With all the talk about hurting or helping your credit score these days, there are probably a lot of confused consumers out there. Most credit monitoring companies try to portray your credit as a mythical entity but managing your credit doesn’t have to be a mystery.
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There are lots of actions that can help your score but there are just as many that can have the reverse effect. Obvious negative actions would include things like defaulting on a payment or not paying your bills on time. But there are actually a few items that won’t have an impact at all.
Let’s explore three actions that won’t affect your credit score:
1. Pulling Credit for Yourself
Most people know that every time you apply for a loan or open a new credit card, your credit score will take a hit. Whenever a lender or bank requests your credit report, there what’s called a hard inquiry against your account. It’s perfectly acceptable to have a few hard inquiries on your account, but once you start racking up too many, your credit score will start to reflect that. Lenders don’t like to see multiple inquiries since it signifies that you’re trying to access too much credit within a short amount of time.
So while you don’t want to apply for too many lines of credit at once, there’s actually no penalty for personally requesting your credit score or report as often as you’d like. These inquiries are referred to as soft pulls since you are the one making the request as opposed to a bank or lender.
2. Getting Denied for a Loan or Credit Card
We now know that every time you apply for a line of credit there is a hard inquiry on your account but there’s actually no difference whether you’re approved or denied. And since hard inquiries are erased after 2 years, if you’re denied for multiple lines of credit, those inquiries will all be gone after 2 years. Your score may temporarily drop because of the inquiries but whether you’re approved or denied will have zero impact on your score.
Related Article: Easy Credit Isn’t Always Worth It
3. Debit Cards
A lot of people like to use debit cards because they are directly linked to your bank account. That means it’s pretty much impossible to fall into the ‘credit trap’ and spend more than you have. Once you do spend more than your account balance, your card will no longer work. Debit cards offer a lot of the same protections (purchase protection, fraud protection, etc.) as credit cards but they won’t do a thing for your credit, positive or negative.
Since there’s really no line of credit being extended, banks won’t even report a debit card to the credit bureaus. Some banks will however initiate a hard pull to open a checking account (which would be linked to a debit card) so be sure to ask about that before applying for a new account.
Related Article: Get Off the Credit Go-Round and Stop Overspending
The important thing is to be informed about what your credit score is currently and what actions can hurt or improve it in the future.
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