Some creditors check the credit profiles of their consumers every month, most notably those with skyrocketing rates for consumers whose credit is less than good. Wanting to establish early on where a consumer’s credit rating is heading, they sometimes attach a credit interest rate hike to an adverse notation on a credit profile.
On the other hand, if a consumer is in the market for a new mortgage loan or even a car loan, it stands to reason that s/he will shop around to find the best rate. This results in a great number of credit inquiries being noted on the credit profile. Credit reporting agencies understand this practice and rather than allowing the credit profile to dip bit by bit, they simply count all these inquiries against the overall credit score after a 30 day period has passed. This ensures that the consumer receives the most competitive offer for credit while at the same time it also remains true to the creditors who expect to see the number of actual credit rating inquiries made on a particular consumer profile.
Krista Scruggs is an article contributor to debt-settlement411.com. Debt-settlement411.com connects you with service providers that can help you avoid bankruptcy. We have several Debt Settlement companies within our network, each with their own strengths and specialties. Depending on your specific situation (the amount of debt owed, nature of your debt, your credit, your hardship, and any other unique situation you might be in), we will match you up with the right company.
Article Source:http://www.articlesbase.com/debt-consolidation-articles/the-effect-of-credit-inquiries-on-a-credit-rating-1343780.html
Related articles by Zemanta
- Credit card default rates at record level (thestar.com)
- Too Much Month At The End Of The Money (slideshare.net)
- Credit Score: Separating Fact from Fiction (hsh.com)
- Debt settlement carries costs, too (seattletimes.nwsource.com)
- Unpaid credit card balances balloon (thestar.com)
- How long will a foreclosure or bankruptcy affect credit? (seattletimes.nwsource.com)
- Credit file myths explained (telegraph.co.uk)
- New escape route from big debt exists (thestar.com)
- WSJ: Credit Drought Hampers Economy (cehwiedel.com)
- Ten things you (probably) didn’t know about your credit record (timesbusiness.typepad.com)
- How To Get Loan Modifications SUCCESSFULLY – Webinar Replay (fhaloanadvice.com)
- No Cost Loan Modification Webinar – How To Get Principal Reductions (fhaloanadvice.com)
- British Regulator Proposes Tighter Home Loan Rules (nytimes.com)
Related Posts
- Settling debts in Wisconsin
- My Life With GHD
- Legitimate Options For Personal Debt Relief in 2010
- Know more about non profit debt consolidation credit counseling companies
- Best Way to Eliminate Credit Card Debt - A proven way to get you out of debt fast
- Getting Out Of Debt – 3 Things To Avoid When Seeking Debt Relief Programs
- The Bankruptcy Option- The Pros And Cons Of Chapter 7 Bankruptcy
- How Can Debt Management Help You? Discover The Benefits Now
- Eliminate Credit Card Debt Without Filing Bankruptcy - How You Can Get out of debt fast
- Unsecured Debt Consolidation - Tips For Getting Unsecured Debt Relief
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=c3917158-bece-4317-bd0b-5d2174a1950b)








0 users responded to this post
1 Pingback & Trackback On This Post
Leave Your Comments Below