Lizard Lending UK

Every credit score is made up of many different parts. By using Equifax Credit Watch Gold you can access and start to improve your score. How many accounts you have open, how much credit you are utilizing and whether or not your credit accounts are in good standing all determine that magic number. But one factor that makes up about 10% of your credit score that many people overlook is credit inquires. A huge advantage of using a Payday Lender is that there is generally no credit reference made, hence no damage to your rating.

A credit inquiry occurs every time you apply for a credit account. When you apply for credit, you authorize creditors to ask for a copy of your credit report from the major credit bureaus. Whether you are denied or approved for the credit account does not matter. But what does matter is the type of inquiry. Different types of accounts affect your credit score in different ways and the length between inquires is also of great importance. With all of the ways that a credit inquiry can affect your credit score, lets define a few key terms and see just how much your score can drop when you are looking for new credit.

First, let’s clarify the difference between a “soft” credit pull and a “hard” credit pull, as we will be discussing how a hard credit pull affects your account.

• A soft pull, also known as an involuntary inquiry, occurs when creditors want to send you pre-approved offers. That credit card solicitation you received in the mail was probably the result of a soft pull on your credit. Potential employers may check your credit as do your existing credit card accounts, both of which would be soft pulls. And if you check your own credit score, that’s considered a soft pull, too. The key is that a soft pull does not affect your credit score in any way.
• A hard pull, also known as a voluntary inquiry, occurs anytime you actively seek credit and fill out an application. The lender will run your credit report and determine whether to approve your credit application and under what terms. A hard pull on your credit report will affect your credit score.

Next, it’s important to understand that not all hard pulls on your credit report are created equal. For example, applying for multiple revolving accounts such as credit cards in a short period of time represents greater credit risk under the credit scoring system. Because applying for multiple accounts is viewed as a credit risk, it will negatively impact your credit score.

As an aside, some have used “Credit Card Arbitrage” to avoid the immediate sting of hard pulls on their credit score. The idea behind credit card arbitrage is that you can apply for a lot of credit cards within a short amount of time to take advantage of no interest introductory offers or sign-up bonuses. If you apply for many cards at the same time, the credit card issuers will not see the negative impact of all the inquiries when they evaluate your application. Your score will be negatively impacted once the credit inquires appear on your report, but not before decisions have been made on the credit card applications.

While applying for multiple credit card accounts in a short time period can hurt your credit score, rate shopping for other types of credit is different. For example, you may submit multiple credit applications when shopping for a mortgage, car loan or student loan. Known in the credit score world as “rate shopping,” the credit scoring system understands that you are shopping for the best rate, not actually applying for multiple mortgages. Assuming you actually open one mortgage, car loan, or student loan account, the credit agencies will treat the multiple applications as just one inquiry.

It’s also important to understand that the impact of credit inquires can vary from one person to the next. The impact can vary depending on what accounts you already have, your current credit score, the length of your credit history and so on. A person with a credit score of 750 that applies for a credit card will not be affected the same way that someone with a 500 credit score is affected when applying for the same credit card. While it’s impossible to exactly predict how an inquiry will affect your score, many of the agencies do offer a credit score simulator that will give you some idea.

One thing to keep in mind is that applying for new credit can also improve your credit score over the long run. Remember that one of the key factors used to determine a credit score is credit usage (how much you owe as compared to available credit). New accounts increase your available credit, which can be helpful so long as you don’t max out the available credit. When I use the credit simulators and assume I open a new credit card account with a $5,000 line of credit, the simulator predicts that my new score will go fall within a range of 10 points lower to 10 points higher than my current score.

As long as you manage your finances appropriately, you should find that credit inquires play a relatively small roll in determining your FICO credit score. Nevertheless, if you are fighting to improve your credit score, do not take credit applications lightly. Apply for credit with care and only if you really need the credit.

Using a Payday Lender means no use of the credit agencies. This means there will be no negative impact on your credit score at a time when many of us are suffering from poor credit access.