Inquiring Minds

These days, everyone from prospective employers to cell phone service providers are looking at your credit report. But not all credit report inquiries are created equal. As reported on, a “soft inquiry” is made when you request your free credit report or a company where you’ve applied for a job pulls your report. Such inquiries typically have little or no impact on your credit score. Usually, they don’t even show up on your credit report. A “hard inquiry” is made when you apply for credit or open a bank account. Such inquiries do show up on your credit report for two years. The main watch-out with hard inquiries is the frequency with which they are made. The occasional hard inquiry should not impact your credit score but frequent hard inquiries can have a negative effect. Overindulging on those retailer offers where you get 10 percent off your purchase if you apply for their credit card may end up costing you more than you save.

It’s important that we all know our credit score (the least expensive way to obtain it is to buy it from Equifax for $7.95 during the process of requesting your free credit report) and understand what impacts the score. The most important thing you can do to keep your score strong is to pay your bills on time. The second most important thing is to make sure you don’t use too much of your available credit. The ideal is to use less than 10 percent. So, if you have a credit card with a $10,000 limit, try to keep your charges to $1,000 or less each month. And of course, always pay your balance in full. One of the most common myths I hear is that you have to carry a balance on your cards in order to have a good credit score. That’s not true. You have to use credit, but you do not have to carry a balance from month to month.

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