Does it hurt your credit score to be denied a credit?
When you need a loan or a loan and fill out the application, waiting for the approval can seem eternal. When you face the reality of a rejection, many thoughts can come to mind. One of the ideas that can go through your mind may be whether the refusal will affect your credit score or not.
Does having a credit to my credit score affect me?
The simple answer is no, being rejected for a credit or loan will not damage your credit score. In fact, even if your credit report shows that you have made a request, it is not shown if the application was approved or denied. Anyone who does an investigation has no way of getting that information
What is an investigation?
Investigations affect your credit score when you apply for a loan. There are two types of investigations. Hard investigations are done by companies when you apply for a loan or a loan. Soft inquiries are the investigations you do when you request a copy of your credit report. Soft inquiries do not affect your credit score at all.
If you apply for a loan, the company does a tough investigation to determine your credit score and your ability to make monthly payments. This hard investigation happens regardless of whether you receive an approval or a rejection. However, the investigation only includes the name of the company to which you have applied for the credit and the date of the investigation. Does not include information on whether the investigation has been approved.
How do research affect my credit score?
Your credit score records the number of recent investigations, and how close they are. Each new investigation in a short period of time, can reduce your credit score in a few points. This is because it shows that you are requesting to obtain new debt. However, the impact is very small, and disappears over the course of the months.
However, having a lot of research in a short period of time can have a greater impact. If you are asking to get new debt in many places at the same time, it can make you look like a credit risk. For that reason, it is better to space your credit requests in at least two months.
Although do not worry much about the investigations. As long as the spaces, will have a minimum impact and will disappear over time. If you have been applying for credits everywhere and everywhere, you do not have to worry. You have not done irreparable damage. Just wait a few months before requesting it elsewhere.
Can other potential lenders know if you have been rejected?
If you have been turned down for a loan, other potential lenders who check your credit score will have no way of knowing. They will only be able to find out if you applied for a loan, and when you requested it. Even if a new account is not shown on your credit report, that does not mean you were not approved. It could be as easy as if you had chosen not to open the account, or the lender might not have reported it to the reporting agencies.
If being approved affects your credit score, why does not it get rejected?
The simple act of being approved for a credit does not affect your credit score. The approval or denial is not what impacts your score. If you are approved, what actually impacts your score is not the fact that you receive the credit, it is how well you manage the new debt and meet your monthly obligations.
Being denied for a credit does not affect your credit score at all. However, if you are rejected, you should bear in mind that there is probably a reason why you have not been approved. You should take a look at your financial situation and debt load and start thinking about what you can do to improve your credit score so that you can change those rejections for approved.
- Published On : 5 months ago on April 17, 2019
- Author By : Desiree Smith
- Last Updated : April 17, 2019 @ 9:38 am
- In The Categories Of : Uncategorized