Keep Your Credit Score High: Create Fewer Hard Inquiries

When talking about financial literacy, credit scores come up often. Credit scores are made up of complex algorithms that take many behavioral aspects into account. It might seem complicated, but there are only five main parts of a credit score:

– Payment history
– Debt ratio
– Types of credit used
– Length of credit history
– Inquiries

Today, we’re going to talk about inquiries. There are two common types of inquiries on your credit score: “hard” inquiries and “soft” inquiries.

Hard inquiries are when you allow a institution to check your credit score or “run your credit” in order to decide if they will extend you credit. When you allow an organization to make a hard inquiry on your credit report there will be a notation made on your credit report that will stay for two years. The fewer the hard inquiries on your credit report, the higher your credit score will be. Only let organizations that you really want credit from to check your credit score.

Soft inquiries are when you pull your own credit report and/or scores. There is no downside to taking a look at your own credit score. Now, you can pull your credit reports, not scores, for free. Knowing what’s going on will often empower you to make changes or give yourself a pat on the back. Many times credit scores are higher than you thought.

Keep in mind that there are three major credit reporting bureaus in the US. To get an accurate picture of your financial health you’ll need to pull reports and scores from all three bureaus for $40.

Read more about credit scores and reports in Money Matters: The Get It Done in 1 Minute Workbook and 10 Things College Students Need to Know About Money. Check them out.

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