Why Applying For Credit Cards Can Keep You From Getting Credit |
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Applying for a credit card is a seemingly minor thing that can haunt individuals for up to 24 months, (25 months when dealing with the credit reporting agency Experian). Why? Because each time a credit card application is completed and submitted, at least one inquiry is added to a person's credit report by the bank issuing the credit card. Inquires are requests for a personal credit report, which is also recorded on individual credit reports. There are two types of inquiries: 'hard' inquiries and 'soft' inquires.
'Soft' inquires are ones that are made with or without permission from an individual, as a marketing inquiry (to review your account for a credit card or loan invitation), or from a company which a person may have a current credit card or loan with (in the form of an account review). These are coded within the credit reporting agencies system to not show to others who pull an individual's credit, and they are shown only to the individual. 'Hard' inquires, on the other hand, are ones that are made with a person's permission by a credit card or loan issuer when someone applies for credit. "Hard Inquiries" can also be pulled without a person's permission by a collection agency who holds one of the person's debts. These inquiries are the ones that can hurt individuals because they ARE shown to others when applying for a credit card or loan. It is these hard inquiries that can keep consumers from getting a future credit card or loan. When a credit card issuer sees too many inquiries, they may take this as a sign that an individual is trying to accumulate due to possible financial hardships or foreseeing future financial rough spots. The kicker is that individuals may have gotten these inquires without even asking for a loan or credit card. More and more, consumers must allow a company to pull personal credit reports to open up a bank account, apply for a job, or get a cell phone. Even some volunteer agencies such as the Red Cross will request to pull personal credit files. These companies can pull more than one time if they want and each time it hurts a consumer's chances of getting a credit card. The biggest culprits are banks, who will pull at least one separate report for each account opened, even if the accounts are opened all at the same time or even if a consumer already has an account with the bank. These same banks will then deny consumers a credit card or other extension of credit for 'too many recent inquiries'. Just how many 'hard' inquiries can a consumer have within two years? This question in better posed to the bank issuing the credit card, as each one will have their own standards. Some prime level banks have been known to deny a with as little as 3 previous 'hard' inquiries. But, if one can avoid a useless 'hard' inquiry (one that is not related to a credit card or loan application or one where consumers know they will likely be denied for the credit card), then it is best to do so. |
