Why Do Credit Card Inquiries Affect My Credit?
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Posted: Wed Aug 18, 2004 5:51 pm
Post subject: Why Do Credit Card Inquiries Affect My Credit?
Lyra
Date: 5/29/2001 11:03 am CDT
I am 21, and always pay my credit cards the day the bill arrives. I always pay off at least $100 a month, and now my entire debt is only at around $600 at this point. I always have at least $2000 in the bank. So I am in good shape financially, and should have a perfect credit rating. My problem is that I have too many inquiries. I did not know before this past year about the negative aspect of having inquiries on your report, and so I would always, for instance, open cards at department stores to get the 10% discount, etc. And most recently, I applied to a few different cards to try and get a better interest rate than the 19.4% I have now. However, when I didn't receive the interest rate I wanted, I always rejected the offer. I became aware of the problem when I received rejections from a few credit offerers because of too many inquiries. How do I fix this problem? Why should it matter if there are inquiries, when the amount of money I owe and my record of payments is on my credit report? How big a deal is this, if I have perfect credit otherwise, and how does it affect my overall credit rating?
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Posted: Wed Aug 18, 2004 5:52 pm
Post subject: Why Do Credit Card Inquiries Affect My Credit?
credit smart
Date: 5/29/2001 2:14 pm CDT
How to fix this problem?Stop applying for any new credit.Why does inquiries matter?Because if they see too many this give any new lender an indication like you are credit hungry,or having some financial trouble of some sort,or you are about to go on a shopping binge therefore they will reject you every time.It is recommended not to apply for anymore then 2 cards every 6 months.Please note that each inquirie remains on your report for 2 years from the date that the creditor asked for your credit report.I don't know how many you got but i think it is enough for you not to apply for any new credit for well over a year.
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Posted: Wed Aug 18, 2004 5:53 pm
Post subject: Why Do Credit Card Inquiries Affect My Credit?
Eugene
Date: 5/30/2001 0:02 am CDT
now my entire debt is only at around $600 at this point. I always have at least $2000 in the bank.
Lyra, it does not make much financial sense to keep that much money in a checking or MM account paying 5% at best when you have debt at 19+ per cent. Pay off the $600, and even though your deposit balance will lower, you get immediate and guaranteed 15% return on this money. Then just pay your credit card bills in full and gradually grow the bank account back to $2,000 or whatever amount you need.
How do I fix this [inquiries] problem?
Simple. Do not apply for anything else for a while. Inquiries drop off your report after two years, and only those in the last 6 months matter more than others.
Why should it matter if there are inquiries, when the amount of money I owe and my record of payments is on my credit report?
Because people who apply for new credit excessively tend to default more than people who don't. In other words, now you are considered worse risk than the next guy, even though you might not have any plans to default.
That said, you are right that payment history should matter more. It does.
How big a deal is this, if I have perfect credit otherwise, and how does it affect my overall credit rating?
The newer your credit history, the bigger deal it is. I would guess it IS a big deal for you because your are only 21. Those inquiries hurt you more than the same number of inquiries would hurt somebody with more established credit, other factors being equal
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Posted: Wed Aug 18, 2004 5:51 pm
Post subject: Why Do Credit Card Inquiries Affect My Credit?
Lyra
Date: 5/29/2001 11:03 am CDT
I am 21, and always pay my credit cards the day the bill arrives. I always pay off at least $100 a month, and now my entire debt is only at around $600 at this point. I always have at least $2000 in the bank. So I am in good shape financially, and should have a perfect credit rating. My problem is that I have too many inquiries. I did not know before this past year about the negative aspect of having inquiries on your report, and so I would always, for instance, open cards at department stores to get the 10% discount, etc. And most recently, I applied to a few different cards to try and get a better interest rate than the 19.4% I have now. However, when I didn't receive the interest rate I wanted, I always rejected the offer. I became aware of the problem when I received rejections from a few credit offerers because of too many inquiries. How do I fix this problem? Why should it matter if there are inquiries, when the amount of money I owe and my record of payments is on my credit report? How big a deal is this, if I have perfect credit otherwise, and how does it affect my overall credit rating?
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
archive
Posted: Wed Aug 18, 2004 5:52 pm
Post subject: Why Do Credit Card Inquiries Affect My Credit?
credit smart
Date: 5/29/2001 2:14 pm CDT
How to fix this problem?Stop applying for any new credit.Why does inquiries matter?Because if they see too many this give any new lender an indication like you are credit hungry,or having some financial trouble of some sort,or you are about to go on a shopping binge therefore they will reject you every time.It is recommended not to apply for anymore then 2 cards every 6 months.Please note that each inquirie remains on your report for 2 years from the date that the creditor asked for your credit report.I don't know how many you got but i think it is enough for you not to apply for any new credit for well over a year.
archive
Posted: Wed Aug 18, 2004 5:53 pm
Post subject: Why Do Credit Card Inquiries Affect My Credit?
Eugene
Date: 5/30/2001 0:02 am CDT
now my entire debt is only at around $600 at this point. I always have at least $2000 in the bank.
Lyra, it does not make much financial sense to keep that much money in a checking or MM account paying 5% at best when you have debt at 19+ per cent. Pay off the $600, and even though your deposit balance will lower, you get immediate and guaranteed 15% return on this money. Then just pay your credit card bills in full and gradually grow the bank account back to $2,000 or whatever amount you need.
How do I fix this [inquiries] problem?
Simple. Do not apply for anything else for a while. Inquiries drop off your report after two years, and only those in the last 6 months matter more than others.
Why should it matter if there are inquiries, when the amount of money I owe and my record of payments is on my credit report?
Because people who apply for new credit excessively tend to default more than people who don't. In other words, now you are considered worse risk than the next guy, even though you might not have any plans to default.
That said, you are right that payment history should matter more. It does.
How big a deal is this, if I have perfect credit otherwise, and how does it affect my overall credit rating?
The newer your credit history, the bigger deal it is. I would guess it IS a big deal for you because your are only 21. Those inquiries hurt you more than the same number of inquiries would hurt somebody with more established credit, other factors being equal
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
posted by CardRatings.com at 2:16 PM
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