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Understanding Credit Inquiries: How They Affect Your Score · Credit Nurse: CPR for your Credit Score

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  Speaker 1: Welcome to the Credit Nurse. I'm your host, Nurse Nancy.
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  Speaker 1: Understanding how inquiries impact your credit score is essential for
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  Speaker 1: anyone looking to improve their financial health. So, let's dive
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  Speaker 1: right in. When you apply for new credit, whether it's
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  Speaker 1: a credit card, a loan, or even a new rental agreement,
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  Speaker 1: creditors will typically request your credit report. This is what's
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  Speaker 1: known as a credit inquiry. There are two types of inquiries.
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  Speaker 1: Hard inquiries and soft inquiries. Hard inquiries occur when a
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  Speaker 1: lender checks your credit report as part of their decision-making process.
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  Speaker 1: These can affect your credit score. Usually, a hard inquiry
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  Speaker 1: may drop your score by a few points, and if
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  Speaker 1: you have too many in a short period, it can
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  Speaker 1: signal to lenders that you might be a risky borrower.
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  Speaker 1: On the other hand, soft inquiries don't impact your credit
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  Speaker 1: score at all. These include personal credit checks or when
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  Speaker 1: companies check your credit for promotional purposes. It's always good
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  Speaker 1: to monitor your credit for accuracy, so I recommend checking
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  Speaker 1: out tools like Credit Karma. It allows you to see
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  Speaker 1: your credit score and report for free, helping you track
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  Speaker 1: any changes due to inquiries or other factors. Moreover, it's
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  Speaker 1: important to know that hard inquiries typically stay on your
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  Speaker 1: credit report for about two years. However, their impact on
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  Speaker 1: your score lessens over time. So if you're planning to
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  Speaker 1: make several applications, it might be wise to space them out.
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  Speaker 1: This way, you can minimize the number of hard inquiries
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  Speaker 1: during that time period. Another thing to keep in mind
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  Speaker 1: is that the type of credit you're applying for can
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  Speaker 1: also affect your score. For example, applying for multiple types
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  Speaker 1: of loans in a short time frame can be viewed
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  Speaker 1: as an indication of risk by credit scoring models. So,
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  Speaker 1: if you're in the market for a mortgage, car loan,
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  Speaker 1: and a credit card within months, it might be better
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  Speaker 1: to prioritize and time those applications wisely. To sum it up,
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  Speaker 1: inquiries do impact your credit score, especially hard inquiries, but
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  Speaker 1: being informed and strategic can help you navigate them effectively.
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  Speaker 1: Don't shy away from seeking out new credit when it's necessary,
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  Speaker 1: but do so wisely. Thanks for tuning in today to
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  Speaker 1: learn about the impact of inquiries on your credit score. Remember,
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  Speaker 1: staying educated about your credit is a crucial step towards
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  Speaker 1: financial wellness. Until next time, take care.