When seeking additional credit, the process can sometimes be a double-edged sword.
You need to apply to different companies in order to get the credit, however, if you apply to too many before being approved, your credit rating can drop and put up a red flag to other creditors.
So, just what type of inquires are there and how do they affect your credit score?
When companies are randomly searching for possible customers, they can do a soft inquiry on your report that will not have no affect whatsoever on your overall credit rating.
The result of these inquires are the flood of “guaranteed” credit offers you receive in the mail. If you are in the market for a new credit card and the rates are favorable, these are often a very good bet, as you know you have already been approved.
This is the same type of inquiry that is on your record when you check your own credit report. Anyone belonging to a reporting “club” knows they can check their credit every month with no negative reporting resulting.
Existing creditors will run similar reports on you from time to time to ensure everything is still status quo regarding your credit.
They may do this if they are considering raising or even lowering your overall credit limit.
When applying for new credit or some type of loan, creditors will run a hard credit check. This stays on your credit report for two years.
It does so to allow creditors to see when you are applying for credit and in what type of volume.
When someone is applying for multiple credit cards at one time, it shows a warning sign to creditors that something may be amiss and is often the reason a person is turned down.
This is why it is so important to thoroughly review your credit report prior to applying and applying with companies you have confidence of approval.
More about credit ratings: http://en.wikipedia.org/wiki/Credit_rating
