Credit: Improve Your Credit, Tip #1
Credit Cards Deals Can Hurt Your Credit Rating
If you will be applying for a mortgage or home equity line of credit, or refinancing your mortgage, just say “no” to credit card offers.
Sure, you might find a bad credit mortgage, but why hurt your credit rating when you don't have to? A lower credit rating results in higher interest rates and will cost you a lot over time.
Apply for credit only if you really need it. Every time you apply for credit, it shows up on your credit report as a credit inquiry.
How Responding To Credit Card Deals Works
A common scenario: the nice, smiling clerk at The Gap encourages you to get a 15% discount for applying for a Gap credit card. She will take your info. The Gap will check your credit. A credit inquiry is added to your credit report.
Same story if you respond to any credit card deals you receive in the mail. Respond and your credit will be checked. A credit inquiry will be added to your credit report.
Why Applying for Credit Cards Can Hurt Your Credit Rating
Credit inquiries are bad. They can look like you are “credit hungry” and may be in financial trouble. Even worse, you may have received many of the credit lines that are showing as inquiries, and many of those credit lines have not yet appeared on your credit report.
Too many recent inquiries indicate to a potential credit grantor that your debt to income ratio may be much higher than you say.
Most creditors disregard inquiries once they have been on your credit report for six months or more.
This may not help your situation if you need credit right away or if applying to a creditor who looks at all of your inquiries. All credit inquiries should come off your credit report after two years.
Bottom Line: Credit Card Deals Can Hurt Your Credit
If you will be applying for a mortgage or home equity line of credit, or refinancing your mortgage, just say “no” to credit card offers. Skip the 15% discount, because it could cost you much more.
