My daughter, only 18, wants to start her credit and applied for a store credit card. Someone told her it would hurt her credit to apply, but she doesn’t have any credit yet! I did a little search for her to help answer some of her questions. We will have her with a home loan sooner than later!
“A good credit score is an essential part of getting approval for a new line of credit, and it also improves your chances of getting the best rates. It’s important to know what kind of activity has the potential to lower your score. Many companies check your credit history, but only hard checks made to verify your eligibility for a new line of credit have a direct impact on your credit score. To maintain your credit score, apply only for loans when you really need them. If you are shopping for the best rates, make all of your applications within a short time frame.
A soft credit check, otherwise known as a soft inquiry or soft pull, is any kind of credit report check that doesn’t affect your credit score. Soft inquiries are background checks rather than checks occurring as a result of new loan applications; in some cases they happen without your knowledge or consent. Common soft inquiries include:
- When you check your own credit report
- When a potential employer checks your credit history to determine your reliability and financial status
- When a financial institute you patronize checks your credit
- When credit card issuers check your credit to send you a preapproved offer
You can see all of the soft inquiries on your credit report, which lists each check along with the name of the organization that made the check.
Unlike soft inquiries, hard inquiries may have an impact on your credit score. Prospective lenders make hard checks when they are making a lending decision, with common examples including:
- Applying for a new credit card
- Taking out a loan for a new car
- Applying for a mortgage
Hard inquiries stay on your credit report for two years, so you should always think carefully before making any kind of loan application as it can lower your credit score.”
per RISMedia 8/7/17