Often I’ve been asked about the impact of credit inquiries to your credit score. First of all – if you receive credit card offers based on your credit report – those inquiries do not impact your credit score. However, once you send one of those offers back they card issuer will pull an official credit report as well as report back that they either gave you are credit or denied your application. This will impact your credit report in one way or the other. The actual official credit report they pull sets you back 5-10 points. If they give you the credit card (application approved) your entire score is recalculated and it depends on your available credit that you can use + existing accounts how your new credit score looks like. It can actually go up or down.

If your credit application is denied, your credit report will receive a negative entry and it can push your  credit score down somewhere between 20-50 points. Knowing this impact it is critical to know where your credit score is and if you can risk a negative entry. Let’s assume you are at the bottom of the range of your current credit level. Your credit level is good and your credit score is 680. A drop in 20 or more points can push you down to a credit level of “Fair”. “Fair” is not good as it means significantly higher credit interest rates and eventually higher car insurance rates.

The only way you can avoid this problem is to know your credit score from all 3 credit bureaus. Don’t think the annual credit report that you are entitled to will do. It does not contain the credit score and it is only pulled once a year upon your request. I usually recommend something like one of these service providers that give you free credit reports and free credit scores + monitor your credit report for changes and email them to you. Credit report monitoring is essential in these days where ID theft is on the rise. I personally monitor my credit report this way for about 3 years. My Credit Score is 798 and I do have perfect credit.