Your credit score is an indicator to lenders and landlords of how well you have handled your credit over the past few years. A number of issues can make your score drop, including problems that weren’t your fault, such as excessive medical debt. So, keeping your score as high as possible is crucial for landing both good properties and loans. The fact that inquiries on your credit report can drop your score is extremely frustrating, but you have another option.
Why you don’t want hard inquiries
Your credit report shows a type of inquiry known as a hard inquiry. Most inquiries made by companies into your credit are hard inquiries because these are basically requests for detailed credit information specifically for the purpose of issuing more credit. Even housing inquiries involve a type of credit, namely your promise to pay rent over a series of months.
Credit bureaus don’t distinguish between someone looking for credit for a once-in-a-while loan and someone seeking a ton of credit out of recklessness. So, all these inquiries dent your credit score as a way to telegraph that something is going on with you financially. Unfortunately, you can’t really place a note on your credit that states you’re applying only for an acceptable reason.
A lot of inquiries can make your score tank and as anyone who has had to raise their score can tell you, it can take longer for the score to recover and go up than it did for it to fall. If you want to preserve your credit score, then you need to keep inquiries off of your report. When you look for a loan, you need to look for loans with no credit check.
These loans use other factors such as your pay stubs to determine how much to loan you. These no credit check loans might be on the lower side, but they keep that hard inquiry off your credit report. Do keep in mind that these are true loans, you will pay interest, and you will have to stay on top of payments like you would with any other debt.
What are soft inquiries?
Occasionally you’ll see an option to pre-qualify for a loan. This is not a full application, and the business trying to qualify you does something called a soft inquiry. This type of inquiry doesn’t show up on your report. The qualification is preliminary only, however, and the lender will likely want to do a hard inquiry if you proceed with your application. Be on the lookout and specifically ask about avoiding credit checks and hard inquiries throughout the application process.
When you need cash fast but also need to save your credit score, a no credit check loan is the perfect solution.