Are You Damaging Your Credit?

Always inquire about the type of credit pull being done when someone asks for your social security number.  Many people don’t realize that two types of credit pulls exist and that they can have a significant impact on your credit score.

No Permission Needed.

A soft credit pull or inquiry occurs when you check your own credit score, a bank or lender preapproves you for a loan or someone is performing a background check on you.  Soft credit inquiries don’t require your permission and usually don’t have an adverse effect or your credit.

Lending Decision = Hard Credit Pull

A hard credit pull or inquiry usually occurs when a lending decision is being made.  When you apply for a credit card or loan, for example, a hard inquiry into your credit will occur.  Hard credit pulls will often knock your credit score down a few points for as little as a few months but possibly up to two years.  That means if you are constantly applying for credit, you are slowly knocking your credit score down bit by bit.  The one caveat here is that nowadays multiple credit pulls within a short period of time are often viewed as comparison shopping and may only have the adverse effect of a single hard credit pull.

Do I need to Change My Ways?

So what is the takeaway here you ask?  If you have questionable credit, you might find yourself applying for credit more often than others.  This behavior could be inadvertently hurting your credit score.  Let’s face it…every point counts.

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