Don’t Fall Into the Credit Inquiry Trap

Black Friday is officially over and other than a few reports of physical altercations over parking spaces, all the hype is behind us.

However, another financial hurdle is quickly approaching. Holiday spending is projected to rise 3.9% of the 2013 holiday shopping season. Keep in mind that while you’re scrambling to find that perfect gift, be sure to avoid credit related inquiries.

Not All Inquiries are Equal
An inquiry is an entry on your credit report and it simply indicates that a company has accessed your credit report. Inquiries are worth 10% of the points in your FICO credit score.

Knowing this information may have you think twice when retailers are offering between 10 and 20 percent discounts this holiday season if you’ll open a new account.

Is this problematic? It certainly can be. Credit card inquiries remain on your credit reports for two years and are considered by the credit scoring systems for their first 12 months on your credit file.

Every Point Matters
For those of us who already have marginal credit scores (anything below 720) every point matters and the negative impact of the inquiry can mean anything from a higher interest rate on a loan to complete credit declination.

This is something to consider if you’re in the market for a loan in 2014. Each and every one of those credit decisions requires that you have good credit reports and solid credit scores.

How have you managed your credit score? Leave us a comment below or on Facebook (click here)!

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