How does applying for a charge card hurt my credit score? Every time you obtain a credit card, the credit card company makes an inquiry into your credit history. These are also known as difficult pulls. Each of these credit queries or hard pulls, take away around 5 points out of your credit score. The rationale behind removing points from your credit score whenever you apply for credit, is that, it is harder to control multiple credit lines when compared to just a couple of. It also shows a tendency which leans towards getting excessive credit after which getting into a spending spiral, which may become difficult to get out of and as a result your likelihood of default become high. These inquiries show on your credit history for a period of one or two years, but the dent in score by itself will be rectified in about two months, if you do not abuse your own newly available credit. If your credit score application gets approved, then your score will rise fairly quickly because
the additional credit line will give you a boost. In addition to this, your 'debt is to available credit' ratio will also improve and that will assist boost your score too. Be aware of the credit application spiralThe those who are worse hit are the people in whose credit application gets rejected. When their own application gets rejected, their score falls. However, since their application has already been rejected, they apply again thereby reducing their own score further and chances are that they'll get rejected once again. This is a vicious circle and if you get into this sort of thing four or five times, your credit score takes a bigger strike. So be careful, and next time you are tempted to use for that store credit card that provides you with $10 off on a new clothing, think twice!
Manshu Verma http: //www. onemint. com
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