If you apply for a credit card and get denied, will your current credit score go down?
by Author on Wednesday, July 28th, 2010 | 4 Comments
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When you apply for a loan or credit card, it becomes a hard inquiry. Your score takes a ding. Maybe about 20 points. The exact formula is classified. They want to keep us in the dark so we don’t have evidence to support a fraud claim.
The only exceptions are when you shop around for a mortgage or car loan. The system recognizes those types of hard inquires as a single hard inquiry during a 30 day period. Creditors know and the FICO system knows that shopping around for the best terms is smart.
When you check your own credit, it is a soft inquiry – does not affect your score.
If a credit card company checks your profile or score without your input, it is also a soft inquiry – does not affect your score. This type of inquiry is just to see if you meet minimum requirements for a possible issue of a credit card – no charge offs or late payments, etc. Income is not included which could affect your ability to further qualify you for the card.
Yes. Your credit WILL DECLINE EVERYTIME there is a credit check done. Whether it is something you initiated, or a scenario like this your credit will decrease.
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Every time you have an inquiry on your credit report it will drop your score 3 to 5 points whether it was denied or not denied.
The impact from applying for credit will vary from person to person based on their unique credit histories. In general, credit inquiries have a small impact on one’s FICO score. For most people, one additional credit inquiry will take less than five points off their FICO score. For perspective, the full range for FICO scores is 300-850. Inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries often can play a part in assessing risk, they play a minor part. Much more important factors for your score are how timely you pay your bills and your overall debt burden as indicated on your credit report.