December 28th, 2009

Dear Credit Karma – Negative Marks On Credit Report

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Dear Credit Karma,
How do I get hard credit inquires off my account?

There is no sure method to get hard credit inquiries “off your account” other than waiting out the two year term hard inquiries remain on a credit report. A hard inquiry is a credit report check by a lender as part of a loan or credit application that negatively impacts your credit score. Some online sources report that you can “bump” hard inquiries off your report by doing many soft credit inquiries, which are credit checks that do not affect your credit score, to replace previous hard inquiries on the list of inquiries on your credit report. However, this strategy may not work because the credit bureau issuing your credit report may list the hard and soft inquiries separately. Also, beware of online companies offering to remove your hard inquiries for a price; if it sounds like a scam, it probably is one.

You are better off just waiting for the hard inquiry to fall off after two years on your credit report. Credit inquiries are one of the key components that go into calculating your credit score, and hard inquiries will drop your credit score by a few points for 6-12 months, but the older the inquiry gets, the less damage it will take on your score. Just take care to avoid future excessive hard inquiries within a short period of time, like multiple loan applications or many new credit cards, because the damage will add up. Check out Credit Karma’s Credit Simulator to see how credit inquiries will affect your score.

Dear Credit Karma,
When items “fall off” of your credit report, how long does it take to reflect on your score? How will accounts falling off improve your credit health?

Determining how long it will take between an item “falling off” your credit report and its impact on your credit score is difficult to say because your credit score won’t necessarily improve due to one item “falling off”. There is no guarantee it will reflect immediately, if at all, on your credit score. First of all, your credit score is calculated according to a complex algorithm involving all components of your credit report. Your credit score will improve relative to your entire credit report, and not just one item “falling off”. Secondly, the impact of one item “falling off” may only have a slight point improvement on your score. Different credit actions vary in their damage points to credit scores, so an old bankruptcy would be a bigger weight off your credit report than a debt settlement. But the longer an item remains on a credit report, the less damage it has on your credit score over time; thus, it is hard to say just how much your credit score will benefit once an item is wiped off your report. The best thing to do is to monitor your credit report and credit score to keep a tab on any changes that happen.

Dear Credit Karma,
I’ve recently been told by two separate banks that they are closing my credit card accounts due to inactivity. Both of these have had zero balances for quite some time but the accounts themselves are at least 10 years old each. How can I apply for new credit cards without it affecting my score? This doesn’t seem fair to me.

Banks have been trimming their accounts and tightening credit access in the past few months much to the chagrin of cardholders like yourself, and now you find yourself in need of fresh credit. Unfortunately, you can’t avoid a hit to your credit score while applying for a new credit card. Issuers do a hard credit pull whenever you apply for a credit card, which will have a small negative impact on your credit score. While you can’t avoid the impact on your credit score, excessive hard inquiries due to applying to many credit cards over a period of time will hurt your credit score even more and reflects badly to potential lenders. Protect yourself as much as possible by shopping around and applying selectively to just a few, choice credit cards that are right for you. Start off with one credit card and regulate your credit use and build up your credit with monthly purchases you can pay off in full, like a trip to the movies or a grocery run; if you still want a second line of credit, you can always apply for another credit card later. But if you have other credit cards, you might consider using those older cards more actively rather than getting a new credit card, which risks letting your older cards fall to the wayside and potentially be closed for inactivity too.



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