Why Not All Credit Inquiries Are Created Equal
You know that credit card applications can take a toll on your credit score, but what about other types of credit inquiries?
With most Americans grappling to pay the mortgage and manage debt, it's a common belief that it's best not to take any chances with inquiries - even if it means going without checking our credit score, say Atlanta bankruptcy attorneys. Unfortunately, our caution may be doing more damage than good.
Yes, there are some inquiries that hurt your score. Known as hard inquiries, they include pretty much anything that could affect your ability to repay existent debts - that means taking on new loans, applying for credit cards, even purchasing a cell phone. If you're adding more financial responsibilities, lenders are going to consider you a higher-risk borrower. But there's another type of inquiry called a soft inquiry. When an employer checks your credit history during the hiring process, when credit issuers peek at your past before sending unsolicited card offers, when you request a copy of your own credit report - these are all considered soft because they don't directly have anything to do with your ability to pay the bills.
By avoiding all inquiries, not just the hard ones, you give up the chance to become familiar with your credit score - and the reasons behind it. For instance, many scores are lower than they should be because of typos and other reporting mistakes. In other cases, identity theft may be doing a number on your good name. Both problems can be remedied by simply requesting your free yearly report at AnnualCreditReport.com.
There's another reason to keep up with your credit. Knowledge is power, and there's no better wakeup call than seeing in print how all those late payments are adding up or just how many times you've exceeded your credit limit and been charged for it.
Of course, sometimes you already know what you need to be doing - but you can't afford to do it. If too much debt is keeping you from paying the mortgages or credit card bills, yet you can't afford to pay off your balance, bankruptcy can help put you back in control of your money. At DebtStoppers, our Atlanta bankruptcy attorneys can identify a bankruptcy plan that makes eliminating debt affordable when you sign up for a free one-on-one debt analysis.